Anyone interested in a good summary of the situation at hand should read this economic analysis from Hayman Capital. My big fear is our circumstances lead us to war, and it is the worry at Hayman Capital too.
I think their exposition of where they are putting their money and why (subprime housing) is interesting but I think there are still so many surprises possible that any bet is a shot in the dark.
We concentrate too much power in too few hands. then those too few people begin to use terms loosely or misleadingly, and it is difficult to understand the problem.
Feel free to forward this by email to three of your friends.
I think their exposition of where they are putting their money and why (subprime housing) is interesting but I think there are still so many surprises possible that any bet is a shot in the dark.
We concentrate too much power in too few hands. then those too few people begin to use terms loosely or misleadingly, and it is difficult to understand the problem.
1. Money is merely a medium of exchange, which emerges in a free market as what from the array of commodities best suits the purpose. Lending money at interest (usury) is a criminal act in natural law. Usury (interest) cannot be sustained without state sanction. State sanction is where the violence begins. Lending money at fractional reserve (that fraction above money is properly called “credit” but we are told it is money. ) The fraud begins. Lending credit at interest (usury) is the next step. Mischaracterizing this as “money” and then lending this credit at fractional reserve makes for exponential force and fraud. Once the game gets to that point, there is no rational limit. At some point it comes apart. We are at the point it comes apart.
Governments support the arrogation of all of this credit unto themselves in order that they may concentrate power. The concentration is achieved through usury (what we call interest) and the act of muclting proceeds is called taxation. Govts are simply the legal fiction that curtains off the very human people who pull the strings.
2. The score in this game is kept by the financial services industry. In a free market The purpose of this regime is taxes, and banking to track the flow of “wealth” in order to tax it. That is why all power is brokered at the financial institution level. The Soviets report Hitler was so constrained by finances he could not develop his atomic bomb. The Swiss report the Allies met with the Nazis regularly to settle accounts (in gold) for their cross-trade in war material. This is to say that even total government is limited by its accounts. When their credit is shot, transactions must be settled in gold. Osama bin Laden got away at Tora Bora while the Coalition awaited the payment of gold to arrive, the media of exchange demanded by the Northern Alliance. In history gold is used at end times.
3. War is the default course. I’ve been saying this for a while, and I hope I am wrong. Whoever can prove their credit is better, that their ability to borrow and concentrate power is superior, will win the war. The winners settle up all of the debts, usually by simply repudiating the debt. (Something any country can do without war: Iceland is recovering since it repudiated its debt. Ireland is sinking because it has not.) Default is the peaceful solution.
The state has only two means: force and fraud. They use both. That is why state policy necessarily always gets worse.
4. There is an alternative. In a free market there is money, properly defined. There is finance based on credit, but limited to rather micro instances which, in total, add up to precise what is necessary and sufficient to maintain prosperity. But there is no interest (usury) since it cannot be sustained in a free market. There is investment, but only in instances in which both or all parties share the risk. In this world, risk is minimized by normal market practices.
In a free market the above scenario gets no farther than money, vendor finance, and shared risk in investments. Loans happen, but never with an expectation of gain. In a free market, loans are economic events, but not market events.
To avoid war, the first step is to unregulate the financial markets, and make a separation between industry and state. The paradox is to live in a free country we must be free of the state. The tragedy is few people want the freedom that is the basis for peace and prosperity.
5. The only way forward is unregulation. Not enough people will agree to that, because they want free stuff. We will get unregulation, and free markets, when the system collapses.
To thrive in that system you need to know how to make something, or trade it.
Feel free to forward this by email to three of your friends.
0 comments:
Post a Comment