Ivo Mosely is serializing his next book over at the Cobden Center. It just keeps getting better. I fraternally criticized earlier chapters for lack of precision in definitions, and in this chapter Mosely included, at least in a footnote, a quote for economic great JK Galbraith:
‘The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.’
Just so. What is wonderful about Moseley's work here is showing that all we are criticizing has been noted before, but along with the "victors write the history books". I have been reinventing the wheel while everything I am discovering has been well explicated 100, 200, 300 years ago. So we did not go off track with the "Great Society" of the 1960s, or the "new Deal of the 1930s, or the "Roaring '20s" or the Robber Barons of the "Gay (18)90s" or the Civil War of the Revolutionary War, it goes back to about 1700, when promissory notes could be traded as an asset and interest have largely moved from defined as recovering an unexpected loss on a charitable loan to contracting an obligation to pay a gain on an uncharitable loan.
The USA was formed to escape the horrors of the European economic system, only to have Alexander Hamilton lead the USA into simply the most efficient player of the game.
Walker’s The Science of Wealth (1866) was published a hundred years after Adam Smith’s The Wealth of Nations. Walker saw the United States dominated by an integrated system of banking, taxes and national debt, designed to take wealth from productive workers and relocate it with an equally integrated power of government, corporations and plutocrats. Building on the last chapter of Adam Smith’s Wealth of Nations, Walker points out that the National Debt is a great gift to the wealthy: they lose nothing by lending, because they get government bonds in return. Meanwhile the interest on the debt – on money that the government spends – is met by those who produce. It is a tax on the productive.[xx]
Hamilton was never a president, but a banker. He died a slow death after a dual with the sitting vice-president, Burr, and Hamilton died a hero and martyr. Violence never turns out well. See subsequent USA history.
Now I have been jerry-rigging terms attempting to be clear, but it appears others already did this. I came up with bene-credit and malcredit to describe what is going on in USA, and the world. Read here:
The subject of how money-as-credit, and money-as-property interact with each other was subsequently almost completely ignored in mainstream economics. Knut Wicksell, many years later, caused a stir in economics circles by noticing that there were two kinds of economy, a ‘credit economy’ and a ‘cash economy’; but as far as I know he never followed up his observation with thorough analysis.[xxiii] Keynes made the same observation in his Treatise on Money (1930) but he, too, pursued the matter no further.[xxiv]
Wicksell and Keynes both addressed this, but let it go? Then this topic is an excellent career-maker for some young PhD candidate who wants a career in academia. Stand on the shoulders of those greats and fill in the blanks they left. In the meantime, I think my terms, bene-credit and malcredit are clear, which is the first rule of writing.
There is so much more in this essay, so you should read it. Yes, the last 300 years, especially the last, has been an era of mass death, war and poverty (unless you are one of the lucky few) but so what? I got mine jack, and if nothing has changed, who cares>
But there is something new:
Fast-forwarding to today, once the independent poor have been robbed into penury they must depend upon a ‘welfare state’ to stay alive. This gives the super-rich plenty of reason to complain at the prospect of some of their money being diverted to supply those they have previously robbed with the bare ‘necessities of life’. In reality, the super-rich mostly avoid paying taxes and the burden falls on the working and middle classes.
That is Mosely's take, here is mine:
What was once reserved for the well-connected, the elite, or a politically connected few, is now down to the lowest person in society. With an EBT card, a welfare recipient can walk into a gas station generate credit from nothing to pay for a meal. He can also buy a car, rent a home, clothe the kids, all from nothing. No Hegemon ever extended the rot so thoroughly through out society. it is an experiment. It works until it no longer works.
There is no fixing this problem, because those on welfare vote, adn overwhelm those who actually produce something. Boeing, Walmart, Amazon, Google, GE and all the other welfare queens and their impoverished co-indolents at the bottom of the econ ladder all make sure the welfare/warfare state is in power. Democracy does that.
Europe is experiencing an immigration crisis as people head for the borders, not their borders to escape, but to european borders where they will be issued such credit facility, for nothing. Islam prohibits this kind of welfare, so one must get to putatively Christian countries (where it is also expressly forbidden by religion) to join in.
There is no rational limit to lending nothing for something, for there is no rational basis for the activity. So when it ends, it will end for some nonrational event. Religion advises us sins only last until the third or fourth generation, and surely the debts have now reached the point where repayment will be onto the fourth generation.
The only way to escape this disaster is to not be in it. It's possible, the Amish have effectively avoided the horrors of the last 300 years (after a shakey start.) But it is possible to also live in society buy not be integrated in its excesses. In a country of 300 million, a market of 5000 is plenty to create personal surfeit, as long as you are working toward wealth defined as a collection of goods and services affordable to people with their own earnings.
We call it self-employment, but a better definition is customer-employed.
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