SIMPLE PRIVATE CURRENCIES
The previous chapter distinguished between the official public currency and certain federally controlled scribbled-on paper products which function as unofficial public currencies. The ability of the latter to function as a currency affecting the official currency--dollars--stems from its extreme liquidity, i.e., from the extreme ease of conversion into the official currency. Consequently, the value of the official public currency can be altered by changes in the value of the unofficial public currency. This principle of liquidity or easy convertibility unlies how the dollars can be cheapened or inflated not only from the production of public sopps
T-bills, Saving Bonds, Ginnie Maes, Freddie Macs, or Aggie Bonds,
but from the production of private sopps. Recall that public sopps refers to scribbled-on paper products issued by the federal government while private sopps refers to non-governmental sopps, the nature of which is this and subsequent chapters.
In both public and private cases, the sopps are issued to as a means by which one can store some of his excess wealth, product worth, or production time. Unfortunately, because these sopps are merely symbols of production, the process of tying up money into these soppy symbols generates cash-starved industries. Consequently, the reduction in production causes a drop in the product worth of the public and private currencies. Counter-productively used, public and private sopps do not serve as common intermediate products by which a producer can store or invest some of his excess disposable income. Said another way, the producer thinks that he will have gains, but all he is doing is stimulating the production of symbols, not the production of more useful goods and services.
Is There A Difference Between ...
In the previous chapter, a writer for the Wall Street Journal was taken to task for saying that a Treasury Note was neither currency, nor immediately inflationary. The same arguments for Treasury issues being both currency and inflationary can be applied to most private scribbled-on paper products. For instance, if someone has a lot of spare cash and buys a large Certificate of Deposit, he will have traded a lot of small official public denominations for one large private denomination. Because of the liquidity of CDs, they are a private currency competing with the public currencies.
Certificate of deposits, and the other private sopps listed below in the Money Rates table, are not necessarily inflationary. Like the Treasury Notes, CDs are inflationary depending on how the banks use the money acquired through certificates of deposits, checking accounts, passbook savings, or any other banking financial instrument. Again, it is the quality of the currency transactions rather than the quantity that productively or destructively affects the future product worth of the currency. If the banks lend the money only to people who are going to increase productivity in the production of real goods and services, then the private instruments are anti-inflationary. They will lower the real human cost--time--it takes to produce products, a lowering which will show up in the official currency buying more than it used to.
Or, Banks Can ...
However, if the banks channel the money away from production, then production will suffer. The effects on the official public currency will be inflationary. Banks can do this in several ways. They can lend the money to stock, commodity, or land speculators. Currency lubricating the generation of inflationary returns through speculation cannot simultaneously lubricate the production profits within an economy. Thus, speculative loans which merely acquire existing products, production plants, or old stale stocks do not capitalize new production for higher levels of anti-inflationary productivity.
Do banks lend money to speculators? Money that could be lent to producers? Loans that crowd out production?
The prime lending rate climbed to a record-tying 20 percent, pushed upward by soaring open-market rates. The costs of carrying speculative investments on borrowed money skyrocketed along with them.
Do notice how the writer failed to make a distinction between investment and speculation when he coupled the two words together: speculative investments. There are productive investments with production profits and there are speculative gambles with inflationary returns, but their are no speculative investments. The paradoxical combining of investment with speculation is more than analogous to the distinction between a clothed person and the voyeur spectator who would like to disrobe the wearer of his vestments. The origin of the words themselves contain the roots that should awaken anyone to their contradictory nature.
Or, banks can lend the pooled money for the capitalization of new production in non-essential products, e.g., cake makers instead of bread bakers. During periods of inflation, the great incomes invariably are tied to inflationary returns; in other words, the banks are capitalizing new production for those who are deriving income from returning overall production to a lower level. (The previous generalization is not without basis, but is too broad to substantiate herein.) Money tied-up in non-essential production cannot lubricate essential production; consequently, production of essential goods and services will fall relative to the demand; the result is sinflation.
Or, banks can lend the pooled money of the small savers as large loans for acquiring existing old production rather than capitalizing new production. When a bank lends money for a merger or an acquisition, a bank cannot lend the same money for capitalizing new production or capitalizing replacement of aging tools of production. Again, production shortages will exist relative to where the level of production would be if banks did not lend money in counter-productive fashions.
A fine example of capital being counter-productively pooled so as to acquire old production rather than capitalize new production was transacted in the early 1980s. A $3 Billion "no-strings-attached" loan to Seagrams of Canada was a record. How do the politicians feel about mergers and acquisition that do not increase the total production base, but rather consume and misdirect human resources into streamlining and vivisecting viable, efficient U.S. production? An article entitled "Government May Abandon Fight to Stem Conglomerate Takeovers" not only portrays the politicians' position but is part of the reason for judging them corrupt and/or incompetent. Many of the leading business sources passed no negative judgment on this acquisition loan to foreigners using the savings of American citizens. Related to the dearth of criticism on Seagrams acquisition loan is how bankers, financiers, and the author's favorite financial newspaper--the WSJ--constantly object to the nationalization of private industry by government, domestically and internationally. A good example of their sentiment is present in the following quotation.
So with the hefty bank account Zambia inherited at independence, Mr. Kaunda set about nationalizing most of the industry already operating rather than building new industry to create jobs.
On the same page, the WSJ recorded the acquisition of U.S. Steel coal reserves by Sohio. Is ignorance or deceit that motivates the leading financial weekly to chastise public nationalization but championing private nationalization through acquisition?
Public or private nationalization has the same effect: over-centralization of decision-making which negates problem-awareness and problem-solution. Over-centralized policy making is either benevolent or malevolent despotism. For anyone that understands the effects of public and private over-centralization of problem solving, decision-making, and policy-formation, the destructive effects of Zambia public nationalization will come to America. How? Through the necronomic pooling of the small persons money by the bankers and the financiers for private acquisitions by firms with no experience in their acquired company, just like public bureaucrats.
The following quotation describes the process by which North American production will be nationalized through the bankers mismanaging the money of small people.
Seagram arranged a $3 billion Eurodollar credit, one of the largest ever, with a group of U.S, Canadian and European banks. The company said the funds will be used for acquisition, but possible targets and a timetable weren't disclosed.
Did your bank where you have your savings participate in the loan syndicated to Seagrams? Or are you one of the persons that will lose their income as Seagrams acquires, streamlines and vivisects some existing, efficient U.S. production? Or both?
Anyone that has their money in a bank is a self-defeating fool or a benefactor of necronomic inflationary returns. An informed person does need someone managing their money, let alone someone who mismanages the money so as to create inflation, unemployment, over-taxation, and violence.
Or, banks can take their depositors money and speculate in old products rather than lubricate new production or existing production. The following quotation provides clear examples of this and shows that the basis of America's economic ills are not only governmental naivete and blissfulness, but private also.
Can the savers or pensioners eat the paper returns which gold speculation by bankers generates, in place of the produce profits that funding farmers will bring?
Or, consider how "Morgan Bank Returns to Gold Market Following in Footsteps of Its Founder". And how "Central Banks Play Quiet but Crucial Role In Supporting World-Wide Gold Market."
Whenever the gold market turns hot, it's a signal for market commentators to trot out their apocryphal, much-repeated tales of panic buying by gnomish Swiss and burnoosed Arabs.
Counterproductive gold purchases cause production to fall and essential purchasing power to disappear. Where is strife common over the lack of jobs compounded by an abundance of inflation? "Central America"!
Or, banks can refuse to make long-term loans or only make second-mortgage loans. By allowing only short-term loans, production businesses are not allowed to make long-term production plans. Consequently, planning for long-term productivity gains is not possible; future inflation is inevitable. By banks avoiding first-mortgage loans, the stimulus for the construction business is gone. Widespread unemployment is inevitable. Is there a basis for the previous lines of gloom?
Changing Credit - Pushed by Inflation, Loan Markets Switch toward Short Terms - Borrowers Devise Gimmicks To Attract Lenders Wary Of Suffering Big Losses.
Or, banks offer more dollar return than some foolish individual or industry can produce by investing into production. Banks do this by offering high-interest bearing certificates of deposits.
When reading the following quotation, think of all the jobs and cheap energy not being pursued. Think not only in the past tense, but in the future tense when the "wind-fall profits" from deregulating domestic petroleum prices really fill the oil companies' coffers.
Alton W. Whitehouse Jr., chairman and chief executive officer [SOHIO], said in an interview that since interest rates began their upward spiral, the pressure on this cash-rich company to spend some of its funds on energy development or acquisitions has eased. The money is proving quite productive right where it is: in short-term, high-yield investments.
This quotation should prompt criticism from almost everyone, including the naive or blissful producer paying high energy prices ... if he has a job.
It should be obvious that the printing or production or private financial instruments--to be exchanged for the official public currency--can be as inflationary as Treasury Notes and Savings Bonds which finance corrupt or incompetent politicians. Actually, because bankers have more money going through their hands, their capacity to shift and destabilize production is much greater than politicians. Of course the politicians are supposed to prevent production disruption; they even passed a law in 1946 (i) to that effect: Congress and the President will maintain a healthy national economy.
The inflationary implication of all the things that a bank can destructively do with the pool money of small savers is obvious. Banks can and have counter-productively used their national role as currency clearinghouse reduce and recess rather than expand production, e.g., the acquisition loans to Seagrams and others. Who is hurt foremost by the bankers cash-starving production? The small saver who is naive or ignoble of how banks mischannel the savers' savings. Sadly, savers are forced to use the banks; the politicians have given the bankers a virtual monopoly on handling the official public currency.
Liquidity of Private Simple Currencies
Even without analyzing the currency nature of private scribbled-on paper products, one could read most any national newsweekly or business journal to learn that the sopps have a high degree of liquidity. Liquidity indicates ready convertibility into the official currency.
Liquid assets include currency, bank deposits, savings bonds, U.S. Treasury bills, certificates of deposit, money-market funds and other holdings.
This latter quotation provides an avenue for showing the extent of liquidity for certain private sopps, a liquidity so great that tremendous security devices against theft do not always work.
A smart crook can steal bearer paper right after a brokerage house does an inventory count, deal in it, and get the proceeds and it isn't even on a hot-list.
One of the previous points not only shows how liquid the private sopps are (as liquid as the official public currency) but a general and specific reason for why there will be no relief from inflation, especially sinflation. When a former President of the United States naively or blissfully participates in the financial institutions that are quite counter-productive, then the system of production is headed for the ropes--see chapter, "Stockflation: The Cheapening of a Capitalistic Tool in this book".
Ford's passive participation in the soppy firms which dilute production can be chastise. However, his passivity is not as bad as the advice and actions of the person elected to the Presidency in 1980. While lecturing on the political circuit in 1979, Ronald Reagan grossed $700,000 advising people to pursue liquidity, short-term deposits rather than long-term investments. True to his word, he converted most, if not all, of his investments into certificates of deposit--see "The Grand Liquidator" in the chapter "Stockflation: Prospect for More Production, Less Inflation." What would happen if every American followed his advice, acquired "financial hydrocephaly"? followed his advice? There would be no production except production of private scribbled-on paper products.
How blind was Ronald Reagan to the effects of private liquidity upon the value of the official public currency? Look who he appointed to police the Treasury Department: Donald T. Regan, the head of Merrill Lynch. Talk about letting a bull lose in the china shop!!! Consciously or unconsciously, Regan, Regan will, as Treasury Secretary, generate one of fastest decline in the product worth of dollars yet seen--see "The Grand Decapitalist" of the aforementioned chapter.
The inevitable inflation will not come from intentionally compromising the nation for personal gain, not totally. Rather, Reagan and Regan will destroy America in the fashion that any pair of necronomists would do, if suddenly given the powers of the Presidency. No necronomist distinguishes between the symbols of production and the real production itself. They all assume that if the symbols multiply so has or will the production system itself. Bull! When the people are without jobs and income, what will the Reagan/Regan pair probably say? "Let them cash a CD."
Money Rates: Private Sopps
A third way can be used by which to argue that there are private forms of currency that not only compete with the public currencies but cheapen the public currencies more often than not. The first argument was how they were easily convertible as the Treasury notes into dollars. The second argument, a restatement of the first, described how many private sopps have a high degree of liquidity. The third argument is simply acknowledging how the most bankers, financiers, and economists refer to a whole range of private scribbled-on paper products, namely, and quoting from the Wall Street Journal,
PRIME RATE: The charge by large U.S. money center commercial banks to their best business borrowers.
FEDERAL FUNDS: Reserves traded among commercial banks for overnight use in amounts of $1 million or more.
DISCOUNT RATE: The charge on loans to member commercial banks by the New York Federal Reserve Bank.
CALL MONEY: The charge on loans to brokers on stock exchange collateral.
COMMERCIAL PAPER: placed direct by General Motors Acceptance Corp.
COMMERCIAL PAPER: high-grade unsecured notes sold through dealers by major corporations in multiples of $1,000
CERTIFICATES OF DEPOSIT: Typical rates paid by major banks on new issues of negotiable C.D.'s usually on amounts of $1 million and more. The minimum is $100,000.
BANKERS ACCEPTANCES: Negotiable, bank-backed business credit instruments typically financing an import order.
EURODOLLARS: The rates paid on U.S. dollar deposits in banks in London, usually on amounts of $100,000 or more.
TREASURY BILLS: Short-term U.S. government bills
To those who say that the phrase "money rates" merely refers to how much money it costs to buy these sopps, the following basic quotation from the Encyclopedia Brittanica is offered for their edification. Money is
anything that is acceptable as a medium of exchange for goods and service or as a store of value for future use. Money may be made of paper, metal, or even of stone; whales' teeth, cattle, and cigarettes have also been used as money. In highly industrialized countries, money consists of bank notes, coins, and checking deposits.
The world's systems of production would be in better shape if all the necronomists went back to square one and started to relearn from simple sources like the encyclopedias available in most public libraries. But it is not in their personal financial interest to formulate a world devoid of high inflation and interest rates.
Official Currency Effects: Inflation and Counterfeit
Because of their liquidity, the private currencies inflate or deflate the value of the official public currency. The nature of the value change, as with the official common intermediate product, is how the private sopps are transacted. If the private sopps are used in a productive fashion, then product worth of both the public and private sopps will rise. If used destructively to facilitate counter-productive uses of human resources, the worth in will decline of both the public and the private sopps. If private sopps are counterfeited, not kept constant in production time worth, the effect on the official currency is the same as if it were counterfeited by legisflators or private criminals.
Can the Fed Control the Money Supply and Inflation?
In the chapter on public currencies--official and unofficial--it was argued that the Federal Reserve System cannot control either the money supply or inflation. The Fed does not properly reference the production within a system of production. The Fed acts as though there is only one common intermediate product, however, all products are to some degree an intermediate product by which producers can exchange their production time. Consequently, the Fed does not try to control the growth of the simple private sopps that can and do cause a cheapening of the official currency.
Evidence for how the simple private currencies affect the public currency is available in this quotation describing the great monetary experiment in England under Thatcher.
What is bedeviling the Thatcher government in particular is the stubborn growth of the broad money supply, M3, called a "wayward mistress" recently by John Biffen, chief secretary of the treasury ... M3 covers money in circulation plus bank deposits in sterling, including certificates of deposit.
The Fed under any monetary economist will never stop inflation. They do not realize that most inflation comes from shortages of production because the public and private currencies are used counter-productively.
What Production, What Products
Again the question is asked, "What production do we want." Do we want the production of symbols to boom while real production falls? Do we want people putting their production time into producing non-essential goods and services when record inflation plagues essential products? Since all monies and currencies are merely products, the problem is not monetary inflation but production reduction. Monetary inflation, as a whole and in specific products, indexes the decline of production. The actual growth of the official public money supply is minute compared to the growth and misdirection of the private scribbled-on paper products.
All Things Are Currency or Nothing Is a Currency.
Official designation and production of a product as a currency does not make the product the functional currency of a system of production. By now, it should be clear that there are many public and private currencies within a system of production; more are listed and analyzed for their inflationary content in the following chapters. All of them are products. Can they or could they be anything else than products of human production?
The products which are currently used as official or unofficial common intermediate products are the ones that best hold their production time content. Have the politicians and the economists established one product as
THE COMMON INTERMEDIATE PRODUCT
by which producers, who are far apart in time, can exchange their production time?
What happens when the elected or hired policy makers do not establish and maintain an official currency? A lot of time will be wasted within the production system. Individuals and industries will seek some product or production which will provide stability of their savings, of their excess disposable production time. A growing number will professionally pursue manipulation of the unnecessarily vast range of symbols for non-productive, inflationary returns. The standard of living suffers or regresses. The regression accelerates as naive people spring for new products touted as retaining their. product value better than any of the previous. Examples of the latter are Small Saver Certificates, Money Market Instruments, Currency Futures. All of them are instances of inflation on top of inflation, products which by their nature of transaction are guaranteed to recess the total production time within the system of production. As a result of the total reduction, each person has fewer new products in which to exchange any of his old retained products on the average. All products lose product value when an economy recesses, depresses, and collapses. Can it be any other way?
A main, if not the main, problem with people jumping from one product to another product in hopes of retaining or gaining buying power is how the basic question of production is ignored. Rather, than taking the time to wonder
what products do we want to have multiplying,
the productive individuals are constantly having to rely on products (sopps) handled, changed, and manipulated by bankers, financiers, and politicians. Instead of organizing and capitalizing products and production more personally beneficial, the producers have to constantly answer the following question
Which of the available sopps should I take a chance on:
The people in the non-soppy businesses are in the foremost losing battle. The increasing amounts of human resources devoted to new "currencies", both public and private, could be markedly increasing the value of the old currencies. Instead the existing currencies are devalued with each new soppy attempt to provide a stable value-holding product wastes human time and ingenuity. While the a non-soppy people will lose the battle against inflation first, the "sopphists" will find their ingenuous machinations a Pyrrhic victory.
a product, is a product, is a product,
even if the product's name is currency. The mere labeling of a product as being a currency will not a currency make. Only those products--public or private, official or unofficial--which maintain their current product worth can functionally claim to be that which they are by effect:
Is There a Better Way?
Clearly, a system of production needs financial centers to facilitate the exchange of symbols of production. However, the exchange of the symbols of production should be productive, not destructive, of more production. As this section shows, bankers are presently manipulating the symbols of production in counter-productive ways; this destructivity is leading to production shortages and sinflation.
Regardless of whether the bankers reform, the producers whose wealth and production is manipulated by the bankers, must ask themselves an important question:
Is there a cheaper way to get the banking service done?
Presently, the banking community consumes a certain percentage of the workhours each year in fulfilling the needed service of handling the nations' currency. If the producers can find other means to serve as saving institutions that are neither counter-productive or expensive as bankers, then the producers are wasting their time not taking their money out of checking, savings, and certificates of deposits.
|Link Label on this page||Uploaded||Webpage Title of Link file|
|(A) No Incomplete Links:|
|(B) No HTTP:// Links:|
|(C) No Dated Links: Annotated References: HTB|
|(D) No Templates:|
|(E) No Internal Links, Absolute (non-dated):|
|(F) Internal Links, Relative (non-dated and ignore lifehour credit links): SI,|
|>||#1 Homepage||071101||Timism: The Morality of More Time, aka, the periodic table of existence|
|(G) No Current Directory Links|
'Links From' Pages linking to this page: ( )No IndexDir ... Refs General ... !RefsRvu ... !Dir.nts) InfoLinks (05-22-2015@07:28) Linkstat:LinksFrom2Table
|Link In From||Uploaded||Webpage Title of Link In file|
|<||#1 BOOKSORT||n.a.||Future Upload of this file|
|<||#3 CHAPTERS||n.a.||Future Upload of this file|
|To Do List||Whole Scheme * Signup * Recruit * ISPs * Help * UPS * TTD? * BDC * Global Dying * MHC * Morality * 24in4 * Retiming|
|Navigate||ABCIndex * Image Bibs * IndexDir * Indexes * Rags * Reference Bibs * RefsMajor RefsYMD * Slideshows *|
|WebLinks||Timism.com * Timism.Net (F L) ... GlobalDying * Letters * Essays * MiniIndx * Writings|
|ManHeaven||Index * IndexDir * D2D * CO2 Sins * Forms * GOOHF * Ltrs * Oath * Index * Summary Tipping Pts * TTD-MH|
|Armadas||FlotillasLinks 6576, flObj, flObj$|
|Are You:||Ill-Employed ... WorkHog ... Rioter ... Moral ... Immigrant ... Habitual Politician ... Medical Staff ... Military ... ManHell Letters|
|Survival||SurfWisely * Timism vs. Habituals * Contract * Credo * Jack and Jill * Hope * What We Need * Leave Me Alone I hate you ... Ttd4U ... Modus Operandi|
|Tables||temp 091226-0724 ntvd error|