A Brief History Of Money

Money is a commodity that has value in and of itself. It doesn't matter if it's precious metal, shells, or even grain (although that doesn't stand the test of time - it only keeps so long). The essential characteristic of money lies in that convertibility. That it is of value to everyone, everywhere that you may want to trade with.

Currency began as simply a more convenient way to exchange goods. Instead of having to cart around all kinds of sizes and weights of money, the commodity itself was stored at a trusted warehouse (or, in most cases, a vault) and the paper was a claim payable to anyone that showed up with it at that place. As the owner of that money you paid them for this service. That's how the original banks made their profit - simply a charge for services rendered.

The more widely trusted the holder, the wider the geographic region that would accept those claims in payment. If you needed to go wider afield, you had to take care of the shipment of the actual money and banks also arranged that with trusted couriers.

Internationally gold and, to a lesser amount silver, became the standard. Gold is valued everywhere in and of itself and has a high value per weight. It is scarce, it is durable and easily divisible. All countries that had a paper currency measured it's value in terms of the amount of gold a denomination was exchangeable for. Country's currency exchange was still actually gold exchange as you could go to the central bank and actually get the gold any time you wanted.

A few hundred years ago, bankers realized that it never happened (almost never - as long as the bank remained trusted) that everyone wanted the actual gold at any point in time. That meant they could loan out notes - more notes than they had actual, physical gold to back. That was where fractional reserve banking started. It started out small. Just a little more than they actually had. After all, you needed to make sure people believed that anyone and everyone could actually get their gold whenever they wanted or the whole scheme would fall apart. In this way, the banks created money out of thin air. They have 100 tons of gold in their vaults, but 200 tons worth of notes in circulation.

The danger was that if people thought their savings were at risk, they would all go to pull it out ... a "run" on the bank. Generally bigger banks would bail out smaller ones if it they thought is was financially sound, but, for example, someone started a rumor that got out of hand. Otherwise the whole scheme could go kaput. As long as it remained private, banking crises were usually localized and/or of short duration.

Then governments started sticking their fingers in the pie. Previously they only minted metal coins. When the devalued their coinage, they alloyed it. The more they alloy they mixed in, the less it was worth. Essentially the same process as inflation but far easier for the average person to understand.

But governments quickly learned to love central banks. Why let private business get all the rewards? It lets them play with the money supply and rake some of it off the top without it being very noticeable, whether that's just a little alloy mixed in or a small increase in the number of currency notes on their reserves. Then, under the guise of "protecting" their citizens, they took complete control.

Central banks now set the amount of reserves banks were required to keep, unconstrained by any business considerations. They would act as the lender of last resort, not other banks who actually risked their own depositors' money when they bailed another bank out. They thought they could create perpetual prosperity by continually expanding the "money" supply, loaning it out left and right. That conceit, along with the trade wars of the late 20's after the war triggered the worldwide Great Depression. In the US they then made it worse by over-correcting in the other direction and drastically reducing the money supply instead of their proclaimed role of being the lender of last resort to shore troubled banks up. The other banks had been told they shouldn't do that any more, the government would take care of it and they should leave it all up to them.

Then things went from bad to worse.

In 1933, FDR stopped allowing currency to be convertible into gold inside the US as a measure to fight the depression, but it was still convertible internationally at a fixed $35/oz. That was a significant increase over the prevailing rate of about $20.67/oz on the open market, instantly making the US dollar "worth" more as far as current accounts went. The idea was that this boost would stop the deflation that was occurring because of all the currency the FED was pulling out of the market and it did do that, at least for a time. Over a few years the prices adjusted and levelled back out at the same amount of work got you the same goods as before.

Then towards the end of WWII, with most of the industrialized world in ruins, one of the first issues the nascent UN dealt with was the value of currencies. As the only major untouched industrial base, and with the US preparing to bankroll a lot of the rebuilding, a meeting was held in Bretton Woods, NH in 1944. At that meeting the allied powers decided to peg everything to the dollar instead of gold itself. Remember that gold was still 100% convertible into gold, which is where the saying "a dollar is as good as gold" came from. So at that point we still were dealing with worldwide currency that could be redeemed for gold at any time. That meant that for most of the world you no longer had to worry about transferring the physical gold, just the currency.

Then came the 60's. The Great Society and the Vietnam War. The US was deficit spending at levels never seen before in what was still, essentially, peacetime. Other countries started to wonder if we truly had enough gold to cover all the dollars that were being spent. Some of them started grabbing the gold - the actual physical gold, which, under Bretton Woods they always had the right to do.

August 15, 1971. Nixon signed a "temporary" executive order ending the ability for *anyone* to redeem dollars for the actual gold. That's when we really went off the gold standard. That's when the dollar became a fiat currency, a piece of paper backed by nothing. The subsequent wage and price freezes, the OPEC refusal to sell oil just for dollars causing the energy crisis, as well as the high inflation and interest rates of the 70's were all results of that as well as the regular, and much bigger than previously, economic roller coaster the world has been on ever since.

While most currencies are still "priced" in terms of dollars, nothing is fixed any more. Everything floats. There has been talk, and not just talk, but serious proposals to end the centrality of the dollar and replace it with a "basket" of several countries' currencies. That way the world isn't tied so closely to the US economy and what happens here doesn't affect everyone else as quickly and completely as it has since '44.

When that happens, and I expect it to within the next few years, the dollar won't be the almighty paper any more. It won't be "as good as" anything. Treasury bonds will drop in value like a rock. We won't be able to get all the foreign financing for our government debts (and remember, those debts are for *government* spending, not for trade purposes, no matter how many times protectionists try to pass it off as such). *That* is when we start learning the lesson the hard way that the dollar is actually *only* worth the goods it can be exchanged for.

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Guess What? Men And Women Are Different!

I've always been the girl and then woman who did and wanted to do things that we weren't supposed to do. I've loved science and mechanics my whole life. Never had a Barbie doll and my favorite present ever was the optics kit I got one year for a Christmas present. The girl who wanted to take shop (but wasn't allowed), who wanted to join the rocketry club (wasn't allowed to do that either) and learn to run the big carbon arc 35mm projector (that I got - I had to do all the secretarial work to get them to agree, but I still got to do it). I had to get to the mailbox first so I could get the pamphlets I sent for from the AEC (the forerunner to today's NRC) because Mom would throw them out if she found them.

Later I had no problem doing roofing (although I couldn't get on some jobs because the men thought it was bad luck and wouldn't go up if I was on the crew) or other casual labor. I could unload up to 200 pounds of dog food bags at a time. I learned to drive an 18 wheeler. I was in the second group of women ever hired by Western Electric as installers. Then when I went back to school I made my own energy engineering degree (since they weren't available then) by doing a concurrent double major in electrical and mechanical engineering. It wasn't unusual for me to be the only woman in the class.

But even with all that background doing what was then rare for women, I've always been PO'ed when I'd hear the later feminists say that there's no difference between men and women. There are differences. Innate differences. We can go beyond them, but that doesn't mean they don't exist.

When a woman is pregnant, our balance is all off. When a woman has a child at suckle it's hard to keep a baby quiet in order to hunt. Women are more dependant on others at various times for pure survival. Some of those traits have been genetically selected for in terms of species survival.

None of that has anything to do with the abilities of any particular woman at any given time outside of dealing with babies, but the fact is, we do have different strengths and weaknesses.

A strong woman can be stronger than most men, but the strongest man is always going to be stronger than the strongest woman. Our center of balance is in a different region of our bodies. That's why women playing basketball always seem a bit awkward. We don't move the same and basketball happens to be a sport where those differences become noticeable. Men are better runners, especially sprints. But for long slow travel, pick a woman. We can keep going longer. Our brains are even wired differently. The brain centers associated with words, emotions, and actions get activated in different orders. We have a higher pain tolerance ... maybe to help us get through delivery. I was in labor for 38 hours. And I can tell you that it HURTS!

Acknowledging those facts isn't misogynistic, in and of itself. Nor is it sexist. We are not blank slates at birth.

No matter how hard the SJWs try to change it, most girls still prefer dolls and most boys still prefer trucks.

The fact that women are assumed to be the ones who should, by default, keep and raise the children is rooted in biology, but biology hasn't caught up with today's technology that makes anything outside of those last few months of pregnancy almost irrelevant to actual child rearing. They learn fast enough that it doesn't matter who's holding the bottle (unless you're breast feeding), they get fed.

Social changes that broad and basic, especially when there are inherent genetic tendencies involved, take a long time to work their way through. It's not just a matter of writing a piece of legislation and expecting everything to change overnight or even in just a couple of years.

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Climate Change – The Actual Science

The climate change debate really isn't about the basic science of greenhouse gases. Just like physical actions can cause a mechanical system to vibrate, the frequencies that the molecular bonds of CO₂ can absorb and vibrate to are in the infrared spectrum, what we measure as heat. No scientist argues that.

All else being held equal, under laboratory conditions, each doubling of the CO₂ concentration in a gaseous mix under infrared light spectrum (the part of the spectrum that is felt as heat) will increase the temperature of that gaseous mix by about 1.1°C (which is about 2°F). That would mean that in order to go up by that 1.1°C the concentration would have to go from the approximately 280 ppm (parts per million) of the 1800s to 560 ppm. To go up another 1.1°C we would have to double that, to 1120 ppm. For a third 1.1°C increase it would take going up to 2240 ppm. We're currently at 400 ppm, less than halfway to even a first doubling.

The disagreement is actually about the multipliers that fuel the "catastrophic" story line. Because all else in the chaotic system that is a worldwide climate system is not held equal. Any initial change creates secondary changes. The question is what those secondary changes are and do they, on balance, tend to increase the temperature further or to reduce the overall temperature changes and by how much.

The catastrophe predictors use a multiplier as much as 6 or more, meaning that each doubling would make the temperature go up by 6.6°C. Even the IPCC (The UN's Intergovernmental Panel on Climate Change) has reduced the low end of their expected targets to a multiplier of only 1.5. However, actual readings of temperature suggest an even lower multiplier because what's being measured is lower than 95%+ of the all various computer models' projections.

While there is consensus (and even if there weren't it wouldn't matter - science is what it is and scientists make mistakes regularly) on the basic science of greenhouse gases, there is *no* consensus on the magnitude of the feedback mechanisms or even what all the feedbacks are. We're continually finding new ones. We're also continually finding new cycles and other things that affect the climate in general, everything from the sun to cosmic rays, ocean currents and many others that also come into play in the net climate at any given time.

We can't even explain much of the known climatic changes in the past. It's the height of hubris to say we know what it will be 100 years from now. We can't even predict the totally human created stock market using computers. How on Earth (pun intended) can we predict the far more chaotic changes in a global climate?

But by the same token, to deny basic physics isn't good either. Yes, CO₂ does affect atmospheric temperature. But the net human and natural consequences of those changes aren't known. We know it improves some things, particularly plant growth and the fact that more people die from cold related illnesses and injuries than heat related. Others it may make worse such as the rate of sea level rise (the sea level has been rising since the last ice age ended - it's just somewhat faster now).

In the even longer range, we may actually *want* to do everything we can to increase the average temperature as we approach the end of this interglacial period. We're already past the time period that some of them have lasted before cooling to a new ice age again. 

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In Defense Of Globalization

Different countries have different comparative economic advantages in making or creating different goods. Everyone benefits from getting the goods and services you need or want at the lowest cost and that’s what globalization is all about.

A country doesn’t benefit from blocking trade and making everything within its borders any more than a single household would benefit from making everything they have off their own land. In both cases, trying to make for yourself what others can make cheaper results in lower standards of living, whereas if you trade some of what you do best for some of what someone else does best, then you both win.

It’s basic economics.

That doesn’t mean no one ever loses for a period in time, but that happens all the time anyway. Manufacturing of a given item in a different location has the same effect on jobs as does a new technology for making it easier, cheaper or making a less expensive substitute that fills the same need. It frees up manpower (and mindpower) to use in more productive activities.

I don’t think much of anyone wants to go back to a culture where it took 90+% of the population living on farms and hunting to feed everyone. I don’t think anyone wants to go back to when horsepower was literally that … actual horses. I don’t think anyone wants to go back to a time when thread or yarn was made by hand and then woven by hand into cloth which was then sewn by hand to make clothes.

Yet each of those changes, and millions more like them, resulted in loss of jobs and sometimes entire industries. Yet the overall net benefit is exactly the same as when jobs simply move to a new place where it’s cheaper to make them.

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A Living Wage – Why Those Evil, Greedy Corporations Just Won’t Pay It

I get so tired of hearing this complaint.

A Living Wage?

My first question is, just what defines a living wage? Considering there are hundreds of millions of people living (barely surviving, but living) on less than $1 a day, I’d say just about any wage you earn in any developed country is a living wage.

Then the question becomes then what standard of living constitutes a “living wage” here? Let’s boost it to enough food to not be malnourished, a roof over your head and clothes to wear to fit the climate. If you’re willing to do what you need to do, even a minimal part time job covers that with money left over.

What’s next? A car? A private apartment? A cell phone? Air conditioning? Cable? Video games? Name brand sneakers? Who decides? Heck, I’ve only got three of those.

Oh, those Greedy Corporations

The next part is if a particular business is even able to pay what someone considers to be a living wage. While a business can pay people significantly less than they’re worth for a short while, especially in a tight job market, but what they can’t do, ever, is to keep paying people more than they are worth. An employee has to contribute more to the bottom line of a business than the total costs of hiring them.

If an employee makes the company $10 for every hour he works and you raise the minimum wage to $15 an hour, guess what … he’s out of a job, no matter how much he needs it. A business can’t afford it to be any other way and still stay in business. That’s not being a greedy corporation, it a business necessity.
If you increase the costs of having an employee by adding in mandates of any kind, same thing. An employee HAS to be worth more than they cost, whether that cost shows up directly on a paycheck or not.

And It Keeps Getting Worse

That’s what ALL externally imposed costs on employers do. They price people out of jobs by making it more expensive to hire them. They don’t allow a person to work cut rate while learning how to do a job, so they never get to learn what they need to get a better job, if they can get one at all. It drives people out of business or they never start one to begin with. That means even fewer jobs.

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The Confederate Constitution Actually Had A Lot Going For It

Everyone knows that the Confederacy was that evil part of the country that saw no problem with owning people. But it wasn't all bad, especially when it came to their Constitution.

If you read the Confederate Constitution, although most of it is copied verbatim, there are several areas that differ significantly from ours. Slavery, of course, was made legal subject to the same limitations on importation of any new slaves. But a separation of State and Economy got the most new changes and limitations on the government.

It explicitly banned their federal government from favoring any branch of industry in any way via duties or taxes on imports.

It required a 2/3 vote for approval of federal appropriations outside of a limited list of purposes as well as for taxes or duties on exports.

It required appropriations to have specific line item amounts for specific purposes and banned any additional payments to anyone after the initial contract had been made or services rendered.

It gave the President a line item veto on expenditures.

It most forcefully banned Congress from appropriating any money for the facilitation of commerce aside from a very few specific cases involving water transportations such as buoys, lighthouses and dredging, and, even in those, duties were to be laid on the navigation that got those improvements until they were paid for.

It made the Post Office pay for itself after the first two years.

It also made a Constitutional Convention easier to call for, requiring only three states instead of our 3/4. It limited the number of people any one Representative in the House could represent to 50,000. It gave the President the power to remove any department head or anyone in the diplomatic service. It also incorporated the Bill of Rights almost verbatim into the Constitution itself.

One of my favorites was getting rid of general omnibus bills: "Every law, or resolution having the force of law, shall relate to but one subject, and that shall be expressed in the title."

Except, of course, for the issue of slavery, I approve of almost all of them. They were almost all additional and explicit limitations on the power of the government in areas that our Constitution over the previous 70 years was found to be lacking in actual practice. Of all of the changes, only the slavery one was changed in ours.

Lincoln's issue, the succession itself, has never been addressed. There never was any ban on it. In fact Texas, which used to be an independent nation on its own, explicitly wrote into the agreement when it joined the US that it reserved the right to secede.

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Market Insanity

Speculative bubbles have been around for a long time. Whether it's a single item or a broad generality like real estate, they have the seeming power to make your wildest dreams come true or to destroy entire economies.

The Dutch Tulip Mania was the first recorded speculative bubble back in the late 1600's. Tulips were highly prized flowers and the bulbs weren't exactly cheap. But a group of investors saw them as a way to make money - big money. They started bidding prices up and up and tempting more people into the bubble, until a single bulb could be "worth" several years of actual wages.
 
Then one day a few people finally said "This is crazy. They're only flowers. Beautiful flowers, but just flowers." Over a matter of a few weeks the prices plummeted and lost 95+% of their "value" and wiped out the entire life savings of a lot of very foolish people.

Bubbles have been blowing up on a regular basis for quite a while now. The dot coms and real estate are only the two most recent to pop.

But they're back. All those trillions of dollars the FED has been pumping into the economy since 2008 haven't been invested in actual productive pursuits, but into speculative investments. Propping up companies that should have gone under (bail outs anyone?). Starting of companies that should never have been started (think Solyndra). Projects that never got off the ground. Real estate again. Dot com again. Multi billion dollar buyouts. Lusting after the Next Big Thing.

I don't expect a pop in the next few months, but I'd be surprised if it was more than a couple of years away and this one could be a lot bigger than the last. A whole lot of paper wealth is going to disappear and there's even more dominos lined up to fall over this time. Time to be thinking about battening down your financial hatches.

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When The Executive Orders

One of the most common methods Obama has used to make things go his way are through Executive Orders. It's also one of the scariest things that Trump is going to have at hand when he's sworn in. But where did the President get that power anyway?

The origins of modern Executive Orders lie in the War Powers Act of 1917 during WWI. That enabling legislation gave the president the *temporary* "emergency" powers to immediately enact laws regulating trade, economy, and other aspects of policy as they pertained to enemies of America. But they explicitly *excluded* that power from being able to affect Americans directly, but those powers were never rescinded after the end of the war.

Then, under FDR in 1933, the War Powers act was amended to allow those same, essentially legislative making power, to operate directly on Americans.

That is the legislation behind the fact that Executive Orders (and later judged to include Memoranda and Directives) are treated as law. It has nothing to do with the Constitution, as the Constitution says "*ALL* legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives."

The power granted to the Executive branch was only to carry out that legislation, not make it, as well as deal with foreign affairs (although without Senate consent, no treaties are valid) and as Commander in Chief of the military, to grant Reprieves and Pardons, and to make appointments to the courts, ambassadors, ministers, consuls, etc. when consented to by the Senate.

As executive types of power are the most common type of overweening authoritarian actions, it was intentionally made very weak and dependant on the Legislative and overridable by the Judicial branches. It was NEVER intended to be authorized to act on its own domestically without explicit legislative authorization.

It's one thing to lay out how a specific piece of legislation is to be enforced, but it's an entirely different thing to *create* regulation with the force of law out of whole cloth.

Past infractions do not justify present or future ones. Although forgiven in retrospect as it having been done for a "good" cause, much of what Lincoln did during the Civil War was outright unconstitutional. For that matter, so was the Louisiana Purchase, as it was presented for payment as a fait accompli, and several other significant actions taken by presidents essentially on their own.

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The Well-Regulated Definition

The phrase “Well-Regulated” is so long out of use that dictionaries no longer cover it as a phrase. Since the word “regulated,” in common (non-scientific) usage requires an external regulator, many people assume that a well regulated militia requires an outside regulator, i.e. the government.

However there are examples of it in usage at the time which gives us, in a way, an even better definition.

  • If a liberal Education has formed in us well-regulated Appetites and worthy Inclinations.
  • A remissness for which I am sure every well-regulated person will blame the Mayor.
  • It appeared to her well-regulated mind, like a clandestine proceeding.
  • The advantage of living a well-regulated life was never better illustrated than in the person of his brother Andrew. — “The Prodigal Father” by J. Storer Clouston
  • He has led a well-regulated life, but his virtues are narrow and petty. — “Prescott of Saskatchewan” by Harold Bindloss
  • Lord Byron’s mind was as well regulated as it was powerful. — “My Recollections of Lord Byron” by Teresa Guiccioli
  • And the one I ran across while reading Mary Wollstonecraft’s “A Vindication Of The Rights Of Women” — … the harmonious propriety that attunes the passions of a well-regulated mind, that I blush …

It referred to something being in proper working order or was associated with self control. Something that was well-regulated was functioning as expected. Government control of the people’s arms was not only NOT what was meant by the phrase in the 2nd amendment, it was the opposite. Arms under the self control of the militia (which was the entire body of the populace capable of bearing arms) is what was necessary to keep government under control.

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Trade Wars

Do imports really hurt the American Economy?
95% of the people used to work on farms. Now it's 2%. Yes, there were periods of wrenching dislocations and plenty of individuals who were hurt. But does anyone really think it would be best to go back to 95% of the population spending their days in strenuous back breaking labor in the fields?
 
Most of the manufacturing jobs we lost were due to mechanization and improving productivity, not lost to other countries, for all of the political pronouncements to the contrary. The unions had a heyday in the aftermath of WWII when most of the world's manufacturing had been destroyed - except ours. But that couldn't be expected to last. We even paid to help everyone else rebuild theirs while ours started to rust away.
 
It's always easy to point to the individual people hurt by a process ... they're always there. But what do the poor do when prices for essentials start skyrocketing because of punative tariff taxes. How much steel does it take to make a car, a refrigerator or a washing machine. Those prices will be going up if either Trump or Clinton has their way. Prices go up, fewer bought, lower production and lost jobs. They just aren't as obvious or concentrated as the ones we can directly point to.
 
Neither one of the candidates have been honest with us. They both pandered to fears and scare tactics and outright lies. In the end the election isn't about who most people wanted in the Oval Office, it's who they fear the most moving in.

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