Currency And Inflation

So what is inflation? Where does it come from? What does it actually do?

Whether it’s paper currency (fiat currency, that isn’t directly backed by anything of value), digital or even physical clams, it’s what we use for trading with other people when the economy is too big to do direct trades of I have what you want and you have what I want. It also allows us to store earnings for later spending or investment. If the clamshells are pretty enough, you can even wear them as is. Which, incidentally, works for Gold and Silver too, but that’s a topic for a different post.

So let’s set up a simple example. You have 100 people with an average of $100 each that have, on average, $95 worth of stuff (physical goods, services, etc) to sell. That works out pretty well. Everyone can pretty much get what they want with something left over for saving or investing in increased future productivity. But two of the people, let’s call them the Freds, realize that they can set up a printing press and get more money to spend without having to actually work for it or take it directly from the other 98. So off they go, and before you know it they’ve printed an additional $1000 worth of bills that you can’t tell from the original. Now they get to go on a buying spree.

Of course the amount of stuff available for sale hasn’t increased, or at least not by nearly as much as the money supply. Next thing you know people can’t get what they want because the Freds already bought it with all of their “extra” inflationary money. So the next time around, they realize if they want something they’re going to have to be willing to pay more for it. The prices start to go up. And up. Those who sell for more have more money to buy with though, so they’re not too bad off. Eventually it all settles out to where the prices and dollars available equal back out. Ah, but those Freds still have their printing presses.

Now, let’s look at something interesting. On first glance, it seems that it all comes out in the wash and nothing really changes. But that’s not what happens in reality because of the time it takes for that money to work it’s way through.  Who really benefits the most from the inflated money supply? The Freds, of course. They got to do their buying at the pre-inflation prices. The people they bought from (usually big business) get the extra money when the prices haven’t gone up nearly as much as they eventually will. The big losers? The average Joe that has to pay the inflated prices long before the extra money cycles through the economy enough times to get to him. So the poor get poorer and the rich get richer.

 

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Politicians – Yuck!!!

John Stossel, in today’s column, reminded me of a quote from economist Walter Williams that I particularly resonated with so I thought I’d share it today …

“I respect ordinary thieves more than I respect politicians. Ordinary thieves take my money without pretense. (They don’t) insult my intelligence by proclaiming that they’ll use the money that they steal from me to make my life better.”

So true 🙂

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Do Electric Cars Really Help The Environment?

Like many other environmental saviors, the electric car is supposed to be a great way to help produce less CO2 and cause less pollution. However the facts of the matter turn out to be quite different when you look at the total lifetime costs in both CO2 and air pollution.

In this video by Bjorn Lomborg, he looks at all the parts that aren’t obvious when looking at only what comes out of the tailpipe and discovers that they really don’t help that much and may even cost more lives than they save.

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Are Electric Cars Really Green?

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In A State Of Nature

John Locke was one of the most influential political philosophers that the Founders drew from. In particular, his Second Treatise On Government. His starting place was from what he called being in a “State of Nature.” Here’s my short form take on it.

In a state of nature, i.e. no government, an individual human being by himself has the absolute freedom to do whatever he wants and has no choice but to accept the consequences, for better or worse, of doing so. But people are pretty weak, compared to other animals. Our only real survival tool is using what’s between our ears.

The primary goal of any individual is to survive, having the absolute natural right to life. Survival depends on taking the actions needed to do so, the absolute natural right to liberty. It also depends on keeping the results of your efforts; food, shelter, tools, clothing, territory and so on. So people have an absolute natural right to defend, with deadly force if needed, themselves and their property (which is what the term of art “pursuit of happiness” means in expanded form to include intangibles).

Now, what happens when other people come into the picture? Working and interacting with other people greatly increases your odds of survival. People can spend some of their time doing what they’re best at or prefer to do and trade that with others who do what you don’t. We can choose, if we see it’s in our best interests to do so, to combine our efforts to accomplish what no one person could do by themselves. But none of this changes the basic absolute individual natural rights.

We have some weaknesses too. We don’t know everything and often make mistakes. If they aren’t fatal, we need to learn from them and go on. All too often, we act on emotion rather than reason. Again, if those actions aren’t fatal we need to learn from them and go on.

But when other people are around, we need to find a way to keep the consequences of acting on those weaknesses from outweighing the benefits of interacting with each other.

If someone takes what you’ve spent time and effort on making or trading for, you’re angry, very angry. If you think you know who did it your normal reaction is to try and get it back and punish the person who did it so badly that they’re never going to do it again.

But what if you’re wrong and it was someone else? What if the punishment you would dole out based on your emotional reaction is way too harsh for the actual damage done? Now we have the need for an external organization that equally protects the rights of all parties to the best of its ability. It puts reason and deliberation and judgement back into the picture.

At least in theory, the people who are judging don’t have an emotional bias. They have the time to actually look at the evidence and decide if the person accused really is the person who did it. They can weigh the harm done against the range of possible penalties and decides what seems sufficient. They can require restitution (which is something we do too little of) to the person harmed.

There is one caveat in all of this which is that the organization has to have the authority to use force, deadly force if needed, to enact its decision. It is exactly the same force that an individual has an absolute natural right to use when in a state of nature to defend himself and his property that is delegated to the government and is the derived source of all proper government powers.

Some forms of government do do a much better job of protecting the absolute natural rights of individuals than others. If the current form isn’t getting the job done, in the judgement of the people who are subject to it, they can withdraw their authorization and set up a new organization (government) that they believe will work better at maximising the benefits of living with others while minimizing the costs in terms of what seems most important to them.

Take all this and then put it into the context of the Declaration of Independence and see if it sounds familiar.

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Rights And The Declaration Of Independence

Sorry for not being here lately. Sometimes earning money to pay the bills has to take precedence. This is an expanded version of a comment I made on PBS at (http://www.pbs.org/newshour/bb/finding-empowerment-words-founding-fathers/). Fascinating discussion of how one little change in punctuation makes the Declaration of Independence even stronger.

As normally written:

Declaration of Independence“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”

With the one little change:

Declaration of Independence“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness, that to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, that whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”
Changing the period to a comma makes the preface “We hold these truths to be self evident” apply to all five following phrases. It’s not really clear on the original text and punctuation rules weren’t as strict then as now. Read it a few times.
On to my comment:

The setting for the word “equal” here is in a political document. Political equality is equality under the law and legislation (not always the same thing).

Natural rights are concepts arising from the nature of members of our species, regardless of race, sex, religion or any other division you care to make except one: That you are capable of understanding that the rights you claim are equal to the rights of every other person and that you refrain from actions that infringe on the equal rights of others.

Natural rights are completely and solely negatives on the actions of others. They do not require anyone else to take any actions, only that they refrain from infringing on your rights.

Procedural rights, such as voting or trial by jury aren’t strictly necessary by nature, but have been found to be good methods within our general societal structure for handling how those rights are defined in general and protected in specific cases.

Children, the insane or those disabled in any other way that prevents them from being capable of understanding the concept of rights are not regarded as fully equal under the law. There are actions that they may not be free to take and there are consequences they would normally face as a result of their actions that they may be shielded from.

Almost every other political use of the word “rights” is actually an infringement on the natural rights of some people for the benefit of other people. Jefferson and the other Founders seem to have been very aware of those differences and were careful where they used the word “rights.”

Liberty and freedom are liberty and freedom to act without government permission, or indeed without anyone’s permission, as long as those actions do not infringe on the equal rights of others. There are no guarantees of outcome, only the freedom to “pursue” what you consider to be what is needed for your happiness. There is no guarantee that other individuals will treat you justly, whatever you consider that justice to consist of. Only the government must be restrained because only the government is authorised to use force and only in response, aside from the immediate self defense right of individuals.

Those shackles on government have been rusting away for a long time and they’re getting pretty loose.

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Welcome

For all the uber intellectualism of the next two paragraphs, my political philosophy can be boiled down to the following in plain English: I want the government out of my bedroom and out of my billfold. If I’m not hurting someone else, then leave me the &$&!%* alone (and hurt feelings don’t count).

As knights of old threw down their gauntlets to challenge another, so do I now throw my virtual gauntlet down to challenge the mindset of those who think people are merely interchangeable biological units to be lead and controlled and otherwise shepherded from cradle to grave. I reject the notion that we are but children, to be taken care of by our anointed guardians, those who think they know better than we do what is good for us and what we should or should not want or do.

As a free human being I reclaim the right to make my own decisions and accept that I must also abide by the consequences thereof, for better or worse. I renounce the use of force or fraud in motivating the actions of others.

I’m socially liberal and economically conservative. I’m a champion for the smallest minority of all … the individual. I really don’t care if you’re black, white, red, yellow, blue or green with pink polka dots, whether rich or poor, straight or gay, an Atheist, a Buddhist or a fundamentalist Christian, male or female, you have the same rights I do; no more and no less.

I don’t want a bunch of flame wars here and I may delete comments for that reason alone. Political correctness pisses me off almost as much. If all you’re doing is repeating the talking points of the day, don’t waste our time. If you disagree with something, please say so but then say why. I’ve been known to change my mind on more than one occasion if given good enough reasons for doing so. I hope you have too.

If you have more to say than what a comment allows, submit a post of your own and if it’s well written and well thought out I may publish it here. If you have your own blog and are looking for more links, guest posting is a good method.

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Thoughts For The Day

Obama took an unplanned trip to Afghanistan for …? Did he do anything there other than to try to make news? How many millions, if not tens of millions of dollars did it cost to make the morale boosting trip? Who was he trying to boost? The troops or himself and therefore his party?

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Interesting article about immigrant citizens vs native born Americans and how they do in life. As a general rule, the naturalized Americans do better and that only makes sense. They’ve already self-selected as wanting more for themselves and being willing to do what it takes by leaving their birth countries and coming here.

What prompted the note though was this short passage: “Here we [native born Americans] think freedom means whatever I wanna do, whatever I wanna say — that is freedom.” As long what you do doesn’t interfere with someone else’s equal right to the same, that’s true. But there’s the other side of it as well. Freedom means you have to accept responsibility for the consequences for your actions, for good or bad.

If you screw up then, while it’s ok to ask for help, you don’t have the right to demand it. Especially not at the end of a gun, whether you wield it yourself or second hand through a government’s.

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What pushes people into unemployment is when their gross pay and employment costs are more than the company makes from their work. Plus there’s always the group that simply expect a paycheck just for showing up, whether they actually do anything or not.

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From The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy, Thomas Sowell

The call for more “public service” is then a call for more people to work in jobs not representing the preferences of the public, as revealed through the marketplace, but the preferences of third parties enforced through government and paid for by the power of taxation.  Sometimes work for foundations and other nonprofit organizations is also included in “public service.”  What is crucial is that public service not be service defined by the public itself through its choices of how to spend its own money in market transactions, but defined for them by third-party elites.

Thanks for the reminder from Don Boudreaux

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For all the talk about whatever the particulars are of a given killer in these attacks, they all have one thing in common. They are a danse macabre with their very senselessness being the point, being an attack against society in general. A society that didn’t give them what they thought they deserved to get, just by existing.

The revenge is completed by the media and others who, with all the ongoing questioning of why this particular person did this horrific crime and how, if his life had been different it wouldn’t have happened, plant the fear and guilt in everyday people that the killer wanted them to feel. Thus proving to the next killer that he really CAN get the response that he dreams of.

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