On a blog called Anarchist Writers someone, apparently an anarchist writer, with the pseudonym "afaq" (which seems to stand for "anarchist frequently asked questions"--I guess anarchist writers lack the guts to use their own names) displays some anarchistic ignorance. Afaq, an anarchist* who believes that state violence should suppress private economic activity, writes:
"A 100% reserve system is not a reformed or true banking system. It is the abolition of the banking system. Without fractional reserves, banks cannot make any loans of any kind as they would not be in a position to give their clients their savings if they have made loans. Only someone completely ignorant of a real capitalist economy could make such a suggestion and, unsurprisingly, this position is held by members of the "Austrian" school (particularly its minimum state wing)."
Despite afaq's crude name calling, afaq appears not to have heard of savings banks. Perhaps a reading of Murray Rothbard's Mystery of Banking would inform this confused soul of the difference between full and fractional reserve banking, and of the evolution of fractional reserve banking after the beginnings of capitalism through goldsmiths' fraudulent issuance of notes on non-existent gold. Moreover, several states illegalized fractional reserve banking in the nineteenth century, and capitalism did not suffer.
Only someone ignorant of how banking works and of economic history would be unaware that fractional reserve banking is not full reserve banking. Fractional reserve banking exists where loans are made without reserves, as is done by the US banking system, where loans are 2 to 10 or more times greater than the monetary base or reserves. Eliminating fractional reserve banking means requiring banks to have reserves in order to lend them, not preventing them from lending reserves. Any student of elementary economics learns this, but it is clearly beyond afaq's knowledge, which does not prevent afaq from expounding pointlessly and confusedly on numerous topics about which afaq is ignorant.
It is characteristic of the left to call others ignorant when they themselves lack the most elementary familiarity with a subject.
*Characteristically, the left adopts nomenclature that is opposite to its meaning. "Progressives" advocate ideas that are four centuries old and were characteristic of mercantilists. Their ideas are guaranteed to stop progress. "Radicals" advocate communist ideas that are appropriate to feudalism, were well known two thousand years ago, and whose adoption would but re-enforce the root of current big government corruption. "Liberals" advocate anti-liberalism and statism. And of course, "anarchists" like afaq advocate governmental suppression of freedom.
Tuesday, March 10, 2009
Sunday, March 8, 2009
James Dale Davidson's "The Plague of the Black Debt"
I am cleaning out my New York City apartment in anticipation of a final move to West Shokan, NY. The biggest problem is all my books. I had to discard a number of old books, including many of no-longer-used labor relations books from my doctoral program. I came across a tiny soft cover volume published in 1993 by James Dale Davison, founder of the National Taxpayers' Union. I don't remember where I got it. Here are some excerpts:
"The Fed has been pursuing a loose money policy for three years, and the money supply is still falling like a rock. The Fed has moved heaven and earth to get the money supply up, and it's not working...the markets are confused because interest rates are going down, and that is always good for the stock market. At least that's what people think."
Davidson points out that monetary expansion does not work if banks are failing or contracting. He notes that in the Great Depression the Fed reduced interest rates but the money supply still contracted because of bank failures. The process did not occur in the early '90s as Davidson feared, but is what many fear is happening now.
Here are some of Davidson's predictions from 1993:
>I see Social Security benefits being cut to the bone. They'll probably only go to the most needy.
>I see at least 40 million unemployed to make-work public assistance jobs
>Sick elderly will be cared for at home. Almost no one will be able to afford nursing home care.
>I see millions of homeowners upside down--with the mortgage bigger than the market value of the home. A lot of them will hand the key to the lender and walk away. There will be a lot of empty houses with "For Sale" signs.
>Banking industry problems will return, much worse than anything we've seen. And much too big next time for the government to bail out. Either your savings will be wiped out or you'll be paid in worthless paper dollars.
>I expect to see 'extended families of 10 to 15 crammed into three-bedroom houses. Millions of retired folks will be forced to live with their children. Young people in their twenties and thirties--including young marrieds with their children--will move in with their parents. In many cases, not a person in the house will have a full time job.
>The suburbs will become slums
Davison argues that knowledge workers will become affluent.
>Small communities two hours away from major cities are the fastest-appreciating real estate in the country. These communities are already benefiting from the "Fifth Migration" in American history. The Third Migration was from the farms fo the cities, and the fourth (1950-70) was from the cities to suburbs. Now, people like us are bailing out and moving to small, clean, safe towns. Technology makes it possible for us to work anywhere...Even if you're not ready to move yet, a rental property in these areas is the best investment in the United States."
Quite a coincidence. Hello West Shokan.
"The Fed has been pursuing a loose money policy for three years, and the money supply is still falling like a rock. The Fed has moved heaven and earth to get the money supply up, and it's not working...the markets are confused because interest rates are going down, and that is always good for the stock market. At least that's what people think."
Davidson points out that monetary expansion does not work if banks are failing or contracting. He notes that in the Great Depression the Fed reduced interest rates but the money supply still contracted because of bank failures. The process did not occur in the early '90s as Davidson feared, but is what many fear is happening now.
Here are some of Davidson's predictions from 1993:
>I see Social Security benefits being cut to the bone. They'll probably only go to the most needy.
>I see at least 40 million unemployed to make-work public assistance jobs
>Sick elderly will be cared for at home. Almost no one will be able to afford nursing home care.
>I see millions of homeowners upside down--with the mortgage bigger than the market value of the home. A lot of them will hand the key to the lender and walk away. There will be a lot of empty houses with "For Sale" signs.
>Banking industry problems will return, much worse than anything we've seen. And much too big next time for the government to bail out. Either your savings will be wiped out or you'll be paid in worthless paper dollars.
>I expect to see 'extended families of 10 to 15 crammed into three-bedroom houses. Millions of retired folks will be forced to live with their children. Young people in their twenties and thirties--including young marrieds with their children--will move in with their parents. In many cases, not a person in the house will have a full time job.
>The suburbs will become slums
Davison argues that knowledge workers will become affluent.
>Small communities two hours away from major cities are the fastest-appreciating real estate in the country. These communities are already benefiting from the "Fifth Migration" in American history. The Third Migration was from the farms fo the cities, and the fourth (1950-70) was from the cities to suburbs. Now, people like us are bailing out and moving to small, clean, safe towns. Technology makes it possible for us to work anywhere...Even if you're not ready to move yet, a rental property in these areas is the best investment in the United States."
Quite a coincidence. Hello West Shokan.
Saturday, March 7, 2009
E-mails from College Students
>Hello professor this is ... from ur sunday class, and I wanted to know if you except late papers?
>hi its .... i still cant get into blackboard they r telling me my old college has to cancell my accountinorder for me to have access to ... blackboard i am waiting for a res[ponce plz email me the cylabus and assignments thx sunday bus self awareness
>hi its .... i still cant get into blackboard they r telling me my old college has to cancell my accountinorder for me to have access to ... blackboard i am waiting for a res[ponce plz email me the cylabus and assignments thx sunday bus self awareness
Friday, March 6, 2009
America Enslaved to the Stock Market
A stock market has a purpose--to provide a means by which people who invest in firms can sell their investments. It is not supposed to be the main purpose of American life. However, judging by the endless horde of media pundits, academic experts, economists and of course Wall Street executives who have announced that in order to survive the US must pay trillions of dollars (is it 2.5 trillion now?) in order to compensate Wall Street and commercial banks for bad decisions, it would seem that the United States exists for Wall Street, not the other way around.
Our current president and Congress, who claim to be the representatives of the poor, seem eager to transfer trillions to the rich. After all, the "financial system" must be retained at all costs. Why that is so, no one bothers to explain.
The most productive decades of American history were when the Federal Reserve Bank had been abolished and the financial system did not exist in its current form. Since Wall Street apologist Franklin Roosevelt abolished the gold standard, Wall Street has felt increasingly bold as to its purpose to steal from and enslave the United States.
I have not been blogging lately because I am working on a research project with some students and a longer term book project. As well, the current parlous state of the United States gives me little to blog about because the nation is past redemption.
America has become a slave state and Americans slaves. They accept 50% and higher taxes just as would slaves who accept that they work for their masters.
There has been a melt down in the national spirit and it is going to get worse. The problem is not the failure of dingbat firms like Citigroup and Bear Stearns, but rather the "cure" that the morons in Congress have passed through while a drooling American public watches their wealth being stolen, stupidly acquiescing to the claims of "experts" who are expert thieves and little more.
I think the best model for today's world is Henry David Thoreau--plant some beans, build a cabin and let the American slave society go its own incompetent way--a once free country that has become the first nation to voluntarily enslave itself to a stock market.
I especially feel sorry for my students, who have watched their birthright stolen by the past four generations of Americans who believed the stupidity of Theodore Roosevelt, Herbert Croly and Franklin Roosevelt; who quietly watched the real hourly wage fall and believed the double talk on CNN. I feel sorry for them because they are not at fault, and will see themselves much poorer than they could have been, but nevertheless will be slaves.
Our current president and Congress, who claim to be the representatives of the poor, seem eager to transfer trillions to the rich. After all, the "financial system" must be retained at all costs. Why that is so, no one bothers to explain.
The most productive decades of American history were when the Federal Reserve Bank had been abolished and the financial system did not exist in its current form. Since Wall Street apologist Franklin Roosevelt abolished the gold standard, Wall Street has felt increasingly bold as to its purpose to steal from and enslave the United States.
I have not been blogging lately because I am working on a research project with some students and a longer term book project. As well, the current parlous state of the United States gives me little to blog about because the nation is past redemption.
America has become a slave state and Americans slaves. They accept 50% and higher taxes just as would slaves who accept that they work for their masters.
There has been a melt down in the national spirit and it is going to get worse. The problem is not the failure of dingbat firms like Citigroup and Bear Stearns, but rather the "cure" that the morons in Congress have passed through while a drooling American public watches their wealth being stolen, stupidly acquiescing to the claims of "experts" who are expert thieves and little more.
I think the best model for today's world is Henry David Thoreau--plant some beans, build a cabin and let the American slave society go its own incompetent way--a once free country that has become the first nation to voluntarily enslave itself to a stock market.
I especially feel sorry for my students, who have watched their birthright stolen by the past four generations of Americans who believed the stupidity of Theodore Roosevelt, Herbert Croly and Franklin Roosevelt; who quietly watched the real hourly wage fall and believed the double talk on CNN. I feel sorry for them because they are not at fault, and will see themselves much poorer than they could have been, but nevertheless will be slaves.
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