Welcome to Liberrants, a blog dedicated to editorials, discussions, and studies of all things libertarian. Don't let the title mislead you; it's merely my attempt to be creative in describing myself as a "hopeful curmudgeon" who embraces the goal of the free, peaceful, economically vibrant society envisioned by America's founding fathers. Jump in! Contribute! Enjoy!

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Location: Tucson, Arizona, United States

A critically thinking curmudgeon whose goal, in addition to creatively venting about the imperfect world in which we live, is to induce critical thinking in others. The ultimate goal is to help bring about a peaceful world in which we can all live in freedom.

Tuesday, October 25, 2005

Some Thoughts on a Post from Individ

Again violating my self-imposed daily posting limitations, I wanted to use some space here to respond to a response I made to a posting on Individ's blog having to do with Greenspan's probable replacement as Fed chairman. Normally I would post the response on his blog, but what I have to say exceeds the 3000-character limit, so I've decided to post my response here. Before I start I would like to say that if you haven't visited Individ's blog, I encourage you to do so. You'll be rewarded by some truly insightful opinion on current events, law, society, and things in general.


Sorry my friend, but I must stand firmly by my original post.

I thoroughly appreciate your perspective on "realism" from the standpoint that there appears to be no light at the immediate end of the tunnel as far as the Fed giving way to a truly viable monetary system is concerned. HOWEVER, it wasn't so long ago that conventional wisdom held that communism was an undefeatable force in the world, that the Soviet Union's presence was permanent and that sheer, brute force would hold it together indefinitely. In the end, however, the untenable nature of the system caused its inward collapse. The same will be true of the fiat currency system on which our economy is based.

It simply defies logic to believe that the nations of Asia (and all others) who underwrite the bulk of our current national debt are going to wait indefinitely for a return on their investment. A good question to ask yourself is, would I keep pouring my precious finances into an investment that promised me a return "at some indefinite point in the future?" I doubt it, but this is basically what the USG is guaranteeing to our creditors when it sells T-bills on the international market in order to pump up the money supply. At some point the foreign creditors are going to weary of subsidizing our profligacy and are going to demand that we pony up, which we will be unable to do, and at which point they will basically start foreclosing on us. At this point you can bet that the dollar will go the way of the post-World War I Deutschmark (it's already losing traction as the world's reserve currency) and whatever the Fed attempts to do to save it will be futile. It amazes me how deeply in denial we are as a nation over what should be a common-sense forecast, but it is as inevitable as the collapse of communism; economic reality will bend only so far to ideology and the underlying ideology of the Fed --then, now, and always-- is to prop up the status quo at all costs even while undertaking measures that only guarantee eventual financial collapse.

As for gold, you seem confused as to its fundamental purpose. It’s not an issue of who will buy my (or your, or anyone else’s) gold; the gold itself is the medium of exchange for goods and services, a medium of fixed intrinsic value upon which everyone agrees. It is important to remember that paper currency has historically been nothing more than an instrument of convenience through which fixed amounts of gold (or other precious metals) were exchanged. Anyone, at any time, could demand and receive a fixed amount of gold in exchange for the value of the paper currency they were holding. Any other means of exchange is reversion to a barter economy, which is what you are basically espousing when you suggest trading bullets (an item of specific utility) for goods or services in kind, although it is certainly not inconceivable that market forces could drive things in that direction.

As for gold storage, why should gold be “stored” anywhere that the fiat currency we now carry in our wallets wouldn’t be stored (the obvious storage limitations of wallets notwithstanding)? Even assuming that banks completely collapse during a state of protracted anarchy or civil disorder (a la the Katrina situation, as you point out), there are always other options. How about storing your gold in your own home (this NOT illegal, contrary to what some still assume), safe deposit box, private storage facility, vault/safe, or any other means with which you would store any other valuable you own, protected by the personal firearms that we all loudly and frequently (via blogs such as ours) support the right to bear? But, you may say, what if our homes are destroyed/looted/rendered uninhabitable? In that case it really doesn't matter whether gold, weapons, diamonds, cigarettes or Hershey's chocolate is your currency; if it's lost, it's lost.

But getting back to gold and its storage and protection, I'm sure that groups of individuals, interacting voluntarily, will do a more than adequate job of guarding each other’s property (to include each other’s gold), just as voluntary cooperation among private groups of individuals did more than anything governemnt could do to alleviate the worst of Katrina’s aftermath. Ain’t liberty and markets a wunnerful thing?

The obsessive notion that gold has to be “stored” in a location specified for that purpose (again, this assumes that gold is a commodity rather than an active medium of exchange) is really a toxic relic of the era when the Great Dictator, a.k.a. Franklin Delano Roosevelt, perpetrated the greatest institutional act of theft in American history by outlawing the private ownership of this precious metal as part of his scheme to socialize the American economy. Sadly, thirty-three years after this dreadful miscarriage of justice was reversed, we (by “we” I especially mean those of us of the paleo-conservative/classical liberal/libertarian mindset) are still uncomfortable with the idea of gold as the basis of our currency as if we were a culture of people reacquainting ourselves with our traditional language and religion after centuries of these being outlawed by an occupying power.

On the subject of weapons and ammo, I’m truly baffled by your claim that these can be a “durable” means of exchange. Again, these are consumer goods (expendable ones at that, since bullets in particular have a very limited shelf life and would be quickly used up in the situation of the future you describe), not media of exchange, unless they evolve into such through purely free-market forces (and what a sad and economically limiting society that would create). However, this seems highly impractical and is ultimately unsustainable. To use consumable objects as currency quickly leads to demand exceeding supply (the black market in cigarettes and chocolate in allied-occupied Germany after World War II proved this very quickly), whereas gold (or any other precious metal) is a “durable” , indeed permanent substance that can be traded and exchanged ad infinitum. A limited quantity of gold will buy a great deal of weapons and ammo even today and can be exchanged over and over throughout the economy for a variety of goods and services.

Sorry to be so long-winded, but as you’ve no doubt suspected by now this is something I take more than a little seriously. In winding this down let me address your final paragraph in responding to my initial response:

I am a realist. As in my science and my philosophy, I am interested in utopian ideals only in so far as they are practical. Right now, the Fed is part of THE SYSTEM, and will be for the rest of my life, and probably well into the future. As such, and within this paradigm, I want someone good in charge. When it is a given that cannon are going to be parked in front of your door, facing in, you are generally happier when the said cannon are manned by friend rather than foe.

As I said at the beginning of this post, I most certainly appreciate and understand your perspective. But to say that “the system” cannot and should not be changed because it is seems so impractical, even impossible to do so is simply defeatist, and I don’t think that adjective characterizes you by any means, my friend. The American Revolution that gave birth to this nation was a “utopian ideal” by every stretch of the imagination and yet it succeeded because enough people realized that this “ideal” was worth fighting and dying for and was the only way a truly free and just society could exist. To let go of that legacy, to accept what we know to be wrong simply because it’s currently the unfortunate reality would be to stop human progress dead in its tracks. If we compromise our ideals, why are we even bothering to maintain these blogs of ours?

In closing, I ask you this: who other than a foe would park a cannon in front of your door, facing in, in the first place?

The Courts and the New Deal

I wasn't planning on blogging anything else today, but after reading this on today's LRC I just couldn't resist posting the link. It's simply too important not to emphasize, particularly in light of the Miers nomination controversy. Willam Anderson has neatly outlined, in one relatively compact article, the entire course of our economic, legal and social decline as a nation . IMHO this ranks as one of the Top Ten Best things Lew and company have ever published.

Please read it, then spread it far and wide.

Wisdom Too Beautiful for Description

Priceless words from Paul Craig Roberts, courtesy of his latest editorial:

"A country incapable of choosing a better president than George W. Bush has no business choosing a president for any other country."

What more can anyone say?