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The Destruction of Property Rights and The Incredible Shrinking Pie



March 09, 2009 – Comments (20)

Each human, from birth, is blessed with an opportunity. Apart from the mentally ill or extremely handicapped (whom we should cherish and care for), all of us are given the equipment necessary to create, work, cooperate, associate, prosper, and enjoy this world. If we are going to solve our current problems we have to consider what elements hamper societal development. If it is true that each of us contains the ability to help create a better world, why does it always seem that our world takes two steps forward and then one step back (or worse)?

Every time you open your wallet, unbeknownst to you, you are engaging not in a free market activity, but in a system of coercion that violates the property rights of fellow citizens and reduces not only their ability to shake free from the chains of economic enslavement, but also further enslaves poorer nations. I realize that statement was quite a mouthful, and as an indictment on your morality - not to mention an admission of hypocrisy - it needs further explanation. Please allow me that opportunity before you attempt to -1 rec this post in disgust!

Most Fools are well versed in the history of money, so I'll be brief in its overview. Money is a method of indirect exchange and its use signaled the graduation from a barter economy to a market economy. It did not, however, arise from government decree. The use of money always arose naturally (hence the term natural money), as societies found the best way to exchange goods. Various commodities have been used from copper to cotton to gold to silver, with silver being the most prominent. Nowhere in history has paper money (not to be confused with credit money or redeemable paper certificates, i.e. currency tied to a commodity) ever arisen from market forces. Paper money, called fiat money, has always been by done through compulsory legislation. So what does that have to do with that outlandish statement in bold two paragraphs up? I'm getting there, just hang on. This next paragraph is a bit of mouthful as well, so take a deep breath before you dive in. It's very important.

Money has two values, a monetary value and a nonmonetary value. The latter arises from its usefulness. In this area, paper money has benefits that are comparable to free market money (silver, gold, etc...). Carrying paper money around in your wallet is quite easier than lugging a purse full of coins around, but has no advantage over redeemable paper certificates. (Again, the difference between paper money and redeemable paper certificates is that the redeemable paper can be traded for an established amount of an underlying good, e.g. gold). On the other hand, the very reason that free markets have always prefered natural money to paper money is the ease with which the future prices of these commodities can be predicted. Gold and silver retain their value over time (and redeemable certificates as well), whereas fiat money does not. That is the monetary value of the currency. The essence of fiat money is that its monetary value is zero (well not quite, but I'll explain that part in a moment.) Should the nonmonetary value of fiat money - its usefulness - disappear, most likely to systematic destruction by an irresponisble government, theoretically fiat money's value could drop all the way to zero. Millionaires and welfare mothers would suddenly be sharing the misery of having an empty checking account. This scenario is impossible with gold, silver, copper, or a strictly enforced redeemable certificate. These monies will always hold some value - the monetary value of the commodity itself, even if the free market chooses a more useful currency.

Here comes the million dollar question: why can't citizens who prefer a currency with a monetary and nonmonetary value, use that currency in transactions?

Let that question run through your head a couple of times.  

Now let's look at an example. Let's say that I'm the next Linus Torvalds. I've developed a great computer operating system, far superior to Windows in its efficiency and stability, and surpassing Linux in its user friendliness. However, I live in a time when all governments are distorting their currencies through massive expansion of the monetary base (ummm, like today). I can't predict in ten years what the value of the currency will be. Rather than risking poverty by accepting worthless money for my hard work, I decide to accept only gold or silver as payment for my operating system. What would happen if I were to attempt to enforce such a policy?

If you answered, the government would shut down your operation, seize your assets, and throw you in jail, you are correct. Why would the government take such draconian measures to destroy your property rights. After all, if it's your property, shouldn't you legally be able to dispose of it as you see fit?

The reason is because in a free market, consumers and producers, rich and poor, will always prefer a stable currency with monetary and nonmonetary value to a currency that has only nonmonetary value. Therefore, as soon as the government allows competition in currency, the value of its money - the fiat - rapidly falls and will eventually end up at zero. In order to prevent this from happening, the government must violate property rights, eliminate the free market, and outlaw the use of any currency but its own.

The tragedy of fiat money is not that it may one day be worthless, it is that in order to prevent the inevitable decline to worthlessness, the government must destroy all property rights. Take a moment and consider what property rights you have. Do you own your home? Do you own your income? Do you own your business? Do you own your stocks and bonds? Do you own your creations and your work? What property rights do you have? Can you name them?

It is saddening to consider, but the monetary value of fiat money (I promised you I'd get back to this) is the cost of jail time. You are compelled to use it by law, and failure to do so - the selection of a superior alternative currency - results in prison.  Each one of us subconsciously calculates the cost of jail time if we consider the use of an alternate currency.  This will become more common as central banks continue to increase the monetary base.

So why can't governments issue a stable fiat currency, one whose monetary base is restricted by law, so that it can not be expanded so frivolously? I'm not sure you want to know the answer to this. Many of you are patriotic Americans who believe that our young men and women spend most of their time overseas fighting terrible enemies to protect our way of life. I'm a former Marine. My father was a Marine. I don't hate our troops or wish them harm. But in order for you to hear this answer you must set aside any pretense of patriotism. It will only cloud your judgment.

Governments decree fiat money to wage war. Traditionally, wars were paid for in the natural money in use. Kings paid for wars in gold or silver, and collected it by taxing the citizens. However, taxation had its limits. Countries on redeemable paper, temporarily suspended its convertability (or worse), in order to expand the monetary base and finance wars. Not only could you tax the citizenry, but now you could also confiscate their wealth through inflation. It's no coincidence that the movement away from sound money also saw a tremendous increase in the power of modern armies.

The worlwide use of fiat money has made permanent war possible. In fact, it was necessary. It is no coincidence that the Federal Reserve and the Income Tax, both of which came into existence in 1913, coincided with an increase in American militarism. The empire that William McKinley attempted to create in the late 1890s was nothing compared to the Wilsonian doctrine of making the world safe for democracy. And the only way to fight a permanent war for "democracy" is with a fiat currency. The complete break with the Gold Standard in 1971 finally made permanent war possible.

These realities, however, have largely been shielded from public consumption. It was only the liberating force of the Internet - finally freed from being a government weapons system (surprise, surpise) - that has allowed a small portion of the United States population to understand the true nature of fiat money.

For most of the American public, the rat race of the last 100 years has been to reclaim the economic sovereignity that has been slowly slipping away. Most people want to amass wealth because they understand that wealth brings greater freedom. Each year that fiat money is forced upon the population, the opportunities to attain that wealth shrink. The pie gets smaller every year as the monetary base is continually expanded to feed the government's appetite for conquest.

This is not a system of competition and free market cooperation. This is a sytem of cannabilization and control. Each time you spend money, you are unwittingly contributing to your own demise. For eventually, the world will wake up to this scam, your fiats will be rendered worthless, and our soldiers will be coming home. The events that follow will be the end of the American dream, the start of the American nightmare, and the final destruction of the Incredible Shrinking Pie.

David in Qatar

20 Comments – Post Your Own

#1) On March 09, 2009 at 2:36 PM, djemonk (< 20) wrote:

I guess it's time to go back to cowry shells, then?

Good post, by the way. Not the direction I had expected.  I thought you were going to go the route of fractional reserve banking and interest, which leads inevitably to the conclusion of banks owning everything.

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#2) On March 09, 2009 at 2:45 PM, Rehydrogenated (32.56) wrote:

Not if everyone else's currency collapses first. Then we will have a huge military while everyone else is forced to cut theirs. Our currency will rise as people flee from the others. It's no joke that the dollar is protected by black helicopters. That is the value of fiat, the army that protects its value.

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#3) On March 09, 2009 at 3:08 PM, outoffocus (23.59) wrote:

Well its refreshing to hear such a positive outlook on things.

But seriously this blog has given me alot to think about.

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#4) On March 09, 2009 at 3:14 PM, whereaminow (42.76) wrote:


Sorry if I brought you down a little bit, but I'm glad if it makes you consider ideas you never would have.

It's an unfortunate realization that fiat currency and property rights are mutually exlusive. No matter how people may differ in my conclusions about war or government intentions, I don't see how they could assert that one can have fiat money and private property/free markets.

David in Qatar 

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#5) On March 09, 2009 at 9:32 PM, Alex1963 (28.90) wrote:


You're pontificating again. Please, try to remember that as convinced as you are in your opinions they are still opinions. I do appreciate that in several posts I've read you have adopted a style that seems to indicate you are expressing opinions. You have posted and replied in some positive and respectful ways. I for one appreciate it the effort. However-

1st-You are still resorting to that argumentative fallacy of 

"Post hoc ergo propter hoc", From a web dictionary:

Latin for "after this, therefore because (on account) of this", is a logical fallacy (of the questionable cause variety) which states, "Since that event followed this one, that event must have been caused by this one." It is often shortened to simply post hoc and is also sometimes referred to as false cause, coincidental correlation or correlation not causation. It is subtly different from the fallacy cum hoc ergo propter hoc, in which the chronological ordering of a correlation is insignificant. Post hoc is a particularly tempting error because temporal sequence appears to be integral to causality. The fallacy lies in coming to a conclusion based solely on the order of events, rather than taking into account other factors that might rule out the connection. Most familiarly, many superstitious beliefs and magical thinking arise from this fallacy.

You resort to this again in your pronouncement that the " It is no coincidence that the Federal Reserve and the Income Tax, both of which came into existence in 1913, coincided with an increase in American militarism" you neglect to factor any other political or global events into your statement. I could on at length on the fallacy of this observation or yours but I have other points to make. Suffice it to say you did use the word coincided implying coincidence.

My biggest issue with these posts of yours is that you paint certain scenarios without logically expanding them to see where they lead. Your beloved Hazlitt would have a cow. 

For instance-Lets say the gov't didn't care that people could willy nilly choose their own medium of exchange. Over time you have an erosion of the use and perhaps the faith in the currency. Now on a small % level this is no big deal. A few thousand or hundred thousand people decide to use gold, some use silver, some gems. But if it catches on in any given population then what? you go to the store to buy food and the owner doesn't want your gold because today silver has more value to him etc. Or someone from out of town used to paying in the water his Ariz home finds valuable now has no "money". Every time you travel you have to figure out what to bring? Or do you just figure that everyone of you "alternate currency advocates" would choose the same medium? Or lets say you want to bank this commodity. Are banks forced to accept whatever form of exchange you have? And then have on hand whatever you might wish to exchange it for on hand in case you need it? What if food is short and chickens are now the best medium. I could on and on it is a logical absurdity. I mean, how do you store and guard all these mediums. Do people keep them at home or in "collective" amateur safe houses. In a way I agree with you. There is a small but very vocal group of people out there who would be much happier lugging their doubloons around. I say let 'em. it would at least put an end to this conspiracy theory that some folks just thrive on. I would love to see you actually get to try this on any scale. it would be a riot-literally. The 1st time you got cheated in your alternate exchange medium where would you go? To the police? The very same complicit "military" accomplice you say supports the illegal "fiat currency". Or do we also form a bullion police squad paid for by the bullion users to enforce bullion related crimes? But wait, you can't trust the gov't/police cuz they just might decide to seize my gold right? So do we 'regular" citizens then have to be pestered for a seperate and private Libertarian police or security squad? This is an anachronism, David. What we really need is a completely paper free system IMHO. Like The 5th Element "Multi-Pass". In 20 years you'll be using the chip implant in your forehead to make transfers and exchange good and services no grubby money anywhere. Think Global. Think less and less currencies. That's where were headed. Not more which is basically what you are proposing. Sure they'll be thriving black market of underground currency and you and me will be arguing about whether you should be able to use your outlawed greenbacks right along with the krugerands. LOL.

I submit this idea only works on a very personal one on one scale and really go ahead. I won't tell. No one would really care if you traded your computer program for a bag of wheat or whatever. It happens every day and our "fascist" gov't basically ignores it.

Next, the gov't also uses it's money (or our money) for aid worldwide it is not for solely for the purpose of making war. That is another absurd pronouncement. Yes the ability paper money gives the gov't to abuse the inherent flexibility is a real problem. But that same flexibility has many benefits. No matter how you slice it there will be a greater need for Fed type institutions than a compelling need to get rid of them. Countries all use their "Feds" & central banks to grease the cogs of commerce. Otherwise they seize up. Again I could kick this premise of yours to further splinters but there is so much more here.

The next loaded statement you make "Nowhere in history has paper money (not to be confused with credit money or redeemable paper certificates, i.e. currency tied to a commodity) ever arisen from market forces."  So? Even if you could prove this. What's your point. If it didn't come from the market it's ipso facto a bad idea? I would further argue that the precise reason that currencies came about is to provide a common exchange to aid the marketplace for pete's sake. To prevent, I would imagine, the exact kind of market chaos which would come about if your diaster of a proposal ever got off the ground. You can't have both. You open that door a crack and the camel is in the tent (to mix a metaphor). Most people would see the folly and choas and the whole awful premise would implode.

Further, you have this romantic notion of so many 'constitutionalist & libertarians that gov't is bad. Taxes are bad. Gov't steals money and every time it does a job dies. It is just wrong at the level you raise it to. The gov't has no profit motive and can pursue long term objectives for the good of society by collectively pooling (stealing, whatever) tax dollars at break even We then vote for the representatives we feel will best direct that money. That there are abuses and waste is no reason to throw the baby out with the bath water. There is plenty of waste in large corporations, too. But notice how the best corporations mimic gov't. Or vice vs. Because it works! I challenge all you "the gov't can't create jobs fantasists" to tell me how any company can afford to fund pure research. Or build roads, or get to the moon. or directly stimulate a leap forward like electric cars or solar energy? They can't do it. Shareholders are too impatient. They want quarterly results! But the gov't can invest in these areas and create-yes create, enough momentum to make it financially feasible for the free market to step in and take over. That Gov't has a hard time letting go of their programs is not a reason to never start them. That is a different fight for a different day. And a critically important one.

 "Governments decree fiat money to wage war." So every gov't who has ever issued currency did so to wage war. You must be joking. Another pronouncement which is enticing in it's simplicity but obviously too broad and yet narrow to ever be proven. You encompass virtually ever advanced civilization which has risen or fallen over thousands of years. I could argue quite convincingly I believe that the issuing of common currency is a hallmark of nearly every advanced civilization. That without doing so civilizations hobble their free trade and their advancement and thus their citizens. That they happen to also fight wars is competely unrelated. 

My last point and really my main point. I thought about rolling my eyes and moving on but you are just everywhere with this stuff. I feel I must make a counter argument Things are very bleak now. There is a lot of fear and uncertainty. I get the attraction of saying "Oh you think this is bad wait til you hear this..." Especially if you really believe it. You want to help I guess. Though where the help is in so many of your posts I honestly don't know. You just leave me with a nagging dread. No ideas. No solutions. Just this awful feeling of the Big Brother conspiracy sucking away our freedoms. You write well and though I know many of the assumptions and conclusion you draw are faulty I really have to sit down to unravel them. 

Let's see a post where you focus on working within the system we have to make positive difference instead of these nearly daily apocolyptic pronouncements where the underlying message clearly seems to be: Rebel.Overthrow. Tear down the institutions. Throw off your chains. It's all rotten and useless. I submit that it is an easy position to take and you could do so much more with all your knowlegde.

I for one do not share your bleak vision of the world, most of our leadership or the ability of everyday people to effect change when there is a collective need to do so. 









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#6) On March 10, 2009 at 1:02 AM, whereaminow (42.76) wrote:

Hi Alex,

Thanks for sharing your thoughts and criticisms. 

The causality relationship between war and the rise of fiat currency is not one that I intended to make the focal point of this blog entry. That academic exercise would require quite a bit more than the 2,000 character limit that I am allowed. However, it was not pulled out of thin air, and in future posts on fiat currency, many of which will follow, I compact that argument into a more concise, academic, and notated work. 

The purpose of this blog was to spark educational interest. Here I wanted to teach a little about the origins of money, the nature of money, how its value is derived, the differences between various forms of money, and the problems and advantages associated with them. Though I had to be brief, my analysis is based on lengthy study, and if you can refute any part of that analysis, please present your case.

As the basics of money production are now laid out for the reader, with the limited space available, I hoped to highlight a few things. First, fiat currency and property rights are mutually exclusive. If you have one, you can not have the other. This is due to the lack of monetary value of fiat money. Given a choice, societies have always chosen natural money over fiat due to its monetary and nonmonetary value. Thus, the only way to keep fiat money in circulation is to abolish property rights and force market actors to use the new "legal tender." Second, it follows that fiat money and free markets are also mutually exclusive, since the use of fiat money is a coerced exchange and an indirect violation of other's property - by confiscation of wealth through inflation. Finally, I touched on the market distortion that fiat money causes, since the producer of goods can not accurately assess the value of the fiats he receives in exchange for his goods. He/she does not know whether they will be worth 90%, 80%, or 40% of their current value 10 years from now. Each of these points will be expanded upon in following posts.

In defense of Libertarianism and Austrian School Economics, I would rather direct you here or here to save time for now. Your criticisms are worthy of discussion, and I have addressed many of them in previous posts with zloj, russiangambit, and many others. I will continue to give you ample opportunity to discuss these issues in the future, as the relationship of Liberty and Economics is inseparable.

I apologize that my world view seems overly bleak and anti-establishment for you. It does not, I assure you, come from living in a secluded fantasy world.  I don't know how familiar you are with my story (and personal stories on a semi-anonymous blog aren't worth a whole lot) but I have lived a very active and interesting life.  I have spent most of the last 13 years overseas. I have lived in Pakistan, Japan, Kuwait, Qatar, and South Africa for extended periods of time (at least a year in each).  I have travelled a great deal. I have had a working relationship with the United States government for 15 years - 10 in the Marines and 5 in another capacity. I have an intimate knowledge of the limitations of government power, the positive and negative results of government policies, and the various methods that other governments and non-state actors attempt to counter that power and secure their own.

Finally, like all humans, I do what I feel I can to make this world a better place, understanding my own limitations and embracing my capabilities. So if I come to understand an evil that others do not recognize, I do my part to speak out against it.  Fiat currency is a new evil.  The system of free market money, the one you claim would be absurd and chaotic, is actually the system that it replaced, and no one ever felt it was such.  It wasn't replaced because fiat was superior. That can be displayed without a shadow of doubt. So why was it replaced? That question is what I will attempt to answer in this series of blogs on money production. I hope you get something from them, at least in some historical knowledge gained, even if you find my conclusions loathsome. It is not my mission to force you to think as I do.

David in Qatar



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#7) On March 10, 2009 at 7:31 AM, whereaminow (42.76) wrote:


I want to address this statement in particular:


For instance-Lets say the gov't didn't care that people could willy nilly choose their own medium of exchange. Over time you have an erosion of the use and perhaps the faith in the currency. Now on a small % level this is no big deal. A few thousand or hundred thousand people decide to use gold, some use silver, some gems. But if it catches on in any given population then what? you go to the store to buy food and the owner doesn't want your gold because today silver has more value to him etc. Or someone from out of town used to paying in the water his Ariz home finds valuable now has no "money". Every time you travel you have to figure out what to bring?


It shows a lack of understanding of history. In every single society on the planet where free markets in money supply were allowed to operate, the societies moved to gold or silver (or the equivalent redeemable paper certificate), usually silver.

If you want a one world currency, all you need is for governments to get out of the way, and silver would have become that currency, or perhaps gold, or god forbid a combination of the two.

Property rights would have been maintained, however, and maintaining property rights was never in the interests of government, as I will show you more clearly as blogs go by.

David in Qatar

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#8) On March 10, 2009 at 10:18 PM, Alex1963 (28.90) wrote:


Nice replies.. Ok Is there enough gold and silver for everyone to use now? I still say you keep thinking scale too small for todays world. I will look up the avail global supply and value of both to see if my hypothesis is true. Because I maintain if people truly adopted them as a universal exchange medium, we the little guy would never see another smidgen of it. Warren Buffet and most countries would REALLY want to horde it then.LOL & think of what it would do to any product which utilizes either to function particularly silver. You want the whole planet ripped up to get enough metal to make this work? 


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#9) On March 11, 2009 at 5:05 AM, whereaminow (42.76) wrote:


I'm working my way up to that. You're just going to have to trust me on this one. This is going to take several posts before the picture is complete. It's no elementary subject. I promise you though, if you give them all a chance, you will be thankful that you did even if you don't agree with any of my conclusions.

David in Qatar

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#10) On March 11, 2009 at 5:35 AM, DaretothREdux (49.28) wrote:

David, Sorry I haven't commented on your blogs in awhile. It's not because I haven't been reading them. I read them all when I can. I just wanted to say that I have learned more from reading you back and forth comments, arguments, and counter-arguments than I learned in 20 some years of school... Of course, the best education is always the one you actively pursue yourself. Keep up the good work man!

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#11) On March 11, 2009 at 6:23 AM, whereaminow (42.76) wrote:


That's awesome and it means a great deal to me. Thanks for keeping up with my posts. Right back at ya too, because your posts are enlightening AND entertaining... something I don't quite have the hang of yet :)


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#12) On March 11, 2009 at 6:28 AM, BenGriffin71 (28.21) wrote:

Thank you.  It is entertaining to read the post and the comments as well.


I believe you have an unsupported conclusion in the explanation (or perhaps my understanding of) your argument:

>>>> '....The tragedy of fiat money is not that it may one day be worthless, it is that in order to prevent the inevitable decline to worthlessness, the government must destroy all property rights.....' <<<<

There is a jump here that isn't previously supported.  Below is a list of actions by a government that curtail liberties related to property rights....

1- the government can wage taxes

2- the government can confiscate

3- the government defines certain goods as contraband, such as subversive currency

4- the government outlaws certain activities which limit the ways in which property can be used or disposed.

 ....None of these powers of government is more limiting of freedoms when a fiate currency is in use.

1- Taxes will be in effect fiat or not.

2- The government can confiscate property fiat or not.

3- The law make certain items contraband including competing currency when a fiat currency is in place.  But to claim that there are no property rights because you cannot exchange for a competing currency is to say that nothign can be contraband. It would be illegal if a property owner attempted to exchange property for, a certain weight and purity of cocain, a human child of a certain height and age, enriched uranium of a certain weight, a classified document, a number of pinkey fingers removed from unwilling donors, or the virginities (sp?) of two or more daughers of federal judges.  Adding to this list a competing currency is not a significant expansion.Additionally since barter is legal and provided for in the tax code, then the underlying commodity (gold, silver, etc) from which a commodity currency would derive value, could be exchanged for the property, or alternately the commodity could be purchased after selling the property for legal tender.

4- Restrictions on your use and disposal of various property.  These restricitons are typically in place to ensure the use of the property does not violate the rights of others. these laws certainly restrict the possible uses and disposal options, but this is not unique to a system utilizing a fiat currency


On a separate point, I don't think it is supported that governments decree a fiat currency in order to wage war, but i do think it is likely that a fiat currency facilitates a process which may result in war.




While I agree that David's assertion that a fiat currency is decreed for the purpose of waging war is highly improbable though nearly impossible to negate, I believe that a fiat currency may serve to increase the chance of war. Your incredulity that this was a motivating factor of which the decision makers were consciously aware is understandable.  Perhaps that is not important.

When a new superhighway is planned, is it with the intent that hundreds will me seriously injured or die yearly in accidents?  

When a Dunkin Donuts is built is the purpose to enormously increase the police presence  in the area?

In an area of cheap tank tops, frequent monster races, and mullets galor; when a trailer park is assembled is it the intent of the trailerlord to increase the frequency of tornados in the area?

In each case, whether or not the intent exists, the effect remains.


In the more serious case,, a fiat currency may increase the propensity for war via a mechanism that goes mostly unnoticed.

The mechanism is not the specific individual intent of a leader, but instead relates to the growth and interaction of multiple competing organizations.


Organizations by their nature are complex. Most grow more complex over time.   Each procedure established and contract agreed, and strategy employed has an effect on the growth of the organization and the way it interacts with the environment including other organizations.

At a certain size organizations become more likely to project 'moods';; unplanned and mostly unmanaged actions that result in; biases, internal and external distortions, and possibly subtle communications.  These moods are the result of the numerous (often seemingly minor) decisions made continually in combination with one or more other decisions interacting in unforseen and then unseen ways.  The sheer number of decisions and the high  degree of differentiation, make these hard to model and difficult to monitor.

As a result, without individual human intent, organizations behave in ways unplanned and largely unseen by the humans who make the organizations possible.

When conditions are propitious for organizations their numbers abound.  In any scenario resources are limited to a certain degree.  Organizations that develop traits that encourage and enhance growth of consumption of a necessary resource, grow consumption faster and begin to squeeze other organizations out.  This can occur largely without human intent to harm competetors.  It is more akin to a very rapid semiadaptive natural selection system. It is not that the largest organizations seek to be damaging to competition and hoard of assets. Instead,  companies that engender similar traits grow more quickly and squeeze out less assertive organizations.

A special case occurs when a fiat currency is introduced in a political environment in which organizations can provide advantage to politicians in obtaining and maintaining power, be it millitary, monetary, media or otherwise.

The fiat currency opens the possibility of significantly larger purchases.  Politicians hold the purse strings to the newly available spending power, and the organizaiton can help a candidate gain or maintain power, Since the amount an organization can help a politician and the number of politicians an organization can afford to influence (while still benefiting from any new spending) is a percentage of what the organization could receive, the organizations with the most to gain, can offer the most assistance.

while there are countless ways for new spending to be untilized, the largest have the advantage just discussed.  In terms of ability to spend massive amounts, militarization along with space programs dwarf most other programs.

Militarization of one country may lead to similar actions in one or more rival countries.  Evenetually all the planning and building is utilized in the form of war, which necessitates more expendetures.

All without the need for sinister intent by individuals.


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#13) On March 11, 2009 at 8:39 AM, whereaminow (42.76) wrote:


Your comments are excellent. May I ask if you have a scholarly background?  You write like a graduate school professor (and I mean that in a good way).

I hope you'll continue to comment on this series of posts. Part II is here. I could use your analysis to sharpen my thoughts.

Individuals, given (and having acquired) enough power, can accomplish whatever ends they desire, no matter how complex the system. 

Here is a prime example, though there are countless others:

In 1956, Kruschev delivered a speech denouncing Stalin. Though this account can not be verified (but it has been referenced in academic work), when Khrushchev had finished his denunciation of Stalin, a voice from the audience was heard asking 'Why didn't you say all this while he was alive?' In a fury, Khrushchev replied 'Who said that?' No answer came. A red-faced Khrushchev pounded his fist upon the podium and again demanded 'Who said that?' Silence reigned. Khruschev paused, then smiled and said 'Now you know.'

Is that story true? I don't know. But whether we are discussing Stalin, Mao, Louis XIV, Machiavelli, Talleryrand, Borgia, Khan, Alexander, FDR, etc, there is reason to believe that people with tremendous influence and power can bring about any change in a system that they desire. So even though we like to kid about conspiracy theories, no one who lived in European court was ever told the system is too complex for these things to be real :)

Finally, one thing I am certain about when it comes to power is this: the powerful have absolutely no concern for earning money or understanding economics. Money can be taken by decree, tricks, and force, if necessary. Economics is for the powerless to argue about the best way to live without a coercive power. Thankfully, there is a greater power than them, and that is the power of the Market. If your enemies don't get ya, then the Market will.

David in Qatar


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#14) On March 11, 2009 at 9:28 AM, whereaminow (42.76) wrote:

Ben, also if you don't mind, I'd like to hear your thoughts on this a priori assertion:

"The first truth to be discovered about human action is that it
can be undertaken only by individual “actors.” Only individuals have ends and can act to attain them. There are no such things as ends of or actions by “groups,” “collectives,” or “States,” which do not take place as actions by various specific individuals. “Societies” or “groups” have no independent existence aside from the actions of their individual members. Thus, to say that “governments” act is merely a metaphor; actually, certain individuals are in a certain relationship with other individuals and act in a way that they and the other individuals recognize as “governmental. The metaphor must not be taken to mean that the collective nstitution itself has any reality apart from the acts of various individuals. Similarly, an individual may contract to act as an agent in representing another individual or on behalf of his
family. Still, only individuals can desire and act. The existence
of an institution such as government becomes meaningful only
through influencing the actions of those individuals who are
and those who are not considered as members." - Murray N. Rothbard, "Man, Economy, and State"

David in Qatar

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#15) On March 11, 2009 at 1:29 PM, BenGriffin71 (28.21) wrote:


Thank you for the kind words and the Kruschev story. I don't write LOL in text messages or email, because i believe often the person writing has not 'laughed out loud'. So know that I am being literal when i say i laughed out loud.

I do not have a scholarly background in the formals sense.  I have a patchwork comprised of proficiencies from various employment  (working with marine mammals, welding titanium sans enclosure, structured finance, nuclear chemestry), college (can roll a quarter off my elbow or nose, have it bounce off the table and land in a glass of beer with a high degree of accuracy), naval nuclear power school, and some hard life lessons.  You are likely hearing my inner nerd.  I read more than many people and study various subjects for enjoyment. I have  a predilection for academic papers (i am always astounded at the frequency with which people, outside of academia, reference the conclusion of an academic paper without evaluating the methodolgy or perhaps even reading the paper) and college courses lectures (Even if your free time is not so dominated by an inner nerd, it is obvious you have not stopped learning.  In light of that, if you haven't yet discovered you should check it out.  I am confident you will enjoy the material).


As to the existence of acts of true evil by individuals or by groups:  I did not intend to suggest that these are not possible.  there is strong evidence that individuals and groups act in ways that can rightfully be catgorized as evil.  With examples like like Pol Pot, Stalin, Edi Amin, Dahamer and  Ceausescu, suggesting that individuals are not capable of evil actions, would be very difficult to defend.

Actions devoid of malice of intent, especially when rapidly implemented can result in consequences that might be difficult to distinguish from actions with malice of intent.

While it was fun to go drinking with the class idiot in highchool and no real harm seemed to come about from voting him class president, the comfort instilled quelled mental alarms and made it possible to vote the retarded cowboy (being similar to the class idiot) in as President of the United State, because he seems like someone with whom you would like to go drinking.

But even without ill intent, the Retarded Cowboy in pushing ethanol requirements forces poor people to compete with automobiles for food.

My suggestion is that intent by an individual is not required.  I will go further and say that examples abound of actions that cannot be undertaken by individual actors.

Collaboration, presenting a united front, negotiation harmonizing, group think, intimacy, and durable games (language, culture, religion.... all games that are played to continue playing) might be mimiced by an individual acting alone, but couldn't actually be performed by an individual acting alone, any more than I can tickle myself.


There is a hint of arrogance in Rothbard's assertion.  It desires to make the individual something unique, with abilities found nowhere else.  

The disticntion of agent and individual is a man made construct.  Looking closely enough it desolves.  The important part of what my mind holds as the singular me, is not even help within the confines of my flesh.  It is a dedication to maintain the continuity of the perceived important similarities of the cumination of all my interactions with things that i do not classify as the me. This would suggest that I am more of an algorith describing various interactions occuring at a time derpendent location....not very individual like.

Alternately consider the mitochondria essential to my ability to continue living.These mitochondria do not share my DNA even.  I am more ant-mound than worker ant.

To deny the life of gestures, cultures, and organizations, likely springs from similar desires that held the earth as the center of the universe, and demanded that everyone unanmously agree to the existence of an invisible man in the sky who has ten things you cannot do, or you will writhe and choke in torment for all eternity... but he loves you.... and he's really bad with money (this last bit  is lifted from the late great G. Carlin).




I am a bit rushed at the moment, so forgive any gramatical and spelling errors, and any ungathered loose ends.......







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#16) On March 11, 2009 at 1:58 PM, biotechmgr (36.50) wrote:

It is interesting to consider alternative viewpoints.

If America is at an end of sorts, it is worth considering what may follow. It could be destruction or it could be change that leads to reform. Both are equally possible if certain conditions are met. I view myself as a realistic who can see either potential.

Having studied some history, I believe wars have been with us not since the rise of fiat currency but since the rise of organized states, demographic pressures, and the competition for scarce resources. Read Ishmael by Daniel Quinn for a thesis regarding what followed from the loss of tribalism and the advent of the agricultural revolution in 10000 BC. Later, even when hard money was in use, wars were commonplace. In a modern philosophy, Hobbes proposed the natural and continual state of man was one of conflict and war.

Even so, fiat currency has created a problem leading to economic instability with the latest and greatest bubble of all time. Prior bubbles may have been relatively large enough to destroy wealth, but may have been relatively subdued by a link to hard money. Now the massive credit bubble has shown us the beginnings of an equally massive deflation. At the bottom of that deflation, when it occurs, we will see what is left and whether dream or doom remains.

 Random thought: Larry Kudlow keeps talking about figurative mustard seeds for the economy. The endless amorphous reference to the economy as it exists today needs to be re-examined for its utility. Do we really need a return to the endless consumption machine that fuels booms and busts? We may instead need a return to thinking about planting real seeds that yield food as so many are already starting to go hungry in America. It is time to start thinking (and acting upon) about real things and real issues and perhaps the real wealth of nations as we continue into economic recession and likely depression.

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#17) On March 11, 2009 at 3:41 PM, nzsvz9 (< 20) wrote:


The purpose of a fiat currency is not only to wage war, but to further the ends of the people in power, whatever their current desires.

$1,049,000 to combat Mormon Crickets in Utah; $332,500 to build a school sidewalk in Franklin, Texas; $225,000 for Everybody Wins!; $200,000 for a tattoo removal program in Mission Hills, California; $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming; $237,500 for theater renovation in Merced, California; and $75,000 for the Totally Teen Zone in Albany, Georgia.


None of these are for war. Some of these may create or preserve jobs (which is the advertised reason for doing this). It's easy to spend someone else's money, just consider what you order when someone else is buying dinner versus what you would order at the same restaurant when you have to pay for it yourself.

You are correct that war is one tool of the dictator, but it is not the only one. You also leave out how bankers financed wars (sometimes both sides) to bankrupt kings and nations (aren't we bankrupt in the US?).

So, back to my point - fiat currency is not just for wars of the dictator - fiat currency has many purposes for the banker's advantage. The first bank of the US. The second bank of the US. The Fed. They have us in chains now.

Who are the dictators? Not so important, they are the figureheads. Who owns the currency! Now that's important.


Abolish the Fed. Issue new currency backed by gold. Not even silver. Mono-metalism.

Known by my business partners as nzsvz9

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#18) On March 11, 2009 at 5:07 PM, Alex1963 (28.90) wrote:


Great post I was not only LOL I was ROFL. "mullets & trailer parks and Dunkin Donuts". Oh man, nice phrasing.

I'm going to have to sit down and really get to know this sentence "It is a dedication to maintain the continuity of the perceived important similarities of the cumination of all my interactions with things that i do not classify as the me."OMG! That is one dense Mfer! If that thought had physical weight & happened to fall on someone it would kill them outright! I have no idea what it means-yet. Give me a week or two. I don't think I implied though that the connection between fiat and currency and war doesn't exist. Only that the statement that one was created for the sole purpose of realizing the other was not provable, woefully simplistic and an exercise illogical construction.
David I believe you are dead wrong on this, too :"Finally, one thing I am certain about when it comes to power is this: the powerful have absolutely no concern for earning money or understanding economics." I would aver that many of the powerful got powerful BY earning money and thorouhly comprehending economics. Your  own favorite Ron Paul might be one, right? If you just qualified these kinds of statements in the slightest they would have some shred of credibility. You have a real affection for stating absolutes. But I do think you believe this deeply and that is at the root of your whole complex & carefully constructed philosophy. A thread runs thru much of your writing of secret knowledge and priviliged information. That you have revealed a deeper insight from immense effort and rigor. The promise of a dark mystery which you will unveil. Plus you sidestep effective counterpoints to your arguments constantly. You might say "oh good reply" but never have I seen you then say-"hmm I could be wrong." or "Gee I never thought about that I need to get back to you" Maybe I've missed it. Little seems to shake your posture (in these type of posts anyway) that you have already "found these truths to be self evident" So if you are on a quest for learning it appears to be done elsewhere & out of sight.. Plus it's hard to shake the memory of you calling out potential dis-adherents to past posts of yours as "slaves" or "fools". I think there is quite a bit more superiority in your thinking than you actively admit to. Or are aware of.  I just find the whole premise of you exchanging & guiding phony. You lecture. And if someone points out a flaw you keep right on going. For instance I have pointed out your penchant for saying B followed A ergo A caused B several times. It is clear, yet you do not acknowledge it. I have ofered my opinion that this is an often cited criticism of the Swiss School and of Hazlitt in particular. You have never taken up the challenge. My point is that to be enamored of their thinking requires a regular suspension of logical thinking. Just because you or they claim to be "enlarging the the effects to include all possible groups (or outcomes)" does not mean that you or they actually have. You seem incapable of making points without resorting to a posture of unassailable fact and you often merely resort to hinting at further clarification to deflect criticism.

David, look, if you can't even postulate "A" effectively then B, C and so on are all on shaky ground. That is just basic logic. You want to be credible with me (or anyone) with this scholarly tone then stick to the rigors (& inconvenience) of logic. Or just admit this is your opinion. There is a big difference and though you might not feel as important saying IMO when you want to say "I have uncovered this little known but undeniable fact" it is more intellectually honest. "IMO"

Look at Ben's messages. There is nothing objectionable in any of it to me. What is the difference? Well, He doesn't cross reference opinion as fact. Ok maybe I also just plain can't follow some of it, too! But my BS alarm doesn't start jangling either. One thought builds on the next starting with a strong logical premise. There is a reassuring and regular use of simple but powerful words like "could", "might" and "possible".That's what keeps bugging me about your posts. You seem unaware of the inherent flaws in your basic assumptions and presentation. Your foundation is shaky and you can add all the flying buttresses or annotations you want but the structure is unstable and the result is not elegant, or enlightening. It is illogical, high on the demogogue-o-meter,and lacks any real aesthetic. That you have researched and read volumes is irrefutable. It's the assumptions you build on which don't add up. What these posts smack of to me are of someone who has arrived at a conclusion and has done backbreaking work to find the any and all supporting evidence no matter how thin or whether it might be contradicted by far more available, prosaic and rigorous studies. You use anecdotal evidence liberally. The opposite method to: phenomena> hypothesis> experiment> data> result. And certainly no: results/evidence contradicts hypothesis> new hypothesis. Oh no. Uh uh. Sure economics is right up their with psychology as far as "hard science" but it doesn't excuse illogical premises and faulty presentation. It invites it so IMO you have to be doubly vigilent to seperate your ideas from what you purport to be facts. You've obviously put a lot of time into this worldview but I maintain what I have read of it is flawed right down to the keystone. If you ever wrote this out in flowchart form, one simple sentence premise following another it wouldn't compute. It is eating it's own tale. As a programmer I think you know what I'm talking about. "System Error". Maybe that's why it requires volumes to support. Simplified it doesn't bear scrutiny.

I do think you have the potential to write some great stuff. Maybe even be published. I'm not trying to soften my ctiticism with hollow praise. I mean it. But I also think you'd have a hard time getting past an editor or a peer review.

Sincerely, Alex

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#19) On March 12, 2009 at 6:15 AM, DaretothREdux (49.28) wrote:


I love logic too man. I find it a very useful tool when I want to refute anything not strictly based on mathematical fact. It's a great tool for manipulating other people into what you believe, but it does not in fact line up with the way the majority of people think and act on a daily basis. I prefer Aristotle's method myself with a little Nieztsche mixed in for spice. Factual conclusions are great like gravity exists. But so what? Does that change my life? Would it matter if I didn't know gravity exists? Common sense still tells me that when I fall down it hurts, and that jumping off really high buildings and thinking I will float is probably a bad idea. All well and good if my intention is still stay on the ground. But even the strictest of science can bend, and even the most structured logic can falter when you add in emotion.

Myself, I like to fly...

I have no doubt you can tear this argument apart (so could I), but you would only prove my point in the process. Sometimes its alright to follow your heart and stand your ground even when the facts may tell me that I'm living a pipe dream.

Freedom was once a pipe dream for many.

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#20) On March 12, 2009 at 3:05 PM, Alex1963 (28.90) wrote:


I agree with you. Logic is not an end all. I'm trying to make a point about making faulty statements of absolute which are being passed off (IMO) as a logical progression of ordered ideas. If there were any acknowlegement in these posts of emotion being in the mix (I'm sure there is) or the possibility of faulty logic (pretty obvious) or wrong assumptions, I wouldn't spend 30 minutes writing replies like the above, believe me! I think David and other Swiss Schoolers mix a lot of really harmful stuff in with their occasional good predictions and more reasonable analyses. Ron Paul vs Schiff or Misch for example. Someone has to say something thoughtful-not just a driveby-"you're a loony" type comment. I've tangled personally with Misch over some of his more rabid and contradictory opinions and engaged others here on MF. These guys are riding a high of credibility for finally being partially right after years of dire predictions and have just gone loco with the doomsady scenarios IMO. The best I can say is that they are like xray techs who think they are oncologists: great for spotting tumors (sometimes) but way over their heads IMO when they start prescribing treatments. They see a small and manageble tumor likely curable with conventional and low impact treatments but insist that we need to amputate whole limbs and torsos asap. In fact they'd be really happiest if we were to tear down the whole hospital. (Which is where David is going with his treatise on fiat currency I will bet my pile of fiat blod money on it! I don't even need to see installments 2-5 or whatever ) Citing extreme scenarios as facts and declaring the most exaggerated prognoses imaginable. I could be wrong, too of course. Maybe David, Schiff, Misch etc will be vindicated some day soon. God forbid. But I think I make it clear where my opinions and emotions and gut feelings inform the arguments I present.

Thank you for the comment


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