When An Advanced Degree Isn’t Enough

I recently purchased two books on the subject of Austrian economics. The first was, in my opinion, eminently readable and highly informative.

The second was not.

So while trying to slog my way through the first chapter of the second book it occurred to me that:

If one sets out to write a book on a particular subject there are two prerequisites that must be met. First one must intimately know the subject matter. And second, and most important, one must be capable of writing.

If one has the first, but not the second, no one will be able to tell that the writer has either.

A Radical Idea for Insurance!!!

Okay… so… all the insurance companies will hate me for this. If the people in the government and the people running for government offices claim this plan as “good” and work to make it happen the future of what is now “insurance’ will disappear and it won’t matter.

Presently we have “insurance” of different kinds. If you wish to drive a motor vehicle, you have to have insurance covering various things like you have to pay for insurance for injuries caused by you or your car, physical damages to other vehicles and things, etc. To obtain such you need “automobile insurance” for which you must pay a “premium.”

If you want to get medical care and are not rich, you presently can get “basic care” for “emergencies” whether you have medical insurance or not, but after a few days the hospital can declare you medically “stable” and toss you out the door… UNLESS you have a lot of cash or medical insurance. With the advent of Obama “care” you can now have “insurance” that pays for your medical expenses after they exceed the amount of your “deductable” (which will probably amount to an amount higher than you’d pay for a new car – and which most people cannot afford so since they never pay the “deductable” to the providers, the government never has to pay off on the “insurance” they mandate that you “buy.” (Just figure that it’s a tax, and the government won’t have to pay out on most people’s “insurance.”)

And of course there is now insurance for just about everything that can happen to you in life. Fire insurance. Yep. Mortgage insurance? Yep. And lots of other kinds of “insurance.”

Where do all these kinds of insurance come from and why do they exist?

1. Most people are insecure. In a world where most people are “just getting by” they consider it essential to have a way to hold on to some value even in the face of a personal disaster. (For example a house/apartment fire that burns up everything they own.)

2. Put that together with the fact that due to their insecurity you’ll find that – People are risk-averse. (That means they are afraid of risk!)

In their minds they think that if something CAN happen, it’s a certainty that it WILL happen… sooner or later… to someone… somewhere… and what if it’s THEM? (many people are almost CERTAIN that it will be them.) It doesn’t matter that out of the millions of home owners in the US a miniscule (teeny tiny) percentage will have a fire that destroys their home and the stuff they own. It seems to me that most people will spend their entire lives paying for insurance policies and never, that’s NEVER collecting anything back for a “loss.” And even if they do collect on a loss, over their life spans they will pay in far more than they collect – that’s why insurance companies are so profitable. ie the ODDS of them having to pay out more than they collect are non-existent!!! But the insurance industry spends $millions of dollars convincing people that if it can happen to SOMEONE, that someone will be YOU and gee… what would you do THEN? (Thus you NEED insurance, and the siren song of the insurance industry enlists governments to FORCE you to buy certain kinds of insurance and make them rich, and to be risk-averse.)

Actually, in regard to the things that insurance can pay for, if you lost everything in a fire and had no insurance you’d probably do very well. If you have a job, you’d keep getting to work somehow (a co-worker would maybe give you a ride?) and you’d keep bringing “home” your pay. (Where ever “home” is – staying with relatives for a while or in a cheap motel) So you’d find another place to live so you could start visiting the Meca of America (WalMart) to accumulate more junk just like the junk that burned up… only THIS would be NEW junk – all shiny and spiffy! (But the insurance companies don’t want you to figure that out.)

So… here’s the plan… the alternative to the current MegaScam that’s called the “Insurance Industry”.

The government pays for your losses.


No, it’s not welfare. It’s not Socialism. It’s where you pay in an appropriate percentage of your pay from work/business profits/etc to the

US Insurance for Everything Fund.

It would be like a voluntary tax. But you ONLY pay in if you want to collect in the event of a personal disaster. And there would be NO deductable. The government pays for everything you lost… after adjusting the amount for “wear and tear” (ie you don’t get a new 52″ color TV to replace the 19″ B&W set that burned up.)

And if over a period of time the government fund pays out less than it collects, the people could opt to get a proportionate refund of premiums paid in or leave the excess “on deposit.” If the fund pays out more than it collects, those paying in would have to pay more.

Medical care would be paid at 100% (+/-) of government cost with a nominal fee which could be waived for the indigent and elderly – ie model it on the VA Medical Care system. Hospitals and doctor’s offices would have no “profit” – and pay no taxes. Drug companies would be paid for actual expense (including reasonable R&D) – but not a DIME for “promotions” or advertising. There would be NO middle-man insurance companies!!!

And so on. Along side of the government system could be a “private” system that the rich could use if they wanted to. They would pay 100% of their medical bills and absorb all personal casualty losses from all adverse occurances – ie not a DIME from the government, and no tax deductions for medical costs or losses due to hazards.

And the best part of the plan – you would have an individual account and when you die, your family or relatives (your “beneficiary”) gets an amount equal to the total that you paid in less the amount that you collected in insurance “payments” plus interest. (If the govt paid 4% interest and the going interest rate was 6% or 8%, then the govt recovers plan administration expenses via interest payments.) So if you wanted to pay in more than you had to (see above) – you could look at it as being government sponsored life insurance… you pick the beneficiary.

If you collect more in “insurance” payments over the course of your life, then the govt subsidizes your “insurance” and picks up the bill – which would be a form of what is currently called “welfare”. Of course, your family would get no “life insurance” – but hey… that would be an incentive to work harder to provide something for them after you’re gone.

So… we get rid of the predatory insurance industry, and we can stop worrying about risk and the losses that MIGHT come our way as a result of life happening to us.

And my phone stops ringing and interupting my life with BS and lies.

An Interesting Day… and it’s not over yet.

A day in the life… This morning was church… then on the way home I stopped at the store. Not much interesting about that, eh?

But after I got home, I had things to do. First I printed out a draft copy of a novel I wrote called “No Credit.” Well… the title makes a sort-of sense since I used to be an accountant, but it has little to nothing to do with accounting.

The book is about 86,000+ words of Science Fiction/adventure. The title comes from the meeting between a woman who runs a junk yard and a space alien who needs a part for his space ship. It turns out that the part he needs can be replaced with a part from an old Chevy straight 6 engine. And the story goes on from there.

While I was doing my stuff, my wife was working on a bee project – making swarm catching boxes so we can maybe add to the population of the apiary without spending a bunch of money and driving all over creation to get short-weighed bee boxes. Then I wandered around our place looking for appropriate places to put our swarm-catchers once they are made.

Then I did my first inspection of the ten new bee colonies I brought home a couple of weeks ago. Being used to the bees I had last year, I didn’t bother to wear a bee suit. While working in the second hive, a bee rocketed out of the middle frame, landed on my left wrist (the sensitive underside, of course), and nailed me. (AHHH!!! I Die for Queen – defendng her and the hive from foreign human invader!!!)

So I got my first sting of the year. (I only got two stings all last year and most of the time, didn’t wear any bee equip.) So I guess I’ll have to wear bee gear for a while until they get to know me better.

The inspection went well… mostly. One hive that was under strength to start with was empty, The “3# package” was awfully light when we picked it up! I’m not sure if the queen escaped during her release, or if she just got robbed out of existence since we had a bunch of feral bees attacking and robbing hive 5 – and hive 5 was in deep doo-doo before I could get control of the situation. So I have an empty hive now. But I did stop the ferals from attacking any other colonies.

As a sort of balancing thing, hive #4 had most of 9 frames of comb built and was working at filling it – so I put another deep super box on top of the brood box. If the weather’s okay tomorrow for a while, I need to put second deeps on hives 6 and 7 too.

Most of the rest of the hives are 1/3 to 1/2 filled with comb and bees – so I’ll have about a week or two before I have to add another deep to them, and then start stacking the honey supers atop of the deeps.

One of the reasons I need to be sure the comb is being built straight and strong in the brood box is that I lost a colony last winter because they had cross combed and then when it got cold they couldn’t get to their honey stores and so died.

So now we’re getting a tornado watch. The angle the storm’s coming in at means no tornado for us. When the thing reaches the updrafts from the 120 foot loess bluffs between us and it – well… it will just start lofting over us, break-up, and then re-form on the down wind side of us, like they always do.

By then, I plan to be in bed asleep, ’cause tomorrow’s another day – and I have lottsa work to do.


Spring Chickenz

It’s that time of the year. Time to collect eggs and put them into the incubator. We collected eggs for 5 days, held them in the fridge (42F ) then put 48 of them in the hot box. Thursday they began to hatch. Out of 48 slots we have had 39 hatch so far, and there are a couple that may yet hatch as the shells are pipped or have broken shells. That’s a bit over 80%.

We took the egg turner tray out when they started to hatch so the little birds would have room to run around a bit and wouldn’t get caught in the moving parts. We were supposed to take it out on the 19th day of incubation, but according to the machine that was Thursday and 4 had already hatched before we got the tray out. The incubator has an automatic timer that’s supposed to tell us what day of incubation we are on (day 1, 2, etc) but it’s made by the Chinese… who apparently can’t count. But it worked out anyway, since I pay attention. (In another post, I mention that I have a Chinese pocket watch that has 360 “degree” marks around the watch face like you’d have on a compass, but the numbers only go up to 300.)

Today I cleaned out the smaller of the chicken house pens (6′ x 9′) and set up our “chick corral”, which is a 24″ wide roll of sheet steel that we unroll and set on edge. (Three thicknesses of steel and the circle makes the corral walls stand up without supports). So it’s really easy to set up, and when the chicks are big enough to not need the protection of a high wall, and big enough that they can’t squeeze through the pen fence, it’s easy to take down. (Just tighten the roll and set it in the corner until next year.)

So the little birds are all fluffy and running around eating their feed and chasing each other over the piles of dried grass from last summer that I had in old feed sacks.

An interesting thing – to me anyway – is that we have two roosters which are different colors. One is mostly white, the other a dark red, and both of them are Brahmas. (Presumably White Brahmas and a Red Brahma.) So far, the chicks have come out one color except for a single chick that is a different color. We’re waiting to see which of the roosters is mostly shooting blanks. Anyone good at doing a real Coc au Vin with a year-and-a-half old rooster? I may have a properly aged rooster available soon… ;-D

National Geographic Article, “The War On Science”

Early on in the article, NatGeo poses a question: “Why Do Many Reasonable People Doubt Science?” I may be able to enlighten the author, Joel Achenbach, on the subject.

The article as written by Mr Achenbach is not written very well. One subject with which I am well acquainted is the issue of “global warming” or “climate change”- but global warming and climate change is not and never has been an issue. For somewhere around 3 or 4 Billion years (+/-) the climate has been changing. It gets warmer, and cooler and warmer and cooler, over and over again with absolutely no involvement or causation coming from human beings.

So to tidy up his sloppy terminology, I will say that the issue in question that is causing all of the fuss is neither of these terms. The issue is “ANTHROPOGENIC GLOBAL WARMING” (AGW) – which is much more specific and controversial. What AGW means is that the climate is changing because things that humans are or are not doing is changing it. That is the part that is in question.

On this specific issue, I will now state that whether the climate is or is not changing is not resolved.

Neither are the issues of how it may be changing and what may be causing it to change. So to put it crudely, anyone who maintains that AGW is happening is talking out of his/her ass. There is absolutely no evidence that AGW is occurring. There may be evidence that weather may be trending towards warming or cooling. And here we should point out that in the ’70s the climate hissy-fit crowd was screaming about the impending ice age – also apparently caused by humans.

Climate can be simply defined as “weather over a long period of time.” Climate change is when an area that has been cool and wet and green for a few hundred or a thousand years, changes and becomes dry and barren over a few hundred or thousand years, or similar long term radical changes. The AGW proponents are claiming “AGW” is happening after a period of only 25 years of observation. (Since there has been zero meaningful change in recorded temperatures for about 20 years they apparently based their conclusions on a sample period of only 5 years.) In real climate change terms, this is the time it takes for a person to blink their eyes. *blink* oops! Ya missed it!

The article accuses many of not being “scientific.” In keeping with being scientific, may I ask you Mr Achenbach, by what metric you determined this? I await your numbers and the specifics of your procedures.

When AGW first hit the news, I waited until IPCC Report #2 was released, then read both #1 and #2. There were things that I did not understand in them, but as a person who has a firm grounding in the practical sciences (including steam engineering, basic nuclear theory, hydraulics, & etc.) and especially in the scientific method, I noticed a few glaring problems in these documents.

First we’ll look at how the IPCC determined “Solar Forcing.” (The amount of heat rise in the Earth’s system caused by the Sun). Now, I can’t quibble with the IPCC’s numbers… but I can certainly quibble with their methodology. They started out “estimating” (not measuring) solar forcing at around 50%. After they’d run some numbers they changed their minds and decided that 50% was too high, and so arbitrarily lowered the amount of solar forcing to 25%. It should be noted that neither of these numbers were obtained by measurement or via application of the scientific method!!!! So…. the IPCC’s solar forcing number is pure unadulterated BS.

Then I looked at how they proposed observers around the world should gather data – you know – the numbers that they tell us prove AGW? (Things like temperatures, levels of atmospheric gasses, etc.) As I recall, there were three levels of collectors and thus collection of data procedures. One level was for urban and advanced areas, like the USA where there were no significant impediments to data collection. Another was for areas where there were some levels of difficulty expected in collecting data… things like mountainous terrain, etc. And the third level of difficulty was where it was nearly impossible to collect data without endangering life and limb, or areas that were virtually impassible like dense jungle filled with hungry wildlife.

I interpreted these differing levels thusly: Area type 1, go read the data. Area type two, go read data that is convenient to get and guess at the rest. Area type three, make up what the data might be and pretend it’s real. All such data was then reported as factual.

After reading these first two “reports” I decided that whatever the IPCC was, it certainly had no intention of being in any way “scientific” or that it was even vaguely familiar with that thing many of us refer to as “the scientific method.”

I think that the above goes a long way in answering the question of Why Many Reasonable People Doubt Science. When “science” ceases to be scientific, it becomes an agenda driven political movement, or a cult. The IPCC is a political cult. Nothing more.

Also Mr Achenbach doesn’t seem to understand that there is a vast difference between “science” and “belief.” He displays an obvious bias against scientists who do not “believe” in the areas he indicates as being validated truth – thus “scientific.” I consider some things as being as yet “undetermined” – such as “evolution” – in my mind that’s unproven one way or the other. (Many of the “fossil proofs” have later been found to be fabrications, and as to the Biblical creation story, it seems to me as plausible as evolution.) Not being considered is the possibility that we were evolved. But at any rate, it’s not my area. Do I believe that it’s possible? Eh. Not that important to me. ;-D

Are vaccines bad? Well… as Mr Achenbach indicates like so many others I sometimes base my “beliefs” on personal experience, and based on my personal experience I’d say many of them are good. Others are clearly in the “questionable” class. So to me, it depends on the vaccine. When our kids were quite young, there was some problem with the whooping cough vaccines – our Pediatrician was a vaccine expert – and he advised us to not get that one for the kids at that time, which advice we heeded. The rest of their shots, they got.

Fluoride? There has been some recent evidence that the stuff actually decays some ethnic people’s teeth instead of protecting them. True? Dunno. If that is true, then the people so affected should be provided with non-fluoride water, or the stuff should not be put in the public water supply. As the Hippocratic Oath put it, Primum non nocere, “First do no harm.”

Moon landing? I’ll buy it.

GMO food? If for no other reason I’d ban it because it is causing the establishment of a food monoculture – which is BAD!!! And I have a visceral objection to being forced to consume known poisons in any form or concentrations, especially when the chemical/herbicide/pesticide companies are sneaking around like weasels and refusing to allow scientific testing of their products (except by them… and can we trust their results? If they won’t let it be tested by independent labs, whether true or not it appears that they have something to hide so I’m doubting they are trustworthy.) All I know is that the stuff they put on crops these days is killing bees… evidence enough for me that it’s not good for us.

Yet despite the weaknesses of the piece, I find that accidently or deliberately, the truth is contained near the end of his article.

Towards the end he puts a quote from geophysicist Marcia McNutt. In regard to asking questions about science issues, she said, “Everybody should be questioning. That’s a hallmark of a scientist. But then they should be using the scientific method, or trust people (who are) using the scientific method, to decide which way they fall on those questions.”

Thank you Ms McNutt. Now all we have to do is figure out how to teach the nation’s politicians, schools and teachers what the scientific method is and how to teach it and use it, and that’s not going to be easy.

Romney, Romney, Romney – Once a moron, always a moron.

Ahhh… Mitt. You’re an idiot. Sorry to be so blunt but truth is truth.

The question about Global Warming the Dems put to the Senate was a trap – and the GOP fell in. In fact, except for one Senator the entire Senate fell in. So I guess you could say that 99% of Senatorial scientific morons agree with you… or are as dumb/stupid/uneducated as you are. When it comes to stupid, being aligned with 99% of stupid people is not a good thing.

The question as put to the Senate by Socialist Sen Bernie Sanders was a 2 parter: “… asks senators to agree or disagree that ‘climate change is real” and is “caused by human activities,’ ”

I’m not going to argue the issue here. In my mind the issue has been settled for years by the climate itself – which hasn’t seen a temperature increase for nearly 19 years (despite the BS put out by the AGW folks, and the fudged temperature reports from the NOAA and NASA people.) You can argue all you want that the un-change was or was not caused by humans. No one really cares.

Contrary to popular belief Science is not determined on the basis of a majority vote. For scientific questions, the answers are determined by UNBIASED observation and testing and examining the discernable FACTS – not by the majority opinions of non-scientific people, or by the pronouncments of people with political agenda. The truth in Science is not the result of opinion polls.

So despite the claims of the Mann-iacs and their hockey-stick attempts to lie about reality, the true majority of “climate scientists” are NOT in agreement with the statement that “Global Warming” exists (since objective data demonstrates that global warming is not happening), or that it is being caused by man (If it’s not happening, it cannot be “caused by man.”)

Over 30,000 scientists have signed a document so stating (http://www.petitionproject.org/), while considerably less than 3000 agree with the AGW claim. (I’ve seen a number as low as 300.) If you want to know how the AGW “scientists” can say that “virtually all ‘climate scientists’ agree” I can tell you how they work that. It’s really quite simple. If you don’t agree with them, they simply don’t consider you a climate scientist, no matter how many degrees you have or how long you’ve been one, and they control all the “climate” publications so you can’t get “published.” At the same time they boost their numbers by considering such people as meterologists as “climate scientists” – which they’re not.

You have unequivocally stated that you BELIEVE in man-caused climate change/global warming. “I’m one of those Republicans who thinks we are getting warmer and that we contribute to that,” he said Wednesday at an investment management conference in Utah, the Associated Press reported.” (http://onpolitics.usatoday.com/2015/01/22/mitt-romney-climate-change/)

You’d make a lousy President. Good Presidents do not go off half-cocked, buying into every BS fairytale that comes down the pike. So Mitt? Once again I will not be voting for you, for anything. You have proven one more time that you’re an idiot.

My suggestion? Don’t run. You’ve got the people of MA fooled into thinking that you’re competent, or at least putting up with your incompetence. If that’s the best you can do, I’d suggest you stick with that.

Gettin’ BUSY!!!

Why is the slowest time of the year the busiest for me? You know… Winter. When it gets all COLD and the plants and trees die-back, and the animals loaf in their dens and burrows snarfing the food they stashed away all summer, (including the dog food they stole from the dog dish) and the ground does its impression of concrete. (It’s really good at it! I was impressed! Maybe the ground should try out for a part in a movie playing concrete?)

Ordered more bees yesterday. But had to figure out how many I could afford since before I could order more, I had to figure out how much I could spend on new hives for them…) So I ordered more hives to put them in first.
Sighed HEAVILY at what the two things above will do to the old bank account. :-(

Gotta make a trip to town sometime soon to get some stuff… gotta unload the chickin feed from the car first… But today if it’s as “warm” as it’s supposed to be today, gotta start trying to clean up the garden weeds from last year (’cause I didn’t get it done last year – I was too busy cutting fire wood for the winter so I wouldn’t have to do it in the winter… which would cause me to FWEEZE my Widdle Pinkies off!) Gotta mail some stuff in a box. And of course, gotta do some dishes and feed me… but then EVERYBODY has to do that.

Last week had one day break between the 3 day Great Plains Grower’s Conference (where I made a deal to trade some seeds from a wild fruit tree for a couple of plants from a different kind of wild fruit tree.), then got a one day break and had to go to a funeral that was waaaaay out of town… so it was motel time – & pack the stuff I’d need, & make sure I didn’t leave any of it (at either end of the trip).

The funeral was good – even tho it was in the Frozen Wastelands of the North and colder than a Witch’s Twinkie (as my wife puts it)! The deceased (a retired US Navy Seabee) was accorded full military honors including the folded flag, Taps was sounded with a real bugle by a lady named Gloria from Bugles Across America (GREAT JOB BTW! – You ever try to blow a bugle in really cold weather?), the Patriot Guard Riders showed up and froze standing a flag line, there were Legion Riders there, the VFW was there to fire the requisite rifle volleys, the American Legion was there, the Masons were there, a couple of active duty USAF guys in uniform (relatives) participated… did I mention how COLD it was yet all those people showed up? I was impressed! And they really know how to give a guy a good send-off! I’m sure he’d have appreciated it. (It should also be noted that during his lifetime, he had attended many such services for other veterans.)

This is entirely off-topic, but I think y’all need to know what great kids I have. One of my daughters had a trip to Texas a few weeks ago, and while down there (I think) she bought me something. She bought me a “brain cell”… a neuron, to be specific. It’s gray and fuzzy, and kinda funny looking. She said “thought you might need this… ” or something to that effect. Smartazz. Definitely a chip off the old blockhead! I thanked her (’cause I really COULD use a few extras.) And then I told her she should have got me TWO brain cells – so that I’d have at least two of them to rub together. ;-D


Today Was A Good Day

Yes. Today was a GOOD day!!!

First, the temp was in the low 50s (F), which made it a day we didn’t have to freeze. We’ve been running electric heaters for the last couple of days because the wood stove wasn’t running right – so yesterday we shut it down so it could cool off and we could dive into it today to see if we could figure out what was wrong with it.

Let me say here that electric heaters are no substitute for a good wood stove!!! Not only don’t they heat as well, but there’s no fire… no cheery flickering flames… no warm glow that you can back up to and toast your rear while holding your hands down at your side getting the cold soaked out of your knuckles. And the wood costs a LOT less than the electric!!!

I shut it down a few days ago for the same reason. It just wasn’t burning right. The draft just wasn’t right. Once it was cool, I took the baffle out and found the baffle gasket was kind of shredded. I have no idea how it got that way, but it didn’t matter. I had one spare gasket, and installed it and reinstalled the baffle. The stove seemed to burn much better, so I ran it the rest of that day, then set it up for the night and went to bed. Got up the next day and I was back to before.

One of the things I used to do for a living was I held and worked under a First Class Stationary Operating Engineer’s License. I ran big powerful boilers and loud machines, and the kind of equipment that roared and scared people who don’t work with it everyday. So I know a bit about captive fires – what they should look like, how the flames should behave, what color the fire should be and why it should be that color. The fire just didn’t seem to be getting enough O2 for a good fire.

Unlike the last time, this time I had my wife present to help me. She asked me questions about the draft, where it came from, how it got to where the fire should be. Trust me. I’d already considered everything I knew about this particular stove’s draft, but couldn’t find a problem with it… other than that it was inadequate. I’d eliminated all the possibilities that I thought I was capable of examining. The things I still thought it could be were walled off from examination by welded steel.

Then my wife… yes… the smart one of the marriage… stuck her fingers down in the front of the fire box and lifted the primary air feed manifold right out of the stove. (I thought it was welded in.) Behind it was a little pile of ash that was blocking the air flow. I got a putty knife and scraped the ash out, we put everything back together, and fired the stove up… YEAAAAHHH!!! HEAT!!!

So… today was a GOOD day. But then I’ve been having lots of good days since I married her 33 1/2 years ago.  😀

And it was also warm enough to work outside, so we got the plastic up on the windows that tend to leak air, and some home-made bean soup with beans we grew last year, and just kind of hung out.

So now… as it gets dark, I prepare to go up to the chicken house, collect the rest of the day’s eggs, check feed and water, and then come back inside, and toast myself. Yep. Any day you can come inside and toast is a good day. Especially if you have a wife who’s smarter than you.  😉

Some Monetary Basics (Replay)

As the “global economy” grows more and more shaky, I thought it might be helpful to repeat some of my “basic money” posts. So here are a few of the most basic with a few advanced/semi-advanced concepts and issues tossed in for good measure – with minor editing being the only changes from the originals. 

Some Monetary Basics (Part I)

(First published version – Wed Dec 24, 2008. Edited and expanded version May 9, 2011)

I’m reading around the internet things that don’t make sense to me. They don’t make sense because apparently the people saying them don’t understand how the international banking and finance system works, and perhaps don’t understand the foundation stones of economics and finance. So I’ll give a shot at conveying some basics – so that maybe some of what’s going on will make more sense.

Okay – first you must understand currency since it’s the basis of the system.

In the OLD days, currency was either “specie” (Gold, silver, copper, etc coins) or tokens that represented specie, or they bartered goods directly – one for so many of the other. If you borrowed a gold coin from someone, you had to come up with a gold coin or its equivalent value in silver, etc to pay it back. Specie is also known as “hard money”.

The main problem with specie is that there is only just so much of it. A story is told that England was once having a shortage of coinage that was crippling the economy. The king/queen was said to have summoned the religious leaders of the day and told them to bring their “saints” (statues) from the churches to be melted down to make coinage out of – the sovereign was said to quip “Let’s get them out of the church and put them into circulation!”

So a shortage of hard coinage can bring commerce to a halt.

This gave rise to “currency” – which started out as paper or some durable token that REPRESENTED specie. An example is the US Silver Certificate – paper dollars which you used to be able to present at the US Treasury and receive one dollar’s worth of silver for it. This fixed the value of the currency at an equivalent amount of a precious/semi-precious metal. If you didn’t have the metal to back up the currency, you couldn’t print up and hand out currency.

But you still only had just so much metal!

So some wag decided that since the currency was “as good as” the metal, they didn’t REALLY need to have as much metal as currency. So they started printing more currency and just maintaining a “reserve” of the metal for those malcontents and distrustful folks who actually wanted to trade the convenient paper for the heavy old metal.

The amount of currency flourished, and so did trade. But eventually, folks saw that there was so much currency floating around, there couldn’t POSSIBLY be that much metal to back it up. So the ability to trade the currency for the metal at a fixed rate – was ended. (In 1971 Nixon unilaterally abrogated the Breton Woods agreement and took the US off the Gold Standard.)

So… did the world come to an end? No.

Did currency disappear? No.

But as before, the world of finance and the use of money changed. The unchecked printing of money creates what is called “fiat” currency. (More on that later.)

If you have questions, please feel free to ask them. If I don’t know the answer… well… Ummmm….


Some Monetary Basics (Part II)

(First published version – Dec 24, 2008 (cont.) This part edited and expanded May 11, 2011)


But like specie, currency had limitations too. Have you ever seen a $10,000 bill? Nope. As far as I know, they don’t make them in the US. So spending a $million could be a tedious affair. (And as we all know, today’s Trillion is yesterday’s Billion!) With the advent of the electronic age it became possible to keep up-to-the-split-second track of transactions – so instead of changing the currency, electronic money/monetary transactions were created. I know people who don’t have check books, don’t carry money. They just have a debit card. I’ve always advised that diversity is good – and having diverse methods of paying for things is really good! One of the people I know who only have debit cards found out that I perhaps wasn’t as dumb as she thought when the power went out in Ontario for a week or three – and she couldn’t even buy a cup of coffee at Timmies!

So, trade goes on, and even though they are just making an electronic transfer of numbers from one account to another, people still talk about “dollars” because at least in the USA for the present, that is the word we use to infer the price/value of things.


Since we don’t back the currency up with metals and such any more – what is behind the US dollar? Why do people accept it in exchange for goods and services? The US Currency is “backed by the full faith and credit of the United States Government.” Period. Nothing else.

Now – I used to think that that phrase meant that the US stands behind every dollar in circulation including the electronic ones, you know – sort of an honor-bound thing to provide value in return for dollars – to “redeem” dollars with something of real-world value. I was wrong. What I now believe that phrase means is that “as long as people have faith in the dollar (faith that it has value and that others will exchange real/tangible value for it), and as long as the US Government can borrow to back it up (the “credit” part), then the dollar is worth something.”

If people lose faith in the dollar – it’s worthless. It doesn’t even make good toilet paper ’cause it’s not very absorbent.

If the US government loses the ability to borrow, the dollar loses its value as a currency. If the people lose faith in the value of the Dollar, US currency becomes worthless. Those are some pretty shaky blocks to build a national monetary system on, eh?


Now we take a leap from what a dollar is – to how it can be used.
– It can be used as a ruler – yes – the US Dollar is EXACTLY 6 1/8 inches long. So you can measure a fish with one and tell if it’s legal length.
– But mostly it is used to measure value – which makes it a medium of exchange. A pair of boots is worth how many chickens? Dunno? Well… if you have a Medium of Exchange (in this case the dollar), you can figure out how much in “dollars” the boots are worth to you, and then see how many chickens you can get with that many dollars.

But remember – the dollar itself has NO intrinsic value!!!

So since it functions as a medium of exchange, you use it as a commodity that REPRESENTS (symbolically) boots and chickens. You can PRETEND it’s a bunch of chickens and instead of trading 34 chickens for the boots, you can just hand over an equivalence in dollars and not bother with the chickens at all.

(First published, Dec 24, 2008 )

Some Monetary Basics (Part III)

Now things get tricky. (Some monetary/economic issues)

What happened was that a lot of clever people in governments (only governments are allowed to make currency) decided that they could just print up as much currency as they needed and spend spend spend. When they started doing that, there came to be LOTS of currency around, so the currency lost its value. (Value of a commodity such as currency is tied to scarcity or plenitude.) When you have more currency/money being created than is needed, it’s called inflation. It takes more inflated currency to buy things because since there is more of the individual units of the currency (“more dollars”), each unit is worth less than before.

Now, I’ve heard a lot of economists say that inflation is the result of “the wage price spiral” but they’re wrong. You can’t HAVE a “wage price spiral” if you don’t have enough money to allow for rising prices and wages. So inflation is NOT caused by wages and prices going up – the wage price spiral is a SYMPTOM of inflation. The ONLY cause of inflation is putting too much money into the economy. Period. And too much money in the economy will kill it just as fast as not enough money in the system. (Not enough money in the system causes “deflation” – where each monetary unit becomes more valuable than before.)

The dollar represents value, but again, HAS no intrinsic value. So… say you’re a new country. You can print up some currency – say some Zlotys – but how will people know what Zlotys are worth in exchange for the stuff they want to sell you? Exactly how many zlotys would a double dip chocolate ice cream cone cost?

You go back to the historical foundation of currency and figure out that you need something to “back the Zlotys” up – something of recognized value like gold or silver. But you don’t have any gold except in your teeth. What to DO? You get a loan from someone who gives you dollars (World Bank?). Then you print up Zlotys (with the president’s picture on one side, an ice cream cone on the other). For every dollar you borrowed, you decide that you’ll print up ten zlotys, making your exchange rate 10:1, zlotys:dollars. Now, instead of gold and silver you are using the dollars you borrowed as your “reserve currency.” You hold the dollars in “Reserve” – so the Zloty is now ALSO “backed by the full faith and credit of the US Dollar.” N’est ce pas?

You say – “We are setting the Zloty at a value of ten Zlotys per US Dollar – this will be a fixed rate of exchange until we get established here, and then we’ll do something else. We’ll allow the Zloty to “float” against the dollar.” In other words people will know how many Zlotys to pay for goods, and how many to get paid for work because EVERYbody knows what a US Dollar is. Then, once your economy gets established, the Zloty can set its own value by the amount of goods and services your economy is creating.

When you fix the value relationship of YOUR currency to another currency at a set rate, like the US dollar, this is called “Pegging” – in this case, “Pegging to the Dollar.” So if the US Dollar has ten percent inflation and loses value – then your currency also loses value, and so on. A peg of one currency to another fixes the value of the inferior currency in relationship to the other.


Well… we’ve talked about money – the different forms it takes, what can be done with it, and a few general economic things having to do with money/currency. But what we haven’t talked about until now is EXACTLY WHAT money/currency REALLY IS. Stay tuned for PART IV.


Some Monetary Basics (Pt IV)

Initially published, Dec 24, 2008 (Edited and expanded 5/17/2011)

Okay – NOW we get down to the IMPORTANT stuff… EXACTLY WHAT IS MONEY/CURRENCY?

Let’s start out with the illustration, then the definition/summary. I think it will be easier for you to follow the concepts that way.

So, let’s say that you decide to go into the lawn mowing business. Okay… you hoof it up and down the street, trying to get your neighbors to “hire” you to mow their lawns. You finally find one, and the two of you agree that you should mow and trim his lawn, and he’ll pay you $25 for the job. So you get busy and do a great job, and he hands over a 20 dollar bill and a 5 dollar bill – transaction complete.

But IS it? No.

What really happened in the above paragraph? You agreed to give up a part of your life and perform a service. Your neighbor agreed to give you a couple of pieces of paper that according to current convention, represented a certain value that you could exchange somewhere for something that you value. So you do that. You ran over your foot with the lawn mower while you were doing the guy’s lawn, so you need a new pair of boots. You take the $25 in paper money to the store and find a cheap pair with steel toes (so you don’t whack your toes off if you run over them again.) And for purposes of our illustration, those new boots cost EXACTLY $25, and there is no sales tax.

So you traded your time and lawn care skills for a new pair of boots. But you didn’t get the boots from your neighbor. What REALLY happened, was you did the work, and your neighbor gave you an IOU for the boots… or for something. Then you gave the currency to the shoe store clerk, who will then use it to pay an employee, or to buy a box of shoe laces or something. So your work has now purchased a pair of boots, and whatever the shoe store owner will in turn exchange your neighbor’s debt to you for something he needs.

But how did the shoe store owner know that your neighbor owed you a pair of boots? He accepted the currency/money as valid representation of the debt owed to you by the neighbor (or someone), and he presumed that the neighbor was good for the debt. BUT – he doesn’t KNOW the neighbor – so how could he trust the IOU?

So… having written at length as to how money/currency is used, and such, we now, FINALLY come to EXACTLY WHAT money REALLY IS!

Money/currency is “Nonspecific Debt.”

That means anyone can collect the debt, or transfer it to anyone else, and it’s as valid as if you wrote a contract with specific names and conditions in it. Why did you take the $25 from your neighbor? Because you ACCEPTED that someone else somewhere else would redeem those notes for something of reasonable value. And the shoe store owner did the same thing when you traded him the paper money for the boots. So you exchanged labor, part of your life, for some unknown person’s promise to pay you something of value in exchange at some time in the future.

So modern economies don’t just create debt by borrowing money – they RUN on debt.

So when you “save money” what are you doing? You are holding someone else’s debt. Can it evaporate? Sure can. How do you make sure that you have value instead of debt? You have to redeem that debt/money for something of (real world, tangible) value so that if the non-specific debt is defaulted on by the sponsor of the paper (government?) – YOU don’t get stuck holding the bag.

CAN you “save for the future”? No. At least not by hoarding money. There is a simple economic/accounting reason/law that it is impossible to “save for the future”, and it’s the reason Social Security can’t work. It is this;


If you have a US Savings bond, can you buy food with it? Probably not because like money the savings bond represents debt – but a different kind of debt than money. A US Savings bond is SPECIFIC DEBT – which is to say that the Government (one specific party) owes YOU (the other specific party – your name is on the bond). So before you can redeem that debt (spend it), you must convert it from specific debt to NONspecific debt (money) or change the specified parties. And since you have no way of knowing what the value will be, or will not be of future debt (due to inflation, deflation, default, etc), you cannot save for the future. If you seek to “save” for the future, to “put aside” the fruits of today’s labor/time for use at some time in the future – the ONLY way to do that is to currently redeem your non-specific debt, and your specific debt for some asset, some item of value, that will reliably return CURRENT income/revenue in the future that is likely to have an value comparable to it’s worth today. The classic such investment would be to buy a liquor store. Another classic strategy is to “think generationally” – which is you take care of your parents, and your kids take care of you, and you all build he family’s wealth through the generations.

And just as a sort of extra value thing here – gold, silver, precious metals, gems, etc are no different than corn, beans, and carrots. They are not magic, they do not “hold value” (ie they cannot be counted on to return a specific amount of a commodity in the future) any more than any other commodity. If you think gold is some mystical stuff that will hold value through the ages – you need to talk to the Saudis who decided to abandon the petrodollar for gold. (They refused to be paid for oil with US dollars and demanded to be paid in gold.) After a while of other nations paying for oil with gold, the price of gold went up and up as the Saudis held it – from somewhere around $200 USD an ounce, to over $800 USD. Then the Brits, who IIRC controlled the price of gold at the time DROPPED the price to back to around $200 USD. Again – IIRC, and the Saudis returned to taking USD for oil. I found the outcome of that situation highly amusing.

And it also illustrates another principle – just because a bushel of corn sells for $8 USD today, does not mean it will do so tomorrow. The value of commodities floats against other commodities and against currencies and according to scarcity and need. And always remember – metals like gold, silver, platinum, copper, etc are commodities. So the idea of hoarding gold to protect against a crash of the value of a currency would probably be an ineffective strategy since the dollar price of gold will fall with the rest of the commodity prices. Will it increase in relative value? There is absolutely no way to know that. (Aside – you would have a better chance of retaining value by holding gold than by holding boxes of cornflakes… but it’s a relative thing. :-D)

Do I own gold? Not an ounce. Can’t eat it, can’t use it to stay dry in the rain or warm in the winter. Unless someone else wants to trade me for something else that’s useful, gold is worthless. (Or as a person I know would put it, gold is an “Oooooo SHINY!). And besides – the mythos that has developed around the stuff over the ages makes it dangerous to own. I’ll take my commodities in non-GMO food. :-)

Generally, I think that people who understand the NATURE of money, and the role it plays in our economic lives, have a better chance of doing well when it comes to ordering their own economic lives, than those who don’t.

But that and the above stuff is just my opinion.

Fables and Fairy Tales

Not long ago I posted a piece where I referred to the book, “Mote In God’s Eye” (Larry Niven & Jerry Pournelle) and the concept of the Motie Museum, which functioned as a “reset” of knowledge and technology for when (not if) the Motie civilization destroyed itself. The function of the Museum was so that the Moties didn’t have to start from scratch when (not if) they destroyed their civilization.

Then I said maybe we (humans) need a motie museum.

This AM, while having a discussion with my wife about “fairy tales” and myths and legends, it occurred to me that perhaps we DO have a “Motie Museum” of sorts. Perhaps our “museum” doesn’t just have technology in it. Perhaps it also has sociological and cultural tips and pointers, and yes, warnings, as to the best ways to live and to conduct a healthy successful society?

One of the “fables” that came up was the story of Jason and the Argonauts and the quest for the “Golden Fleece”. She had been reading one of the “Science News” type web sites, and it was mentioned that in one location a stream passed through a gold bearing area, and rather than “panning” for gold as the ’49ers did, the people just laid out a sheep skin with the wool still on, and it caught the gold dust and nuggets. Has anyone in Alaska considered doing something like this? Maybe they have. So the story of Jason and the Argonauts is probably based on actual fact/history.

And the fables and fairy tales that demonstrate that honesty is the best policy, and that right action pays rewards, and hard work is rewarding, and that dishonesty (almost) always catches up with the dishonest and there can be dire repercussions from it… perhaps these are timeless principles for creating and maintaining a healthy civilization with happy prosperous people in them?

And perhaps these principles were more than principles… perhaps they weren’t “stories”. Perhaps they are history lessons that we should learn from because violating the principles found in them leads to destruction?

But I’m thinking that even if true, we must remember that humans are what they are. Or said in a different way, “People’s People.” Despite that truth perhaps someone, many someones, wrote the “stories” back in “the day” in the hope that humanity could rise above it’s nature and improve? And how could they do that without a guide map to a better society, to a better life for we humans?

So… find and read a fairy tale today. See what principles you can glean from it… and ask yourself “Are these principles worthy of being followed?” “Would the world be a better place if we all learned from this story?”

I dunno. And I keep coming back to that “people’s people” thing… which is probably why we need “forgiveness.” Wouldn’t it be better if we didn’t?