Electronic Currency: Economic Wildcard For Modern Times.

For several years there has been a tug of war in economic circles between the dominant Keynesian economists and those of the "Austrian" school.

More recently, there has been some question by the conventional economists to the Austrians: if the "printing" of so much "money" is supposed to lead to hyperinflation and its attendant economic catastrophe, why then in the wake of all these trillions of dollars that have been dumped into the economy, has it not happened?  Why are we still afloat, rather than having tea at the bottom of the economic ocean?

I believe there is a very good reason for it, and it the answer is not that the Austrians were wrong, but rather because at the time their theories were formulated in the earlier part of the twentieth century, there was one thing missing that today pervades the world economy: electronic currency.

Back in the olden days, the king would mint his coin and by whatever means it would find its way into the economy.  Once released, the king lost much of his control over it.  He could and often did make decrees making it a crime to do this or that with "his" money, but at the end of the day, people were going to do what they would, and for the most part the king was powerless to do anything about it, save in very specific cases.

The same can be said of paper monies of later times.  Once the national mint released its bills into circulation, it had in some ways little to no control over it.  For the most part, once a bill was out there, it was out there.

Fast-forward a few decades to the latter half of the twentieth century as we find something new that had never before existed.  The advent of the digital computer enabled a novel implementation of balance-sheet entries from paper to digital storage.  This in itself was insufficient, but once computer networking passed a threshold of capability and ubiquity, a fundamental shift occurred in terms of the king's ability to exercise far greater control over the currency assets released into the general economy.

Electronic currency, as it now exists in our daily lives, provides the king two capabilities in far greater measure now than ever before.  Firstly, it allows the king to know exactly who has what to a degree the kings of old could never have imagined possible.  And secondly, it enables the king to take back that which he gave.

Banking laws are many, and often very strict.  Part of the requirements placed upon those institutions that wish to do business as banks is that they must abide by the various rules for the maintenance and reporting of their assets, both for the purposes of taxes, audits, and the provision of information on the accounts of its customers.  With the right authorization, whether it be a warrant or some other rule to which the bank agrees upon becoming licensed to be a bank, any information on any account must be handed over to the requesting agency.  There is very little wiggle room for denying such requests.  If an FBI agent shows up a Chase Bank with a warrant for all account information relating to John Doe, the bank must provide it.  That information may be extensive, including balance information, transfers, and even purchasing information if the customer is the holder of a credit card issued by that bank.

This brand of access allows anyone in the right position of authority to gather much information on a given individual's financial activities and, by extension, others as well.

The capability in which we are mostly interested, however, is the ability to directly access accounts and alter their balances on command.  The significance of this can barely be over-stated.  Electronic records in conjunction with sophisticated networking allows someone in the position of authority to readily locate most, if not all, of the accounts attached or otherwise associated with a given individual.  Once identified, in purely technical terms it becomes a matter of a few keystrokes and the balance of any account can then be altered, whether outright or through transfer of funds from one place to another.

The power of this is absolutely enormous, both in political and economic terms.  A few short  years ago, for example, the island of Cyprus decided it was going to give every account in every bank there a haircut to the tune of ten percent.  In a matter of a single weekend, the government ordered all banks to close their doors.  Once secured from those pests whose property the odious government of that unfortunate nation sought to swindle, it was a mere arithmetic matter of examining the balances of each account, calculating the 10% and electronically transferring it to their coffers.

So what then is the significance of this in the context of hyperinflation and economic catastrophe?  It is plainly this: a government is now technically capable of pulling money out of circulation very rapidly, efficiently, and easily.  We shall shortly see why this is a game changer.

In times past, once the printed monies were released into the economy, repatriating them to the national treasury was a non-trivial, some would say mainly impossible, endeavor.  If the king prints and releases "too much" money,  the excessive cash artificially increases demand because people often spend excess money.  As demand rises, so follow the prices.  If the king errs by releasing even more money to address the rising prices, prices only rise even more.  At some point if the king does not gain possession of himself and stop releasing more cash into the economy, the rate of inflation then begins an asymptotic rise.   This is what is commonly referred to as "hyperinflation", at which point the king finds himself between a rock and a hard place.  If he cuts off the money supply on Monday morning, the economy will collapse to one degree or another by, say, Monday afternoon.

But the king may not want to suffer the consequences of his foolhardy decision.  Therefore, like all good intending but hopelessly misguided tyrants, he attempts to delay the inevitable in the hope that things will stabilize if given some time.  This, however, is unlikely, meaning that all he is accomplishing is the delay of the inevitable, all the while digging the economy into an ever deepening pit.

At some point the presses literally cannot keep pace with the demand for cash in response to the rapidly rising prices.  That is when the train goes completely off the rails and the economy crashes, often with very unpleasant results for many.

Because he was unable to recall the cash with any practicability, the king went the opposite way and drove even more into the economy in the false hope that it would somehow all work out.  Wrong-0.

But today the situation is fundamentally different.  If the king issues too much cash, he can simply order it recalled.  Forget the various legalities that might, under normal circumstances, tie the king's hands, preventing him from being able to recall currency without the benefit of due process for those from whom the cash is to be taken.  In an "emergency" those obstacles to unilateral action are often swept away at a moment's notice, paving the way for immediate and direct action.

Unlike in olden times where the practical reality of repatriating cash to the national treasury would have entailed real men visiting every bank and home in the land, computer technology allows accounts to be instantly identified, accessed, and altered to whatever degree the issuing authority deems fit.

Today if it is deemed that the amount of currency in the system is too great, by way of emergency declaration the issuing authority now holds the technical ability to identify specific repositories of such resources and instantly transfer them back to treasury hands.

Consider the TARP bailouts of 2008-2010, as well as the others.  Literally trillions of dollars were pumped into the global economy.  At those volumes there ought to have resulted an episode of hyperinflation.  While the inflation has indeed been high, it is nowhere near to qualifying as hyperinflation.  Why?  Have all the economists of the past 100 years all been wrong?  Well, no but also yes.  Not wrong in the sense that had those cash resources been actual printed paper, hyperinflation would almost certainly have occurred by now.  Wrong in the sense that what should have happened didn't, but that was because of the nature of electronic currency.

It is not inconceivable that those who received TARP payments, many of whom remain unknown to the general public, were given those funds on conditions.   One of those conditions may have been that once received, the transferees were not to do anything with those funds for some specific period, or perhaps not until given the green light.  It may seem unreasonable, but consider the alternative of losing your shirt with no recourse, save to go out of business.  All of a sudden such conditions do not seem so bad after all.

Electronic currency allows us to inject as much as we want, created out of thin air.  If the infusion proves too great, movement of some or all of those funds can be restricted, completely stopped, and the currency even withdrawn from  "service".

This capability alters the economic game fundamentally.  It also places frightening power into the hands of a very few men who now have to ability to crash any economy on the planet within a day or two.

As we plainly see, our advancing technologies have quietly ushered us across an invisible threshold into an age where at least some of the old rules may not necessarily apply anymore.  It remains to be seen how the landscape of these new technological realities unfold for us.  Something new is afoot, but do we have what it takes to keep it under control.  Perhaps more importantly, can we trust the people wielding this immense power?

As always and until next time, please accept my best wishes.

The Canon of Proper Human Relations

What is the right way to live amongst one's fellows?  What are the behaviors in which men are entitled to engage and which are those rightly prohibited or otherwise restricted?  To answer these questions, we must know how to make the determination.  Equally importantly, we must have a way of knowing that the means by which we arrive at our assessments reliably produces the correct result when properly applied.

These are questions with which human beings have been wrestling for an age, and yet it seems we never get any closer to the truth, judging by some of the practical choices we routinely make pursuant to the ostensible goal of living properly among and amid our fellows.  Is this because the answers are too difficult for us to understand?  I say no.  The answers are surprisingly simple and, in fact, arrived upon through the most direct and intuitively obvious logic imaginable.

What is difficult, then, is neither the answers nor the path to the answers, but rather the acceptance of some or all of the truths they carry.  The fact is that these simple answers often lead one to results that they find unpalatable, which then impels them to cast about for another, more amiable "truth"; one that does not chafe, but rather satisfies one's perhaps unstated, tacit, and even subconscious desires.  It is our human bent toward the corruption of wanting something for nothing that tends to drive us toward other corruptions.  Generally speaking, people want a state of existence that enjoys all the benefits of freedom without having to bear any of the costs of being free.  We want that which cannot exist: the proverbial "free lunch".

It is sad to observe the seemingly overwhelming proclivity of the average human creature to resort to all manner of mental gymnastics to justify the wanting of what they want, no matter how obviously ridiculous or even criminal those things may be, not to mention their efforts in attaining them.  We could speculate endlessly as to why so many people, I am sure a very vast majority, behave in this manner. I am not, however, interested in such expenditures of effort at this time.  Rather, I am interested in uncovering those simple and obvious truths that define the metes and bounds of proper human relations.  I will add that those principles so very happily coincide with the inherent freedom of each and every human individual.

Beginning at the beginning, there must be a postulate - an assumption - whose innate truth is so obvious as to be acceptable to all sane, rational, and honest men.  Likewise, its self-evident nature must be such that those refusing to accept it are put to the sword of logic such that they are unable to credibly support their refusal of such a base assumption.  This postulate, once accepted, serves as the basis for all that follows, constituting that which is built upon its bedrock.

As such, the postulate must be not only intuitively self-evident, but irreducible such that it cannot be validly further subdivided, conceptually.  It must in itself represent a conceptually atomic primitive.  The notion to which we will refer to as the Cardinal Postulate (CP) and which I would like to now offer as the basis of a set of principles of proper human relations is as follows:

"All men are equally endowed with life"

At first blush this may seem odd, even silly, or of questionable relevance.  This is perhaps precisely because it is so absurdly obvious as to not merit mention.  After all, is this not a deeply tacit assumption held by most of us - so deep in fact that we may never even have given it a thought until just now having read it for the first time?  That is the precise quality for which one should always seek when establishing a foundational assumption upon which to base a line of reasoning.  It is especially true of those philosophical treatises, the tenets of which purport as mandates imposed upon free men.  Such fiats must be based upon foundational assertions that are precisely so obvious that no man deemed to be in his right mind could possibly reject them, the burden to which he would be put in supporting his rejection being perforce monumental in order that the correctness of the requirement may be relied upon with supreme confidence.

From this simple, self-evident observation, one may now proceed to derive the sequiturs that issue therefrom.

It helps to note specifically that one is either alive or not alive.  It is of no import as to the character of one's specific state of being alive at any given moment with respect to the question of whether the person in question is, in fact, alive.  It is useless to speak of degrees of being alive, though people are in the unfortunate habit of thinking in such terms.  For example, one might say of a man clinging to life in the wake of a terrible automobile crash that he is "barely alive".  While emotionally compelling, in point of fact the degree to which the man is alive is not really relevant to the question of whether he is alive.  He is, and remains so until he dies, regardless of the quality of the life.  In other words, life is life and all life is equivalent as life.

To further beat that dead horse, consider that man barely clinging to life in the context of the Law.  Were you to unplug his life-sustaining devices, you would almost certainly be charged with murder.  A defense of "well, he was only barely alive" as justification for your act would not be likely to sway a jury to acquit you of the charge.  Even if only tacitly held, the members of that jury nonetheless would likely have a deep and very powerful sense that regardless of the man's condition, and perhaps even because of it, you had no right to unplug him such that he then expired.  And based on that profoundly felt sense of life, you would be then and thereby convicted.

It is here is that things become interesting.  The status of being alive is bivalent.  One is alive, or he is not.  If one is alive, his status as such is perfectly equal with that of all other men.  This is what it means to be "equal" in philosophical terms.  Equality is sameness, and in terms of our each being alive, we humans are precisely the same as every other human.  From that point on, each individual begins to rapidly depart from his fellows in terms of the specific qualities of his life, which are largely the everyday characteristics of the individual in all of its manifestations.  It is this distinction between the most fundamental fact of being alive and the superimposed characteristics of that life that must be understood in order to come to clear apprehension of the nature of men and of the proper order of their interrelations.

There is a fundamental difference between raw, undifferentiated life and the characteristics a given life may assume.  Some of us are male, others female.  Some have light skin tone, others dark.  Some are tall, some short.  Some like vanilla ice cream, others chocolate.  But in my opinion, nobody in their right mind likes strawberry.  As you can see, these qualities, characteristics, and preferences are all a little different, individual to individual.

Let it be also pointed out that the ways in which any given human being regards a specific "quality" or "characteristic" of a life in question is often determined by the various cultural influences that shape one's perceptions of the observed attributes.  What for one man may appear a wondrous quality  in life for another may be ultimately displeasing, perhaps even hateful, such as strawberry ice cream.  There is no single standard of judgment for individual preferences, but there is an objective standard for judging whether human life exists in a specific case.

Let us briefly summarize our findings thus far.

Life is life, regardless of its shape, flavor, and other specific features.  Poor or wealthy, tall or short, handsome or homely, healthy or sickly, in all such cases one is alive and that status of being alive is perfectly equal to that of every other individual.  As such, all lives are equal though they may manifest different outward characteristics.  Therefore, all lives merit equal respect as lives regardless of the differing superimposed attributes to be found with each individual.

This may seem as the splitting of semantic hairs, but in fact the idea is important and should be understood by all people because if we are all equally alive then our lives are, in sé, perfectly equivalent between any and all individuals.  This means that one life as a life in sé is neither inferior nor superior to that of any other in any true sense when such comparative assertions are subjected to the withering light of competent analysis.  If one's status as being alive is perfectly equal to every other's, those statuses must therefore be treated as perfectly equal.  After all, upon what basis would another standard of less-than-equal regard be justifiable?

From the Cardinal postulate follow a small body of consequents that include principles and their corollaries.  Let us now examine them directly.

This is what we have thus far:


Cardinal Postulate:

0 - All men are equally endowed with life.

For the time being, let us assume the truth of the CP.  Demonstrations shall come at a later date.

Because all men are so endowed, we find the Prime Corollaries:

0.1 - All men hold equal claims to life
0.2 - No man's claim to life is superior or inferior to that of another
0.3 - A man is born the sole owner of his life, that life being his First Property.

 

The equal rights of men imply the Cardinal Principle:

1 - All men are equal in their authority with respect to one another.

From this, the Fourth Corollary:

1.1 - All men are free with respect to one another

By virtue of the equal authority that the universally equal claim to life bestows upon and between all men, we now have basis for the Cardinal Proscription:

-1 - No man may trespass upon or otherwise violate the rightful claims of another.

From these, the following derive and are sustained:


Primary Derivatives:

Absolute Nature Of Human Rights With Respect to the Cardinal Postulate et seq.

2 - The fundamental nature of a Human Right is that of a claim to property.

2.1 - A man's right is just and valid if and only if it does not violate the Cardinal Proscription.

2.2 - The Just and Valid Rights of men are absolute because there exists no valid basis for denying them, all else equal.

Relative Nature Of Rights Between Men

3 - The rights of all men have equal effect, as such, between them.

3.1 - Rights are not additive in effect and valid moral power.  Taken in groups, the rightful validity and power of the rights of men do not inherently exceed those of the individual man, regardless of size, composition, or purport of such groups.

3.2 - The just and valid will of a single man may countervail that of any number of others, taken individually or as a group, where the will of the group would constitute a violation of the individual man's rights.


Human Rights Are Property Rights

4.1 - A man is the sole owner and proprietor of his own life, which constitutes his First Property

4.2 - All men are free to acquire property unto their possession to the degree that rightful acts may provide.

4.3 - The licit acquisition of property establishes a just and valid claim, or "right" to that property.
4.4 - All men are free to keep, use, and dispose of their rightful property as they see fit.
4.5 - No man may assert or exercise a property right over a Free Man without the other's free, perfect, informed, and explicit consent.
4.6 - All men hold the absolute right and authority to defend their rights against trespass and other violations.
4.7 - No man or group thereof may act against the rightful acts of another.

The Right to Contracts and Consensual Agreements

6.1 - All Free Men retain the right to enter into contracts and other agreements with one another, singly and severally.


Crimes and Criminality

7.1 - Any Man violating the Cardinal Proscription where an articulated and demonstrable loss to another is proven is guilty of having committed a Crime.
7.2 - Any Man having committed a Crime loses his status as a Free Man and assumes that of Criminal until such time as he has made his victim whole and paid whatever other debts have been assessed for his crime.
7.3 - Criminals may forfeit some or all of their rights including proprietorship of his own life.

This methinks is the Canon, more or less. It may require tuning, but I do believe that what we have here has more or less captured the essence of what it means to live properly among one's fellows.

I invite and challenge anyone and everyone to examine it and attempt to punch holes in the logic it employs and the truth is conveys.

We have described the fundamental nature of men's rights and how they relate one to the other. We have captured the single circumscription that exists to limit men's prerogatives and what it means in the most general terms when they violate those limits.

The rest, so far as I can tell, are matters of a secondary and perhaps changeable nature addressing the proper formal responses to criminal acts.  Once codified, I do believe that the entire and correct basis for all human Law will have been established in a form that has perhaps never been before presented to the world.

Please do give this some thought. Play with it; take it apart; try to drill holes in it, smash it even.  It is the only way to better ensure that what one has at hand is what he thinks it is, and is not something else.

Thanks for you time, and in advance for any thoughts you may share.

Until next time, please accept my best wishes.