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Mode Nook

Correspondence with Ron Paul Supporters

by mode nook

This response was the longest and most biting and covered the most points so started with this letter to me:

B. N: Also, no, people in other countries don’t want out intervention. Either provide some proof or stop making retarded arguments, which this whole article seems to be entirely comprised of. All this piece is is some liberal socialist rhetoric that tries to make it appear that basic economic principles don’t apply anymore. The world is not globalized near to the degree you state. Nobody in this country, outside of self-righteous idiots like you, really care about the rest of the world’s people. Nor do they much care about us.

And people-backed fiat money? This is the single most utterly retarded statement I’ve heard from anyone talking about economics. The Fed is an illegal banking cartel that controls our currency. That’s supposed to be congresses job. Even then, all they’re supposed to do is coin gold and silver as currency. The subsidies the Fed provides are the whole problem. Maybe you should look up”inflation” sometime. You might learn that adding a ton of currency into an economy causes prices to rise. It matters not at all what that money is spent on.

As far as free markets go, you are correct in that often times people ignore foreign subsidies of markets. However, to suggest that simply because other countries do that, that somehow invalidates the entire concept of free markets. Hell, if the Chinese subsidize manufacturing and sell it to us for far cheaper, then if anything it helps our market. You see, capital and labor allow businesses to make goods and expand. If the Chinese free up labor, and provide more capital to us by selling us stuff cheaper than it should be, we can then use the free labor and capital in other areas. That would cause some fluctuations, but those are (under a free market) quickly resolved.

Also, if you have an editor he sucks at his job, and I’m not overly impressed by your own grasp of our language, tough it is better than your grasp on, well, anything political it would seem. “Outside intervention weather by our..” is wrong. The word you’re looking for is “whether.”

* . *. *.

Hi Brenden. I thought I would just whip off a response to you as you have to me, but ended up taking all freakin day so you better like it. lol. I tried to be as condescending as possible. That always seems to be antagonizing enough to get someone to read through an entire piece. lol. Let me know what you think of the ‘new discoveries’ I’m presenting about credit and we as the gold. I look forward to your quick wit response once more. aloha:

Hi B. N.

Dialogue of Good Will

Your passion is direly needed against today’s political apathy, however, the name calling and intensive need to degrade those of a different opinion reduces the validity of your good arguments. It leaves you sounding more an intellectual bully. A rewrite without the contempt would offer a more convincing note though softer in tone. My dyslexic spelling may be annoying, but your dismissive pitch may prove a greater liability. Let’s keep these talks sporty conversation between American comrades rather than a cold hearted Newt out to crush his opponents. Changing the dialogue of the country means introducing better ideas as it is about having dialogue of grace and good will.

The Gold behind Fiat Money: You

The second paragraph of your letter completes the point I was making about the information gap of critics of fiat money. Putting aside all your name calling, you recognize that banks are not loaning cash to creditors. Banks only have 3% to 5% cash reserves against the ‘credit’ they are extending to clients. So where does the rest of this money come from? In fact, its not even fiat money. It’s not even paper. It’s some mythical credit that exist as computer codes in cyberspace somewhere.

This has always been the quandary of fiat money critics. They can’t figure out where this value is coming from. They are left to assume that the whole thing has to be a scam. They think it has been created ‘out of thin air’ but it has not. These loans have actually done a brilliant job of identifying the inherent value of the person borrowing the money. The person themselves is what the money credit is being issued against. This has always been the case. It simply took us getting off the gold standard to finally to see it.

The value is actually in the work or product that the client is going to produce with the credit provided by the bank. Let’s say you borrow a $100 from the bank and make 10 chairs. You now sell them for $20 each,. You just created double the value of what you were loaned. There’s the value for the original $100 as well an additional $100 of new value. In this way, you created new value to that ‘paper’ fiat money (credit). That value was always there as long as you could actually deliver those 10 chairs and sell them for double their price.

While the money supply remains the same, you now doubled the value of that money with new products. We now have $200 of value against $100 of issued credit. This new value (from the chairs) counters the initial $100 of credit and adds to it by another $100. There is no inflation because a real value has been created against the initial $100. This is as true of 10 chairs as it would be for 10 million chairs and a $100 million dollar loan against it. If there is real value against that $100 million, it will not create inflation.

Inflation is when there is more cash chasing fewer units of value and visa versa. So the amount of money issued is not the deciding factor, but rather, the value is decided if it can be backed up in either immediate value (gold) or future value (production).

The reverse is also true. Let’s say the bank lends you $100. This time however, you only produced $50 worth of value in chairs. This means we now have created an inflation upon that money’s role in the economy. There is now $50 more in credit then there is in value to ‘back it.’ That is where the inflation comes from. We keep thinking of money as a zero sum game, but its not. It appeared that way under the gold standard for you could only issue as much credit as their was gold, but now, you can issue as much non-inflationary money as you have in (deliverable) future production.

The value of any paper money (whether that be dollars issued against gold or not) is always based upon the value there to ’back it.’ In the gold standard system, if you find more gold to add to your reserves, you can extend more letters-of-credit (paper) against it. No inflation is created. It does not matter how much paper you issue as long as there is a corresponding value of gold against it. This is just as true of the paper money issued against a product ‘to be produced in the future.’ This system of credit works as long as the money goes to create the same or greater value of its amount loaned.

I came to see this as a dyslexic wherein we have simply reversed the same process we get from the gold standard, but we now do it without the gold. How? People. In short, the loans are being given against the people and what they can then do with it.

Banks inadvertently did this without recognizing it. It happened when they decided to shortcut the role gold was playing as middle man. The gold was simply a stand-in until the credit borrowed was used to produce its equivalent value and then repaid. Banks intended to scam people by loaning more money (credit) then the bank had in reserve, but banks could only do so because the actual value was always based upon the borrower creating equal or greater value then the loan given. Gold was simply the stand-in until that value was created. If people did not create that value, inflation was avoided by the banker paying out to creditors of the borrower or by enslaving the borrower. The borrower then became an indentured servant until the debt was paid.

Bankers of course chose to enslave people and in time, they worked to lend for the greater value of enslaving people. But that slavery could only happen if the money borrowed did not produce an item of similar or greater value that could then be repaid to the banker. The conspiracy of banks was to issue money that would not generate a corresponding value to repay and so create their slaves.

Money lending developed the notoriety of being evil for it seemed that to borrow would end in slavery, but this was only true if one did not produce equal or greater value from the money loaned to them. If you could generate enough to pay that loan back, you would do just fine.

In our example of the chairs, you produced double the value of the money lent and so you created more money that was now outside the federal reserve until you wanted to collect more from it via another loan.

Inflation has now taken the place of that slavery. Inflation is now the side effect of failing to produce similar or greater value against money issued. In both cases, it comes down to creating a greater value than what was borrowed. Whether that is issued by the Feds or by Congress, that true function of money has not changed. Nor has its counter part of either inflation or slavery. Until this is recognized, you will fail to pinpoint effective monetary policy. You mistakenly think that having the states or the feds or gold backed banks issue the currency will decide its value, but it won’t. The deciding factor is what value is generated from that loan. It really does ‘matter what you spent the money on.‘ In fact, that is the only deciding factor.

Most startling of course is that most everyone seems to have missed this. I discovered this from the sovereignty movement that says that all credit is actually issued against us anyway whether that be by the Feds, states, banks, congress or the Chinese. We are the walking gold bars that all credit is issued against. We all sort of know it without realizing it. The fact is that tens of trillions have been issued against people every day. This is the basis of our global economy today – credit. How can you not see it? Of course we are the gold. We always have been. The gold standard simply hid it all this time. Hence, I make the claim that you and Ron are outdated in your understanding of money. You start on the premise that this whole system is only a scam, and so you have never looked to see if there was actually any real value there to be had. There is. Hopefully, you can see it now too. I wonder if this would be some kind of award winning discovery. Lol. What say you?

Free Market vs. Foreign Policy Issue

I find your free market defense especially amusing because you unwittingly make my point for me. The premise of free market economics is that the most efficient provider of a service or product wins. In this way, we see an evolution of products and services. Gov’t subsidy distorts the advantages against the most efficient producers and instead leaves us with second tier providers. This is why free market proponents rail so fiercely against gov’t intervention. They insist that it destroys the most productive producers in favor of the most INefficient ones.

This is the story of China imports wherein China starts with its 50% subsidy of its currency before it includes all its other political, environmental and economic subsidies as well. All combined, it must run between 100% or more in subsidies of its products. This translates into the more efficient American manufacturer unable to compete against China. We are losing our producers to China’s subsidies.

You fail to see this obvious market distortion even though you quote this exact same scenario to me and dress it up as something good to ‘free up labor and capital.’ Yeap, you are right. $2 trillion in unspent capital and tens of millions of Americans out of work. And you somehow consider this a good thing. Wow. You may have noticed I said all this without calling you a single name. Please take note.

Where is this miracle you talk about in the “capital and lobar (that) allows business to make good and expand” in this economy? Its quite amusing because if the US gov’t does the subsidy, you cry fowl and carry on how it destroys our free market system. When China does it, suddenly, it’s some how a good thing. How is this possible? Why would it not be true when Uncle Sam does it? This kind of distorted logic is the result of those too radically confined to an ideological purity rather than a true reality of the world.

You fail to see that America is the most efficient producer and as such, China can not compete with us without its many subsidies. If you removed China’s subsidies, their exports would collapse overnight because they can not compete against America. If they were indeed so competitive, why do they insist on such massive subsidies of 50% to 200% (depending upon the product)? They know they can not compete without their subsidies. Why don’t you know this? You know it, but can not see it because of your obsession with free market purity which always means to blame our gov’t when things are not going right. You instead propose that we become more like China with more deregulation, labor abuse and environmental damage. China manufacturing is less efficient because they destroy their labor force much as they do their environment and communities etc. You have it backward my friend. America is more efficient because we take better care of those things. This is what I’m referring to when I say Ron Paul does not have a incomplete understanding of markets. You have demonstrated the point once again for me.

Foreign Intervention vs. Partnership

And now for your first paragraph. I like your first point about providing ’proof’ that others want our involvement. Your point suggest that if they indeed want it, we then have a mandate to provide it. And that is my point as well. I have the impression that there were a great many times were the USA has been called upon. In those cases, it is morally appropriate if not important for us to be there for these other countries. This is especially true when it is an issue of democracy as is the case with the Arab Spring. So though we may disagree over whether that call to us was real, the baseline to honoring it remains.

You end your first paragraph with a blanket statement that grossly over extends your credibility. You say: ‘The world is not globalize near to the degree you state. Nobody in this country, outside of self-righteous idiots like you, really care about the rest of the worlds people. Nor do they much care about us.’ (As a side note, NOBODY, happens to be a huge word.)

Your little sound bite personifies the misinformed premise of isolationist. They take assumptions that NO ONE else cares because they themselves don’t and if someone should care, they must have a problem as you described: ‘self righteous and an idiot much as the rest of the world is in return.’

This assumes that the different communities such as the Chinese, Thai, Italian, Irish, Mexican etc suddenly have no interest in the home lands of their lineage. But they do. And yes, they are American too. They have pride and have their host of concerns with these countries. And no, its not self righteous but an important context to their own lives today. There are also a host of business also working in other countries with their own set of concerns much as there are those with moral concerns as well. All of these groups are interacting with their respective countries and visa versa. How you could possibly miss this would seem inexcusable. This is why its so important we get exposure to new truths. While I maybe over stating the case, you have certainly far underestimated it. Maybe a balance between us would be good. This still leads us to the same point which is the need for a better context with the rest of the world. None of this has been developed in Ron Paul’s isolationist policies. You have proved my point beautiful in both attitude and lack of insight.

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