All that glitters...

I have to admit that I am musing on the topic of money and economics lately. Not just fiat money, you know, the folding stuff in your wallet that you spend. I am considering why gold has value.

There are two commonly held views as to why money has value:

1. Social convention--People are willing to accept it as payment.
2. Government decree--The government says so (Fiat money).

The first reason, that being that money has value because people are willing to accept it as payment is nothing more than a circular argument. It states that money has value because it is accepted. Why is it accepted? ...because it has value!

The second belief is also false. As history reveals, there are many country currencies that have suffered through hyperinflation or complete collapse click here.

Right now we are witnessing the collapse of the world economic system which is causing great grief to governments. The problem is what is going to replace it. Not to mention there is fierce resistance from the "haves" who see their power waning as their wealth becomes worthless.

Money originally started out as a commodity. Originally, people exchanged goods according to their wants and needs with one another. Examples of commodities that have been used as mediums of exchange include gold, silver, copper, salt, peppercorns, large stones, decorated belts, shells, alcohol, cigarettes, cannabis, candy, barley etc. These items were sometimes used in a metric of perceived value in conjunction to one another, in various commodity valuation or price system economies. The problem is that it makes trade difficult, so along came a medium of exchange that eventually became money.

Money has to fulfill three things to be useful:

1. It is a medium of exchange.
2. It is a store of value.
3. It is a unit of account.

Now the real hitch is value. The title of this comes from the fact that I read that gold has no real value. I read somewhere that gold's value is subjective. That is

1) The item is useful in satisfying human wants, therefore it is desirable
2) There is a limited supply to satisfy demand.
3) We are told it is valuable even though it can't be eaten, worn, or very useful.

There are actually three types of value in economics, Objective, Subjective, and relative. Objective value is a value set by a marketplace such as a commodities exchange and is otherwise known as market value. It's a bit like the social convention that says "gold is valuable because people find value in gold". Relative value is the attractiveness measured in terms of utility for a given instrument of exchange.

Although value in general is relative. That is even if gold has a market value (Objective), it doesn't matter whether you think it's valuable or not (subjective), it does not affect its objective value. However, the situation in which the gold is supposed to be of value does matter, because value in general is relative to individual and circumstances. For instance to person X, who happens to be stranded on a desert island, gold is not valuable. Its value to him is still objective. That is it won't all of a sudden change price because he decides so, that's a market force. But relative to him the value of gold is, objectively, zero since it isn't useful for exchange. That is there is no utilty to gold.

So, in a situation where the currency has colapsed and one needs food, which is more valuable to the person with food: gold or something they need?

I like to quote the TV show "Jute City": Money in of itself isn't evil, its when people take it from a medium of exchange and make it into a commodity that it becomes evil. Probably more of a paraphrase than a quote, but you get the idea. There is a cruder version of this which is "money is like shit, it's useless unless it's spread around."

Part of the problem is that people have been wanting to accumulate far more money and things than they need. That means the rest of us are stuck in an economic form of musical chairs since the economy is really based upon debt. I know, I just did a literary no-no by introducing debt into this mix about money and value. But really the fiat money has been backed by debt and not by value for some time now. That is the reason for the seeming economic fluctuations. Although to be quite honest, the economy has been in recovery for quite some time now: at least since Reagan-Thatcher came into office.

Why are so many people having trouble making ends meet given the economic recoveries?

Actually, the economic situation is like a game of musical chairs and the recoveries have just been changes of songs.

But the real gist of this is that the gold out there is worthless if it can't be spent. It's nice to think something has value until you try to sell it.

Then you really see the market forces kick in.

Right wing astro-turf, or why nothing ever really gets done

There is a phenonmenon called astro-turfing by politicians. This is the practise of creating a fake grass roots effect. The Gun Rights/RKBA crowd are notorious for this since they tend to appear like flies to shit when someone makes any sort of comment that some form of regulation is needed regarding the purchase and ownership of firearms.

Their funniest statment usually runs along that there are loads of gun laws on the books right now, why don't we enforce them?

Because these gun laws are toothless due to the fact that the legislators are scared shitless of the "gun rights" lobby. Quite frankly, they aren't worth the paper they are printed on.

And even more foolishness, the agency tasked with enforcing these laws, the Bureau of Alcohol, Tobacco, and Firearms (BATF, ATF) is vilified by the gun rights crowd. This agency has no power or funding because the gun rights crowd don't like them. In fact, the gun rights crowd does everything possible to make sure gun laws aren't (a) enforcable or (b) enforced while saying the gun laws on the books need to be enforced!

So, go figure!

From the Center for Responsive Politics's OpenSecrets.org website:

If lawmakers are guilty of tiptoeing around gun control issues, it is because the NRA and other gun rights groups wield an enormous amount of influence in Washington. The source of that influence is money. Gun rights groups have given more than $17 million in individual, PAC and soft money contributions to federal candidates and party committees since 1989. Nearly $15 million, or 85 percent of the total, has gone to Republicans. The National Rifle Association is by far the gun rights lobby's biggest donor, having contributed more than $14 million over the past 15 years. Gun control advocates, meanwhile, contribute far less money than their rivals -- a total of nearly $1.7 million since 1989, of which 94 percent went to Democrats. The leading contributor among gun control advocates is the Brady Campaign to Prevent Gun Violence, formerly known as Handgun Control, which has given $1.5 million over the past 15 years.

If gun rights groups have a substantial advantage in campaign contributions, they dominate gun control advocates in the area of lobbying. The NRA alone spent nearly $11 million lobbying elected and government officials from 1997 to 2003. But it wasn't the gun rights lobby's biggest spender. That was Gun Owners of America, which spent more than $18 million on lobbing over the same period. By contrast, the Brady Campaign to Prevent Gun Violence spent under $2 million on lobbying from 1997 to 2003, and the Coalition to Stop Gun Violence spent $580,000.

The National Rifle Association has an additional advantage over all other groups in the debate. As a membership organization, the NRA can spend unlimited funds on communications to its 4 million members that identify pro-gun candidates. Those members also contribute millions of dollars in limited donations to the NRA's political action committee, which runs ads aimed at the general public that expressly advocate the election or defeat of a federal candidate. Since 1989, the NRA has spent more than $22 million on communications costs and independent expenditures, with more than $18 million spent in support of Republican candidates.

So, what we are seeing isn't really the popular voice, but the voice of money talking and influencing politics. In fact, Most of the "Second Amendment Scholarship" that has come out in recent years has been funded by the NRA! For example, Nelson Lund is the Patrick Henry Professor of Constitutional Law and the Second Amendment at the George Mason University School of Law. This position was created thanks to a one million dollar commitment to GMU School of Law by the National Rifle Association Foundation announced in 2003.

The Academics for the Second Amendment is funded in part by the National Rifle Association. Academics for the Second Amendment isn't exactly a collection of academic gun nuts--most of its more than 500 members aren't academics! The organization is engaged in a genteel lobbying effort to popularize what many liberals consider the gun nut's view of the Second Amendment: that it confers an individual right to bear arms, not just the right to bear arms in a well-regulated militia. Since it was founded in 1992 by Joseph E. Olson of the Hamline University School of Law, who was on the NRA's National Board of Directors, Academics for the Second Amendment has held by-invitation-only seminars for academics who share its beliefs about the Second Amendment--or might be persuaded to adopt them.

Strangely enough, Academics for the Second Amendment doesn't have a website, but it does have a blog!

In fact, it's fairly hard to find information on this group, but I would put that it does have an incredibly strong connection to the NRA given the lobbying efforts of the "gun rights" crowd. Funny though that Academics for the Second Amendment doesn't give out any info on who belongs to it. The most I could find was this:

A2A is a tax-exempt educational organization recognized under IRC §501(c)(3) [that makes your contributions tax-deductible]. Our primary goal is to give the “right to keep and bear arms” enshrined in the Bill of Rights its proper, prominent place in Constitutional discourse and analysis.

A2A was formed in 1992 by a number of present and former law school teachers, joined by historians, political scientists, and philosophers of government, who believe it is time to stand and be counted in support of a complete Bill of Rights which includes an individual right under the Second Amendment. The organization seeks to foster intellectually honest discourse on the Constitution, the Bill of Rights, and, of course, the environment in which academics, judges, politicians, and the public place the rights preserved by the Second Amendment.

Now, wouldn't an organisation with such noble goals work in the open?

Anyway, I plan on delving deeper into the topic of paid "scholarship" and the Second Amendment, but the real point I am making here is that there isn't an "intellectually honest discourse" going on here--especially since money is talking the loudest. In fact, money is drowning out any real discourse or action.

So, I don't need to mention that there was yet another mass shooting near Pittsburgh, PA since even more inactivity will come of it. I might have even been flooded with comments if I allowed them.

How bad is the economy?

The economy is so bad that not even counterfeiters are able to make money!

I wanted to get that in print before anyone else does. Not sure what good it will do me, but....