Topic: Debate
Redirect to Master C's "A Truthful Article Is Much Stronger Than One That Is Made Up" Master C comes charging back, claiming that I'm not being truthful. Let's take a closer look and see where the truth lies.by Walt Thiessen
(libertarian)
Thursday, October 9, 2008
First, an apology. I did in fact indicate that I had quoted from the wrong article in my Rebuttals piece, and I have corrected that section to show the right documentation.
With that bit of business out of the way, let's get to Master C's critique of my rebuttals.
"To say that money never creates any goods or services is about as naive as some hayseed not being able to find the hat that's on his head."
For someone who claims to have read and admired Ayn Rand's Atlas Shrugged, Master C's defiant assertion makes no sense. Rand would take strong issue with the idea that it was money which built Hank Rearden's famous "Rearden Metal," Dagny Taggart's railroad, or John Galt's power source, and for good reason. Her claim was that it was the human mind and ability which created and built these things, not money. Even more precisely, she claimed that it was the human mind which created and built these things in the face of the "looters of the spirit" who were represented in the persons of Orren Boyle, Peter Keating, Ellsworth Toohey, and the rest of her "anti-mind" characters. In fact, this was the central theme of Rand's novel, a theme which supports my assertion that it is people who build things, not money.
Master C thinks he has scored a point by claiming that you can't build things without money, so therefore money builds things. That's like saying that you can't build things without tools, so therefore tools are what build things. Yes, I agree that money is an essential item for going into production, but let's be careful about the way we use terminology. Tools (including money) do not create things. They are just that...tools...nothing more. I would no more claim that fiat money builds things than I would claim that gold and silver build things, because I think words and terms should be used more carefully and precisely and meaningfully than Master C uses them.
He is particularly incensed that I refuse to grant the title of "commodity" to fiat money, first by claiming that anything which is bought or sold is a commodity, and second by claiming that gold has no intrinsic value because it cannot be consumed. I'm guessing by "consumed" he means "eaten," because clearly gold and silver can be consumed in the form of rings and jewelry, high-priced tableware, decorative objects, etc. They also can be consumed as a resource in making other things. For instance, both gold and silver are highly prized by industry for their electrical-conductive properties. Silver is generally preferred to gold for industrial uses because the price per unit is typically cheaper, but gold can certainly be used for such purposes and often is.
Fiat money, on the other hand, isn't good for much else except, perhaps, as wallpaper. I'm not sure it would even work as wallpaper. Frankly, I've never seen anyone use it that way, but I guess I shouldn't rule it out as a possibility. Is that why Master C thinks fiat money is a commodity? Or does he think it's a commodity because you could burn it for heat? Unfortunately, it's not cost-effective enough for that yet, but give it time. The day is coming when fiat money will be so worthless that bathroom tissue will be more valuable than fiat money. I suppose if you really want to claim that paper has some intrinsic value, there's a tiny amount of truth to it. After all, paper is often bought and sold. At the moment, the price of paper is a whole lot less than the monetary value of fiat money, but never fear! The day will come when even fiat money will be worth no more than the paper it's printed on. It can't be avoided. Whether anyone will want to use it as money at that point is another matter entirely. I know I won't, and I'm sure other people won't, but I can't speak for Master C.
As for his claim that Walmart won't accept a lump of gold for payment, Master C knows perfectly well that the U.S. government has outlawed the use of gold and silver as currency, so of course Walmart doesn't dare accept gold and silver as payment. If gold and silver were legal to use as money, we both know that Walmart would gladly accept them in payment.
The quarters and dimes that the government currently lets us use, which are only silver plated, are items the Treasury department would rather eliminate, because the value of the materials themselves are now significantly higher than their legal monetary value. The price of nickel is considerably higher than the monetary value of a nickel. Even the lowly penny, which was watered down a few decades back by mixing zinc into the copper, is now worth nearly twice as much as the fiat monetary value of the coin itself! In fact, in 2006 the government outlawed the practice of melting down coins for their metallic value precisely for this reason! So if fiat money does have intrinsic value, I guess we'd have to say that that value is negative, not positive.
To be fair, the government does have a recent history of issuing gold and silver coins for collectible and investment purposes only, although even that practice has been suspended of late. What's equally true is that they have been so unwilling to produce these coins in any signficant numbers that it has been virtually impossible to use them as currency. even if it were legal to do so. They've been hoarded instead by buyers as a hedge against fiat money's ravages.
Getting back to his initial claim that anything which is bought or sold is a commodity and that therefore fiat money is a commodity: I was using the word "commodity" the way the marketplace uses it. The commodities market, for instance, refers to precious metals, foods, oil, coal, and other primary resources. Commodities in the marketplace are specific primary resources that have a market value. I suppose if you really want to stretch a term until it's unusable, you can claim that Roger Clemens is a commodity, as Master C seems to imply in his example. At best Clemens is a rare commodity, but even that isn't accurate. What is accurate is that his ability to pitch was for sale (until his age and the steroid allegations got the better of him), and that ability is not a commodity at all! He himself isn't a commodity either, no more than fiat money is a commodity.
I never claimed that money is not useful. I'll ignore the rest of Master C's suggestions to the contrary. What I claimed is that fiat money is fraudulent, that the way it is created is based on fraudulent principles. Real money (gold and silver), if it were legally permitted, would be exceedingly useful as money. Since we aren't legally permitted to use gold and silver any more, we are thereby forced to put up with a terrible substitute, fiat money. To that extent, fiat money is useful, as a tool of tyranny, because the only way for it to gain acceptance is by government forcing us to use it as money and nothing else! That's hardly an argument in favor of fiat money as opposed to gold and silver, however.
It doesn't make any sense to me to use terms like "commodity" if we're not going to use them in a meaningful way that conveys specific information. Master C's definition is not meaningful or helpful. He says a commodity is, "an article of trade or commerce." I suppose by that definition we'd have to say that a service is a commodity, since what Roger Clemens offers is clearly a service, and Master C considers him to be a commodity. But if we stretch the word "commodity" to mean anything that can be bought or sold, then an idea is a commodity too. At this point, I'd have to ask Master C: what isn't a commodity? If there is nothing that is not a commodity, then the word commodity ceases to have any useful meaning!
This leads to another very important question. If the word "commodity" is not limited to a physical item or product that has some intrinsic value, then what word can we use to describe such a physical item or product, as distinguished from a personal service, a government order, or any other non-physical "article" as he calls them?
It is Master C's intention that we eliminate from discussion the notion that fiat money could be considered different from hard money. Unfortunately for him, reality has a way of horning in. I know that he knows that hard money is indeed quite different from fiat money. My guess is blurring such distinctions is Master C's intention. Only by blurring the distinction between fiat money and hard money can he hope to deceive us into thinking that fiat money is worth anything and defend his claim that gold and silver are merely archaic curiosities.
Master C also thinks he's scored a point when he says the following:
If Walt is asserting that FIAT currency has been responsible for "undercutting the rate at which the economy COULD HAVE grown had hard money been in play," (emphasis my own) why is he listing a great stretch of downturns that occurred when we were using GOLD and SILVER CERTIFICATES? I guess sometimes when he starts pounding with that Libertarian hammer of his, he often gets a little carried away.
This is truly laughable. All of the downturns I listed took place after the passage of the Federal Reserve Act. It was the Fed who created the booms and busts, not silver and gold certificates. Here's the obvious test. If the choice of villains where the boom/bust cycle is concerned are (a) The Federal Reserve System (as I'm claiming) vs (b) gold and silver certificates (as Master C is claiming), then all we have to do is look at the historical record after gold and silver certificates were removed from circulation. That happened in the 1960s. Almost half my list of recessions and crises happened after that time. Therefore, it must be the Fed, not the certificates, which causes the boom/bust cycle, QED.
The fact is that Master C cannot explain the so-called "business cycle" nearly as well as Rothbard did, and no amount of Rothbard-bashing on his part can change that fact. Master C delights in bashing me as well, claiming that gold-backed currency is worthless. I know a nice little test for that one, too. Just legalize the use of gold and silver as money. Master C will never agree to that, and neither will the government, because both know that if gold and silver were permitted to compete as currencies with fiat money, without forcing them to be converted to fiat money at a never-changing fixed rate as was done for two decades after the creation of the Fed, fiat money couldn't possibly keep up to gold and silver money.
That's how they managed to get rid of the gold standard, you know. They fixed the price of gold at $20 an ounce, then inflated the dollar until they couldn't afford to redeem their dollars in gold anymore. Then they blamed gold for the problem, increased the fixed rate to $35 an ounce, for international exchange purposes, and FDR confiscated all the gold Americans held in 1933, 20 years after the Fed was created. But allow gold and the dollar to compete as currencies without using government edicts to force gold to be underpriced compared to the market, and the fiat dollar will shrivel up and die as currency, as Master C knows it will!
As for his little attack on my knowledge of history and the founding of our country, he says my claim "ignores the freedom that was deprived of women and blacks at this time in history." To the contrary, I don't ignore that at all. In fact, Thomas Jefferson, who was himself a slaveholder, wrote a scathing rejection of slavery in his initial draft of the Declaration of Independence. It was so powerful that the southern planters demanded that it be removed or they wouldn't sign. In 1784 after the Revolution was won, Jefferson also introduced a bill in Congress under the Articles of Confederation that would have outlawed slavery. It lost by one vote, and that one vote was a delegate from New Jersey who was known to be in favor of the bill but was home sick that day. If only he'd made an appearance, we would likely have been spared the Civil War some 80 years later.
In a sense, the revolution never ended. It took many years, but eventually equal protection of rights was written into the Constitution in the 14th amendment. Today it continues as good men and women strive to restore the primacy of these principles to their rightful place in America.
I doubt that Master C could find many modern women or African Americans who believe that the principles that our founding fathers fought for don't apply to them. He would not be able to find many people who do not believe that they are the basis of our understanding of liberty and freedom in America. Most Americans gladly embrace the ideals of life, liberty, and pursuit of happiness, and see them as the basis for freedom. If Master C does not, that's his misfortune, not ours.
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Nicely done, Walt. You show a good deal of class in dealing with this pipsqueak. I expect the rebuttal will be light on logical argument based in solid fact, and very heavy on smoke, mirrors and mud. Just like his misguided heroes, he can't handle the truth.
Just one thing to ad. I once though about melting down penies for their copper value. But today penies are about 90% zinc so they probably are still less valuable than $0.01 However, pennies before 1950 are loaded with copper and are worth more than $0.02. But to gather and collect just coins prior to 1950 and melt them down still requires some costs that were not worth the effort.
With paper it costs the same no matter the denomination. With regards to burning: A friend of mine from Taiwan was telling me that after their civil war with mainland China Their currency was so devalued that people were burning the lower denomination currency for heat because it was cheaper. You take a higher denomination exchanged it for lower denomination units and was cheaper than buying wood or other sources for heating. So it has actually happened. But we don't have to use my frien's example. We just need to use the Zimbawean dollar as a better example. Last Summer the cost of an egg was ZW$50 Billion. So I guess in Zimbawe every body is a Billionare and most are even Trillionaires
Even though many of Master C's arguments are falicious and foolish, he is right when he says that money is a commodity if he means physical cash money. Let's be fair. Digital money or money created in a ledger book is not a commodity, though. It would be better to say that MOST money is not a commodity. SOME money is (cash money.)
However, unlike other commodities, cash money's value as a commodity is based on laws and enforcement that require it's use. Absent this, cash money would be worthless as a money commodity and it would instead become a paper commodity.
Posted By: Walt Thiessen
Date: 2008-10-10 05:29:28
Dirty, I agree to an extent. True, gold and silver cash money are definitely commodities. Fiat money is a false and misleading commodity. It does get treated like a commodity when we have no legal choice about what to use as money, but my claim was very specific. I claimed that fiat money has no intrinsic value (not cash money in general) and that's what I meant when I said it. Therefore, fiat money (not cash money in general) does not really qualify as a commodity.
I suppose one can argue that if something has such a tiny amount of real, practical intrinsic value but is still tradeable that it qualifies as a commodity, but it seems to me a very large stretch of the word when our purpose in using it is to discuss intrinsic value. I suppose that even paper has a value per sheet, so that makes it a commodity.
Let's see, if I go to a store and purchase a ream of 500 sheets of paper for $5 retail, then I'm paying one cent per page. Divide that page into, say, six sections to be the roughly equivalent size of a dollar bill, then the value is roughly 1/6 of a cent. Put some pretty printing on it, and Master C would have us believe that it acquires an intrinsic value equal to $1...or $5....or $10....or $20....or whatever number is printed on the paper. Clearly, it's no big stretch of the imagination for me to claim in such circumstances that the dollar has no intrinsic value.
By his definition, everything qualifies as a commodity regardless of its relative value. If there is nothing that does not qualify as a commodity, then what's the use in calling things commodities when we investigate intrinsic value? Such use of the term certainly conveys no useful information. We could just as easily say "stuff" instead of "commodity" and the term would have equal meaning, but it would tell us nothing about intrinsic value.
Gee, Mr. Thiessen, if I were Master C, I wouldn't be so quick to call the founder of this website a liar. He posts here at your pleasure, and if I had been you I would have provided a definite rebuttal of his claims and then banned him from this site for malicious personal attacks. He owes you an apology, and I hope he already gave you one.
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