Some weeks ago Matt Taibbi’s bombshell exposed Big Money in the pages of Rolling Stone. Today a friend sent me this link to Taibbi hat-tipping Ellen Brown about yet another facet of bad money.
And it’s a whopper.
A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages.
Well then, it seems the house of monetary cards is everywhere. How much the mortgage problem owes to the Greenspan-era reserve note is up for endless debate, but surely the reserve note’s continued ease of abuse, from the very top down, fueled the crisis.
Some (in the update) will see, hear, and speak no evil about that monetary system and sadly, some of them are “conservative.” But with everyone from Paul to FDL to the Rolling Stone to scores of congressional Republicans and Democrats calling for an end to Big Money as usual, it seems we’ve finally hit upon bipartisanship Hope For Change.
The question is if we can get there from here.
Comment by cranky-d on 9/22 @ 12:03 pm #
Without the ability to foreclose, the completely natural result is that no one has to pay their mortgages because there are no repercussions for not doing so. I wonder what’s going to happen now?
Okay, I don’t wonder at all. I know.
Comment by Jeff Y. on 9/22 @ 12:06 pm #
Wow. Just wow.
Comment by OCBill on 9/22 @ 12:46 pm #
From what’s quoted, it’s not clear to me that MERS is even holding the note. If they’re not the lienholder, then why would they have standing to foreclose?
Comment by Pablo on 9/22 @ 12:47 pm #
How did I not get in on a free house? Damn.
Things are becoming very interesting very rapidly.
Comment by Eben on 9/22 @ 12:53 pm #
From what’s quoted, it’s not clear to me that MERS is even holding the note. If they’re not the lienholder, then why would they have standing to foreclose?
yeah, it seems to me maybe this isn’t that earth shattering because the lien holder would still have standing to foreclose.
Comment by happyfeet on 9/22 @ 12:53 pm #
I’m with OCBill. That Matt person needs to slow down and enjoy a tasty yoohoo and then slowly explain for us kids what are at the back of the class.
Comment by Blake on 9/22 @ 12:59 pm #
Banks are currently playing shell games with mortgages. They’re effectively not foreclosing, so they don’t have to take a loss. Yes, delinquency notices are going out, but, they’re aren’t being pursued. That way, the bank can carry the house on the books as an asset, rather than writing it down and taking a hit.
There is a lot of bad mortgage paper out there and I think banks are trying to slowly write down the debt, very slowly. I would guess the thinking is they can survive the losses if they spread them across a few years.
I don’t think they’ll make it, due to the coming collapse of the commercial real estate market, though.
Comment by happyfeet on 9/22 @ 1:00 pm #
All over the country, lawyers are contesting foreclosures because of similar chain-of-custody issues.
See that’s sick. The bottom line is that these losers can’t pay their bills and the lawyers are basically threatening to destroy the economy so their loser clients can’t sit on their loser asses in the houses they can’t afford.
Seems to me an insurance company could deny a claim by the same reasoning.
Comment by happyfeet on 9/22 @ 1:00 pm #
*can* sit I mean
Comment by The Sanity Inspector on 9/22 @ 1:09 pm #
Typo alert: his name’s “Taibbi”.
Comment by JHo on 9/22 @ 1:09 pm #
OCBill, ‘feets, see the Brown piece and read the five paragraphs under “Eliminating the ‘Straw Man’ Shielding Lenders and Investors from Liability.” The net effect lies within the court’s finding on MERS.
The Kansas Supreme Court:
Comment by DarthRove on 9/22 @ 1:10 pm #
Which leaves me to wonder, what’s in it for these lawyers? They have a customer what can’t or won’t pay their mortgage, and they expect they won’t have collection problems?
Or will the deal be, “Each month, you pay me 50% of what the mortgage is, and you stay in the house and we’ll screw the bank together”?
Comment by JHo on 9/22 @ 1:12 pm #
BTW, weren’t ARM resets going to sink our collective asses? I recall that being a 2009 thing. Anyone?
Comment by Thomas on 9/22 @ 1:27 pm #
Yeah, count me among those who fails to see how this is a good thing. Millions of people who can’t afford to pay their mortgages get to stay in their houses for free, artificially propping up housing prices while destroying the financial system. Or am I not getting it?
Comment by Frontman on 9/22 @ 1:31 pm #
I’m not a lawyer, and don’t play one on TV, but…
It appears to me that the real money in this for the lawyers could be in the establishment of a putative class of people who are being foreclosed upon. The lawyers would have to establish a thread of commonality within the proposed class, which under the present circumstances, may not be that hard to do.
Weigh in, lawyer types.
Comment by Blake on 9/22 @ 1:41 pm #
Karl Denniger of Market Ticker is pretty sharp.</P
He weighs in on this issue:
“A mortgage is a combination of a promissory note (that is, a promise to pay) and a security instrument. That is, there’s a deed of trust and a debt (the promissory note.)
State law governs foreclosure and most states require as a matter of statute that these two items remain intact. Further, most states require as a matter of statute (that is, law!) that to foreclose you must present proof that you actually have an enforceable interest. In many cases this requires what is known as a “wet signature” – that is, the actual original signed document from the debtor confirming agreement to be bound to the terms. In addition you must establish ownership of that document – that is, you must show an unbroken chain of assignments from the originating bank to your hand.
This is where the problem comes in – the originating lender has no standing to foreclose once he sells off the mortgage. He was paid in full and thus has no standing to appear in court.”
More at the link.Link here.
Comment by Blake on 9/22 @ 1:42 pm #
drat
Link here.
Comment by Blake on 9/22 @ 1:47 pm #
Double drat.
so you don’t have to scroll down and can go straight to the above referenced: Correct link (hopefully)
Comment by Old Texas Turkey on 9/22 @ 2:00 pm #
I’ll say this much and shut up.
WTF standing does Rolling Stone have in matters economic? Who the fuck is Matt Tabibi and why isn’t he at the FT or WSJ, if he can “see the forest for the trees”?
Well I’ll tell you why. The piece on Goldman Sachs in Rolling Stone is a hit piece. A frame up of a potential villan if things go south on Team O. Rolling Stone is part of the Gay Mafia loosely run by David Geffen. The one and the same that dropped the Clinton Machine in favor of Obama and got him running as a serious candidate with serious cash early in the Dem primaries.
They are setting up Goldman and Bernanke as fall-guys if it really goes south from here on out. Thats it. Plain and simple. Remember, the credit crisis was all the fault of the banks. Not Congress, not Fannie, not Freddie, not Chris Dodd, not Bwarney Fag. The Banks. Yea. Corporations exist in a regulatory maze. Thats how fucked up the system has become with the government inserting itself to the point of becoming the system. Corporations game the system and lobby the lawmakers for an edge. Thats all Goldman Sachs is doing. Being responsive to its shareholders by trying to maximize the bottom line by tilting the table in its favor.
It is the last remaining Investment Bank. The last remaining bastion of the free market capitalism. Remember that the Banks are the symptom of the problem, not the cause. O needs a bad guy, perhaps a couple of bad guys for cover his skeezy socialist schemes. Goldman is set up for the fall. When Bernanke was re-elected to another term over Larry Summers, the fix is in on him too. And he is an easy mark, being that he has abbetted the mess we are in. Goldman may have thought they bought their way into the game via campaign cotributions, but like I have said here many times before, they will be swiftly underbussed, if it becomes necessary. You don;t hear much from Volker and Buffett these days, do you? They have seen the nature of the beast.
If the Rolling Stone hit piece had any credibility to it, IBD or WSJ Opinion would have highlighted some of the aspects of the story. They haven’t. Because it has no legs. Caveat Emptor folks. There are a lot of people out there, that should know better, who buy into the “Goldman evil empire” story. Some of it is professional jealousy, most of it is ignorance.
Comment by Ric Locke on 9/22 @ 2:17 pm #
OTT is of course correct, but the fact is, all economic systems are “houses of cards”. JHoward should be less gleeful. One of the things about houses of cards is that they don’t partially fall down.
Regards,
Ric
Comment by JHo on 9/22 @ 2:25 pm #
Define or fully enumerate “bank”, OTT. That’s where the topic begins. I’m not sure you can give GS a pass while rightly calling banking a trainwreck.
And I know you can’t give Obie that much credit.
Comment by Ric Locke on 9/22 @ 2:34 pm #
JHo, I do believe Old Texas Turkey was recounting the “talking point” for ironic effect, not making an assertion.
Regards,
Ric
Comment by JHo on 9/22 @ 2:41 pm #
But OTT isn’t correct, Ric, not in sum. And you’re not correct about money, again not in sum if I understand your notes about it. If I do, the difference between us is that I call foul on the current system’s opportunity cost, which is failure by way of defeating free markets. I recall that you abstract money into simple trust, which if it is (and it is, ironically) must be assessed in a final analysis, that analysis including the runaway nature of this particular experiment in fiat notes, unpayable debt, epidemic devaluation, and our favorite, a kind of fraud at the top that while wanting for agreement on the semantics, has the net effect of impoverishing a country.
That is, trust is ruined, and the word can no longer be used to say that rocks and papers and trinkets constitute money as long as folks are willing to empower them with that attribute. Look around: Clearly trust is gone.
How these symptoms can be first ignored and then tacitly condoned as merely natural actions in an otherwise healthy trust system is beyond me. Always have been — if OTT is right, then he surely is on the nature of banking — which is to say that under the Fed-down pyramid, and owing as much to the myriad rules and regulations that prop up this paper monster, it has the power to first leverage the short term and then to ruin the long term.
Ok, the topic may be pointless exercise in pointing out innocent human folly, but it isn’t anything of the sort when it comes to pointing out manipulation and the fallacy that lets it stand. That that fallacy is left to stand while those above us ruin us for their enrichment is probably the greatest assault on classical liberalism. It defeats liberty from within as well as from without.
It’s not the technical nature of abstract money, Ric. It’s the real nature of systems and from them, the tenuous nature of liberty.
Old Texas Turkey:
None, actually, and he’s an ankle-biter, in the tradition of anyone tossing sticks in the spokes of corruption and irresponsible self interest operating within an inherently insolvent and opportune system, all of which stick-tossing I condone and appreciate. And I hope he goes far, the company he kept notwithstanding. Power is corrupt; let’s not make some nonexistent distinction between the corporation and the government in that regard, or likewise between the top bank and the US Treasury.
The Rolling Stone — and the left side of the political divide that is calling for bank reform — are in the same boat as Obie, OTT: They’re too clever by half. The problem is vastly bigger then they. It’s the global system that’s amiss.
So you have it about half right: The Rolling Stone may have shit for motivation but it is a broken clock nonetheless. The other half of your point should be that money is the problem — when you indict the banks for the credit crisis kindly extend that to the top bank. Our kind of money is the problem. The entire system is leveraged out over an abyss and to think otherwise and that Obie has this dazzling political card up his otherwise incompetent sleeve is a stretch.
When you rightly rail against the big corporate bank, you can’t hand Goldman Sachs a pass unless you let the money problem go too. I.e., the system is by now unrecoverable. Right, Ric?
Comment by happyfeet on 9/22 @ 2:42 pm #
This is getting scary to where I’m going to make a peanut butter sammich.
Comment by Old Texas Turkey on 9/22 @ 2:46 pm #
JHo,
I see where I lack clarity. To restate. I am not giving GS a pass. What I was setting up was: the banks operated in an environment of distorted values, imposed upon them by Government Fiat. The distortions were severe enough that it incentivized the accumulation of catastrophic risk rather than mitigate it (which is the purpose of a risk marketplace) by warehousing that risk on the taxpayer.
When the cards came tumbling down, the blame was laid solely on the feet of “greedy bankers and Wall Street”. Thats what I meant when I said the Banks were the fault. No mea culpa from the government. That made it easy to peddle the “solution” to get the government more involved and to bail out the offenders, rather than let the system correct (naturally as it would).
Thusly the banks are symptom of the unintended consequences of do-gooderism (Ric has aptly covered this at his blog) and the accumulation of risk that led to the credit crisis (destruction of trust in the financial system that brings down the house of cards – again Ric aptly covers this too in his link).
What I point out is that the Matt Tabibi piece is a hit piece on Goldman, which is totally unfair (imho). And I think it behooves us to recognize that, when using this piece as support of a “larger point”. In fact how I would conclude is, don’t use it. Don’t give it credibility.
Funny thing is how Tabibi rails about how GS is gaming the carbon markets (the other progressive agenda item of do gooderism) witout acknowledging that when government attempts to control markets, all they do is distort it and provide avenues folks to game it. But self awareness being nil as it is with liberals it is not surprising.
Comment by Old Texas Turkey on 9/22 @ 2:53 pm #
Shorter – I am going to blame you and your system for the problems I caused by making the system perverse in the name of fairness (uhh my definition of …). Oh look heres a bad capitalist trying to game my utopia that I have half-assed into place and poured lots of money (not mine) into.
Comment by JHoward on 9/22 @ 2:55 pm #
Precisely. Thanks.
That bullshit we have with us always, OTT. I see Mikey Moore is after Big Money in his latest film, and in the trailer, at least, Pelosi & Co seem to have earned his great ire. Meanwhile, above you’ll find hints of various leftist endeavors at least sniffing around the throne of DC, looking for something, anything. One can hope.
By now it’s all academic, but the Fed Reserve Act was part of our downfall. We can ask Wilson himself about that.
I disagree. The Fed reform movement has to be bipartisan to succeed. Taibbi may be incomplete but tearing down the veils, even incompletely or one at a time, has to happen. Call me simultaneously cynical and hopeful. We’re screwed but we can learn. We can try.
Comment by happyfeet on 9/22 @ 2:55 pm #
No one knows what happened to the honey bear. Someones lying and they’re freaky good at it.
Comment by happyfeet on 9/22 @ 2:56 pm #
*Someone’s* I mean
Comment by Lamontyoubigdummy on 9/22 @ 2:57 pm #
I’m with Old Texas Turkey in #19.
Well…not about the Gay Mafia thing. I just don’t buy it.
When ACORN thugs show up at a town hall with ball bats and fashion advice for you and your illegal-immigrant child prostitot…or SEIU goons start breaking into homes and tastefully redecorating them while they beat/maim the home owner…or, maybe Organizing for America leaves horse heads in a bed or two but then leaves a nice wine & cheese basket on the nightstand….well, ok then.
I think David Geffen just sucks dick on general principal.
The “scapegoat” thing though is 100% balls on accurate. Old Texas Turkey is backed up by this.
Holy. Hell.
The FDIC is looking to borrow money from…banks? Fucking banks!?!? Banks are the insured! FDIC is just federal insurance for the national deposit which rests in…wait for it…banks. That’s it. That’s all it is. So…if your health insurance carrier or life insurance carrier called you up tomorrow and asked if they could borrow $500 dollars to keep them afloat…you’d tell them what?
Want some sauce for that burned & destroyed goose? The FDIC currently has enough funds to cover 28% of the national deposit.
Yeah. 28 fucking percent.
I’d be moving that CD or IRA if I were you.
Comment by Old Texas Turkey on 9/22 @ 3:07 pm #
Lamont,
This is even scarier
Say hello to wealth confiscation
Don’t cry for me f* Argentina.
Comment by Ric Locke on 9/22 @ 3:10 pm #
JHo, I can concede everything in your comment, without reservation, but also without disturbing my thesis in any way: that is, the interlocking system of trust that support(ed) this economic system is neither worse nor better than the interlocking system of trust characteristic of any other economic system.
In the beginning is the unconstrained exchange. Everything builds on that.
You are quite correct in saying that the “gimmicks” and maneuvers characteristic of the upper level of our <harrk! spit> financial system over the last few years, and their subsequent exposure as fragile and in some ways unethical, have been instrumental in breaking the trust links that held the whole mess together — but Old Texas Turkey is also correct, when he asserts that most (if not all) of those shady maneuvers were resorted to in attempts to get around bigoted prejudices and the counterproductive “regulatory” measures taken to work them out.
The “mortgage bundling” system, of which this is a little (though important) corner, is such a maneuver. Banks and lenders were being exhorted, strongarmed, and/or compelled by law to issue loans to people without regard to their ability to repay those loans. Many, perhaps most, of those getting the loans could and would repay them; the “tranche” system allowed investors to provide a little money in return for an outside chance that the high-risk individuals would repay, or a lot of money in return for the near-certain chance that the low-risk individuals included in the system would repay. It is a perfectly sensible system for providing some stability when the lenders were not permitted to assess the creditworthiness of borrowers.
Regulators would not allow a market to occur. Obedient to Rule #2, a market happened anyway; and obedient to the corollaries to Rule #2, that market was illiquid and fragile because it could not be denominated in the currency that the (forbidden) market used. It was (and is), in effect, a black market in mortgages, and like all good Government intervenors everywhere, the first priority became to stamp it out — including the usual excoriations issued against black marketers (“profiteers”, etc.)
If it hadn’t been that, it would have been something else equally shaky and shady. Markets happen anyway.
Regards,
Ric
Pingback by “Big Money” and the mortgage crisis on 9/22 @ 3:11 pm #
[...] think we’ve got a real bipartisan consensus on this one. I completely agree with the not-exactly-conservative likes of Rolling Stone and [...]
Comment by Lamontyoubigdummy on 9/22 @ 3:19 pm #
“This is even scarier”
And the hits just keep on coming.
FOX NEWS: “Economic Turds Won’t Flush, Obama Calls in Joe the Plumber”.
Sweet Jesus.
Comment by william on 9/22 @ 3:24 pm #
JHo,
A recent post at Calculated Risk addresses the issue of Option ARMs.
“Of the $189 billion securitized Option ARM loans outstanding, 88% have yet to experience a recast event … Of these loans that have not yet recast, 94% have utilized the minimum monthly payment to allow their loans to negatively amortize.”
“Total 30+ day delinquencies are now 46%, despite the fact that only 12% have recast and experienced an associated payment shock.”
http://www.calculatedriskblog.com/2009/09/comment-on-option-arms.html
Comment by McGehee on 9/22 @ 3:34 pm #
Hmmm. Perhaps Obama ascended to the throne too soon. He got elected because of initial panic, but the real panic had not yet set in.
It isn’t helping that everything he’s done and proposes to do, only adds to the danger.
Comment by pdbuttonscone on 9/22 @ 3:40 pm #
deny/deflect/ pray one day u’ll be erect..
for the children
Comment by pdbuttonscone on 9/22 @ 3:44 pm #
i lurv them innocent childs eyes..
especially when i take them out of the trunk..
so hopeful..
then we wisk them off to the smarty farty division
Comment by JHo on 9/22 @ 3:45 pm #
Ric, one wonders how much Cloward Piven is in all of this. Perhaps none, what with the establishment standing to lose so much.
Comment by Greg on 9/22 @ 3:56 pm #
Speaking from experience on the original issue of whether Mortgage Electronic Registration Systems’ problems in Kansas spell doom for the banking industry, I’d have to say “no.” Or at least, “not in Illinois.”
The laws in Illinois are a little different from those in Kansas, as the mortgage is merely an incident to the promissory note it secures. There’s no need in Illinois for a formal assignment of the mortgage, since the promissory note is a negotiable instrument (just like a check). The originating lender can simply endorse the note to the successor holder, and the mortgage automatically is transferred with the note.
My guess in the Kansas case, without having seen the facts, is that the mortgage states that Mortgage Electronic Registration Systems, Inc. is the mortgagee under the mortgage, but Lending Bank “B” is the Lender. I’m sure that MERS held the mortgage paper since the execution of the mortgage and note, but the servicing of the loan was done by some third party, as the note was most likely sold within hours of its execution. Since the whole point of MERS is to avoid massive assignments of mortgage paper, the practical effect of this ruling will simply be to require MERS to assign the mortgage to the foreclosing entity prior to the filing of the foreclosure lawsuit.
Since I’ve probably bored everyone enough about this point of legal frippery, I’ll go back to lurking.
Comment by Lamontyoubigdummy on 9/22 @ 3:57 pm #
The Cloward Piven Strategy. Not too far a fetch for this Obama fellow.
Welfare/ guaranteed annual income for all.
All one needs to add to that particular mission statement is from each according to his ability & to each according to his need.
Comment by pdbuttonscone on 9/22 @ 4:04 pm #
wake up wake up wake up
let’s make love tonight..
what?
i heard it through the carbine..
Comment by happyfeet on 9/22 @ 4:10 pm #
this is the best thread in many moons
Comment by Ric Locke on 9/22 @ 4:10 pm #
I wasn’t familiar with the Cloward-Pivens Strategy under that name. Having read American Thinker’s exposition on the subject, I’d have to say that yes, Cloward-Pivens is part of it.
The trouble with the strategy is that it’s not sustainable in the American context. Even if you ruin a lot of people, many of them will still have assets that they can trade with one another. The result would be an economy that functioned entirely in the “black” (the market sense, not the economic one). There’s an SF novel whose name and author I misrecall at the moment, whose author describes a similar situation:
The Cloward-Pivens strategy would in fact produce the most pain among the dependents of Government, but what could they do about it? They’re hemmed up in cities; if it ever got to insurgency, dynamite a few natural gas pipelines and they not only freeze to death, they can’t get food, and they’re lightly if at all armed, so even a “swarm” strategy wouldn’t do them any good.
Pray it doesn’t come to that. Pray hard. But the signs are ominous, and getting worse.
Regards,
Ric
Comment by Ric Locke on 9/22 @ 4:32 pm #
Here you go: A Planet in Arms by Donald F. Barr.
Highly recommended. Barr is, or was, a diplomat of the same generation as Keith Laumer, and the book is a near-endless source of anti-leftoid snark. Space Relations is less good, but contains the immortal line “…we always sacrifice a few of our comrades to the liberals” (spoken by a general in charge of an invasion).
Regards,
Ric
Comment by cynn on 9/22 @ 4:32 pm #
This is some scary stuff. Thanks for following this and thanks for posting it JHoward. I know jackshit about finance but I do know that everything is upside-down now.
Comment by pdbuttonscone on 9/22 @ 4:36 pm #
moon june spoon loon
octaroon pat boone
none to soon
any happyfeet is a reality
cartoon
i bow my big booner..
in ur general direction..
but this is about protien wisdom..
be-i-bicky-by
fo fum
Comment by JHo on 9/22 @ 4:57 pm #
I’m betting that in among the Ric’s Laws that include markets happening is one that observes that opportunities never go unaddressed. I think I remember one more or less to just that effect.
Which brings us to intent: Was the switcheroo to fiat notes all those decades ago an aim to benefit society — under the honored terms of strict originalist constitutionality, natch — or was it a means to enrich the immediate, local players with cash and prizes.
The Creature From Jekyl Island suggests it’s the latter. Recent events confirm this. None of this is for our own good; rather it’s in spite of it, both then and now. Remember: We are our own governance, and we’re allowing and we’re causing government to be stolen, sold, bloated, and exploited.
The present monetary system carries the baggage of that negative intent plus its decades of damage. From there it fits the current crop of deceivers and their fantastic deficit pillaging to a tee. To know fully whether its outcome is solely attributed to all that bad intent would require an appeal to omniscience — yet we’ll know what the motivation to corrupt money was by studying the symptoms already evident. No, the aim was power and wealth and that it delivered. Jefferson warned us but Rockefeller told us to our faces what was afoot. I’m not going to cheerfully abandon what we had once, and I can’t easily accept that this was always to have been just another system among many co-equally but flawed systems.
Can the American Republic, with its fundamentally rare principles intact, persist against not only history but against an undermining force of this scope? Seems like quite a disadvantage for people already contracted by a rare, fragile, cooperative exceptionalism.
Which is to predict that markets and opportunity both happen; of course, they can’t not happen. But still, as you say, the signs are ominous, and they’re not improving. I think this means that we value what it seems we’re about to lose, and if we do lose it, I think we should question how and why.
Comment by Pablo on 9/22 @ 5:00 pm #
Don’t start with that, buttons. Yer freakin me out!
Comment by Ric Locke on 9/22 @ 5:18 pm #
The problem is that you aren’t helping, JHoward.
The bee in your bonnet is “fiat currency”. The term is a redundancy. All currency is “fiat” currency. Yes, even gold, which, despite your fetish, is just another form of dirt. It is valuable because people agree it is valuable, and for no other reason.
And there simply isn’t enough gold to serve as the medium of exchange for six-and-a-half-going-on-seven Billon-with-a-B people. There just isn’t. To do anything at all would require somebody issuing “gold-backed” notes (perhaps electronic ones). Presto, a “fiat currency” — the notes are worth something because somebody says they’re worth something. What if they lie? What if they invite inspection of a Potemkin treasury? How would anybody know?
No. You’re right that there have been manipulations that didn’t help or were destructive. But as long as your prescriptions parse out, ultimately, to one or another form of gold-buggery — which they do, so long as you keep prating about “fiat currency” and the inevitable ills produced thereby — nobody’s going to listen. Nobody cares, because they know it ain’t so.
Regards,
Ric
Comment by alppuccino on 9/22 @ 5:26 pm #
Lead will be more valuable than money or gold here shortly.
Comment by louchette, they said there would be no math on 9/22 @ 5:27 pm #
every time i think i am starting to understand just how bad it is, and just how f’ed we are there is always more. it’s like the end of a terminator movie, where you keep thinking well at least the worst part is over and then something worser attacks.
i’ve hated all politicians, on principle, all of my life. they are all venal scum and narcissistic corrupt douches until proven otherwise. and every few ever prove otherwise, even to a small degree. which is why i’m nominally on one team, because at least they sometimes (tho not often enough) try to limit the damage they can do. like those founding document thingies call for.
so it’s not like i don’t think they are capable of both the evilest and stupidest things imaginable. but the amount of epic WTfuckery both exposed and committed over the last year, year and a half, whatever it is since the first implosion and bailout, is truly wearying.
i can never be cynical enough. *sigh*
Comment by pdbuttonscone on 9/22 @ 5:27 pm #
white boy rick pause..
me betters condenmn u..
white boy rick say..
i play the mellotron/melan rocky
Comment by happyfeet on 9/22 @ 5:30 pm #
opportunities never go unaddressed
that’s the one about how the ants find the sugar
Comment by louchette, they said there would be no math on 9/22 @ 5:32 pm #
*very few ever*
Comment by geoffb on 9/22 @ 5:34 pm #
Before Ric posted the name of the book I tried to find it and came across something else instead. Rittershasen Monetary Theory PDF.
Amazing how the internet is so like the old “card catalog” of a large library. Where looking for one thing turns up many others both related and not.
Comment by pdbuttonscone on 9/22 @ 5:38 pm #
macaroon coconut chefs reality [cough/cuff?)
sprinkle ur tinkle on the side walk..
u mean gutter?
no.. obama public walk..
how about i piss around ur face?
Comment by pdbuttonscone on 9/22 @ 5:43 pm #
monks mouth open
harmonics have half cream in my cough..hack/ coffee…
isn’t it romantic?{rodgers and kraftwerk?)
Comment by happyfeet on 9/22 @ 5:48 pm #
this is an interesting article
Comment by happyfeet on 9/22 @ 5:51 pm #
sorry I didn’t have time to sell that better I got hungry
Comment by Lamontyoubigdummy on 9/22 @ 6:09 pm #
Amazing how the internet is so like the old “card catalog” of a large library. Where looking for one thing turns up many others both related and not.
Indeed.
Tried to find an old Jonah Goldberg column about feminism on Google a while back. Links came back from Feministing and…Femifisting (not safe for…anywhwere).
Be interesting to know how Duey would have decimal’d that one.
Comment by Snowcone on 9/22 @ 6:13 pm #
…the amount of epic WTfuckery both exposed and committed over the last year, year and a half, whatever it is since the first implosion and bailout, is truly wearying.
995 of the “epic WTfuckery” in the financial markets was committed by the private sector, louchette.
Comment by JHo on 9/22 @ 6:17 pm #
This is not so. In fact, that view is surprisingly naive.
1. The bee in my bonnet is fraud and corruption, especially when they defraud you and me, even to the point of ruin.
2. Of course all “currency” is not declared into existence, Ric, to be created and destroyed as part, in our case, of a fractional reserve system just tailor made for abuses such as mortgage industry fraud, congressional ripoffs, et al. Ask yourself what part of currency, by your definition, gold adheres to. Is gold — your example, not mine — declared into existence? Perhaps debt can be leveraged infinitely, but costly matter cannot. The US federal reserve note is debt.
3. Pursuant #2, there is no alchemy and there should be none in a monetary system if it is to be as reliable as we’d all trust it to be: Gold cannot be spontaneously created. The Democrats and the Treasurers and you cannot will it into existence for your aims and benefits. Like coal and iron, it has cost and it has inherent cost, inherent costs aimed to stymie governments, I might add, and not so inconsequentially.
Trust notes have policy to float upon and so they do. US federal reserve notes exist only as units of record that appear when promises are made and disappear when they are either — and this is key — fulfilled or they are not fulfilled. Gold? Oats? Land? Carriages? I thought not. Each of them has a fundamental, fraud-resistant principle of value and trade distinctly and fundamentally different than what we today call money.
4. It’s not a fetish. Pursuant #3, it’s a principle and the differences and the implications are both obvious and profound.
5. Indeed, any money is valuable because people agree it is valuable — you’re backtracking now, back to one of my earlier comments on your view of money as a simple abstract of trust when it is also best established as an insurance against loss — but value is based on stability and stability is based on integrity and integrity is based on the inherent property that makes something valuable, trustworthy, and reliable: It cannot be subject to creation and evaporation, especially so as to expressly wreak wholesale change. Yet that’s our system, Ric.
I’ve never been a goldbug, Ric, and I doubt you’ve ever defended systemic misappropriation on a scale such as this, if at all, if ever. You continually confuse the central principles, which are that while anything may be traded, only fiat may be declared. You cannot declare rubies and you cannot thereby cause events and conditions that only rubies dictate in whatever environment they may do so. Or water in the desert or food during famine.
In a society built entirely on notes, you can consume shells and be left with notes but you cannot consume notes and be left with shells. You’re hung up on the former and despite yourself, say you see no harm in the latter while pointing to devaluation and listing it’s horrible outcomes! It’s because you haven’t included that second principle in your view of the first.
People don’t listen because they intuitively know the solution is hopelessness, even for a time, not because the premise is flawed.
Comment by B Moe on 9/22 @ 6:17 pm #
Oh boy, Snowcone is going to weigh in on this thread? This should be epic.
Comment by Lamontyoubigdummy on 9/22 @ 6:23 pm #
995 [did you mean %?] of the “epic WTfuckery” in the financial markets was committed by the private sector, louchette.”
You lie, boy.
Dodd, Frank, Schumer, Pelosi, Franklin Raines.
Facts.
Suck on ‘em.
Comment by blow pop on 9/22 @ 6:26 pm #
“995 of the “epic WTfuckery” in the financial markets was committed by the private sector, louchette.”
Elaborate, in detail, in your own words.
lulz!
Comment by OCBill on 9/22 @ 6:27 pm #
Back to original topic. If the “splitting” of the mortgage into promissory note and deed of trust could make the mortgage “ineffectual” by law, then MERS should have known they were effectively giving up their rights to foreclosure. Given this, it seems they would have priced this higher risk into the transaction that left them without an enforceable mortgage. Or maybe they did, but the price turned out not to cover the actual risk, so they’re trying to have it both ways (in effect). Or not.
Comment by louchette the ludic on 9/22 @ 6:28 pm #
snowtard, you really do not understand me. or what i know or don’t know. or whether i am really as stupid as i sometimes pretend to be for the lulz. i’m not surprised that you don’t get it. but jusso you know, you are gonna get about as far with me as the cowboy in the diner gets with mallory knox, figuratively speaking, of course.
*meep meep*
Comment by Snowcone on 9/22 @ 6:29 pm #
You lie, boy.
Aaah, nice to hear the dittohead line on our current but fading fast financial crisis.
I’m sure the crooks who caused it will be happy they’ll have a fresh supply of victims like Lamont when they get rolling again.
Comment by blow pop on 9/22 @ 6:30 pm #
detailz snowie! Detailz!
Comment by pdbuttonscone on 9/22 @ 6:34 pm #
boop boop ba doop
Comment by Brooke Davidson on 9/22 @ 6:34 pm #
Disturbing, just plain disturbing.
Brooke
Comment by JD on 9/22 @ 6:37 pm #
Its balloon fence should protect yellowsnow from capitalism.
Comment by pdbuttonscone on 9/22 @ 6:37 pm #
ACME ..mmm
[shhhs / lets louchette/ gnaw ..)
mm,nbeep mmnbeep..
[i puppy bagrahm twiddle toes
0
Comment by B Moe on 9/22 @ 6:43 pm #
Dude, calling you a moron is a complement.
Comment by Snowcone on 9/22 @ 6:45 pm #
Dude, calling you a moron is a complement.
Don’t be embarrassed by your addiction to Limbaugh, B Moe.
Sure, you look like a fool when you quote him in public, but being freed from having to think makes it worth it, right?
Comment by blow pop on 9/22 @ 6:45 pm #
snowcones a googlin’ economics book learnin’, the po’ boy is yearnin’
ta show smarts bout earnin’. Hermeneutic diphthong sasquatch paraquat shamalamadingdong bippity boppity boo.
Comment by JHoward on 9/22 @ 6:48 pm #
Further:
Gold (your example) isn’t calibrated in people, which is important to the point because like cows or airplanes, it cannot be, although unlike cows or airplanes in the usual sense, it is easily divisible.
Audits. It’s not perfect but it’s far, far better than this. How about a basket of commodities.
Ric, are US federal reserve notes even alleged to be backed by anything other than arbitrary, quasi-political policy? Is the Pelosi-Reid congress backed by anything? Is Obama’s veto pen or Rockefeller’s profits?
Surely you’re not endorsing this free for all. At least have a preference for policy more to the Austrian end of the spectrum. This faux-Keynes endgamesmanship of late is ruining us. Only snocone can’t see the curves all going madly up (or down) the charts.
Comment by B Moe on 9/22 @ 6:48 pm #
I am waiting to hear your opinion on the Rolling Stone piece, Snowcone. What do you think about this foreclosure dilemma? What is you opinion on fiat currency vs. the gold standard? What do you recommend we do to keep these Robber Barons in check?
Comment by Spam Heap on 9/22 @ 6:49 pm #
The villains here are Jimmy Carter – for the CRA, Bill Clinton – for expanding the CRA, Barney Frank – for pushing the CRA so far down banks’ throats it’s choking them, and finally, Chris Dodd – for selling out the US to for a house in the West of Ireland.
These four have fucked us over in ways we’ll take decades to recover from. Oh, and note that Jimmah’s at the root of this fail, just as he is at the root of so much fail in modern American life.
Comment by Cowboy on 9/22 @ 6:52 pm #
, you are gonna get about as far with me as the cowboy in the diner gets with mallory knox…
Careful there, louchette. :)
Comment by pdbuttonscone on 9/22 @ 6:56 pm #
i digrees/ i apologize
butt i want loucchette…
we all
fall
Comment by Snowcone on 9/22 @ 6:56 pm #
What do you recommend we do to keep these Robber Barons in check?
China executes corporate criminals after a very brief trial.
Comment by blow pop on 9/22 @ 6:58 pm #
“China executes corporate criminals after a very brief trial.”
China is a corporate crinimal ya s-s-s-s-stupid.
burp!
Comment by blow pop on 9/22 @ 7:00 pm #
I want my economics dissertation from snowy. Tick-tock. And no peeky at Samuelson and Nordhaus.
Comment by B Moe on 9/22 @ 7:04 pm #
Figures you would be a fan of lynch mobs, surprised you actually admit it.
Comment by louchette the ludic on 9/22 @ 7:09 pm #
don’t worry cowboy. i like actual cowboys. they’re not wimps and they’re cool with animals. i just don’t have patience for stupid, or talking points sloganeering, or stupid. i’m happy to converse, and even to shut up and listen and take notes, when in the company of people who know stuff i don’t, and who are honest. whether they are rocket scientists or bankers or jazz musicians or marxist philosophers or car mechanics or monks or cowboys. the current troll doesn’t qualify.
and i *hart* you too, senor buttons. ;-)
oh and i am having the most delicious bowl of blueberries for dinner. nom nom.
Comment by Snowcone on 9/22 @ 7:14 pm #
B Moe,
I think there are a lot of Americans who would be willing to spend 5 or 10 years in jail if they first got to live an equal number of years as a billionaire (Madoff, etc.).
There is no deterring these people.
Comment by Spam Heap on 9/22 @ 7:23 pm #
There are any number of politicians willing to risk 5 or 10 years in jail if they get to come out as millionaires on the other side.
There is no deterring America’s only native criminal class.
Comment by pdbuttonscone on 9/22 @ 7:24 pm #
hey look.. gutter…
hey look
stars!
[roll me over in garlic)
Comment by Spam Heap on 9/22 @ 7:27 pm #
When time get tough like this, two videos see me through: the The Divinyls, and Eamon Morrissey.
Comment by pdbuttonscone on 9/22 @ 7:27 pm #
millionares..
what a concept..
tobaggan!
Comment by Topsecretk9 on 9/22 @ 7:30 pm #
to link 1
Federal investigators are probing whether a local union president at a Pennsylvania U.S. Energy Department laboratory improperly helped President Barack Obama’s 2008 campaign on government time by using government facilities, union lawyers said.
The U.S. Office of Special Counsel is probing whether Ronald Demicheli improperly taped a video criticizing 2008 Republican presidential nominee John McCain in an office at the National Energy Technology Laboratory near Pittsburgh, said Ward Morrow, a lawyer for the American Federation of Government Employees.
Demicheli is president of the union’s Local 1916, which represents employees at the Energy Department lab and nearby research facilities of the National Institute of Occupational Safety and Health..
Comment by blow pop on 9/22 @ 7:33 pm #
snowie entered a serious economics discussion and it done died. Died dead i tells ya.
Comment by cynn on 9/22 @ 7:44 pm #
No, it dint die. What the hell is fiat currency? Is it tied to a cheap Italian car? What is the gold standard? I only have a silver certificate.
Comment by Lamontyoubigdummy on 9/22 @ 7:46 pm #
“I’m sure the crooks who caused it will be happy they’ll have a fresh supply of victims like Lamont when they get rolling again.”
I told you ten or twelve threads ago to flat out announce if you were retarded because I didn’t want to keep making fun of you if you were. It’s uncouth, so to speak.
So I’ll ask again. Are you retarded?
“Crooks who caused it” all have a (D) behind their name dumbshit.
Comment by sdferr on 9/22 @ 7:46 pm #
Here you go cynn, fill up on Money theory to your heart’s content. Want a specific chapter on the Gold standard, look here.
Comment by pdbuttonscone on 9/22 @ 7:49 pm #
the island of misfit [blow me) toys has a
curmudgeon[blow me) dentist[blow me)
who will solve all ur [suck)
ur holiday problems
Comment by Rusty on 9/22 @ 7:50 pm #
#94
Snowie can’t/won’t answer simple questions. Why should he be expected to answer on something as complicated as economics.
Once again snowjob; where does stuff come from?
Comment by cynn on 9/22 @ 7:53 pm #
Thanks, sdferr. I have been following this outrage for awhile and am glad to see you all taking it up. It’s incomprehensible. Somehow, all I can think of is all those school buses stuck in parking lots during the Katrina devastastion. Just more incompetence.
Comment by happyfeet on 9/22 @ 7:55 pm #
oh. while we wait for the awesome thread to get back on track what we can do is listen to another selection from the remastered Douchebags With Great Voices collection. Yay! Everyone meet Vincent. Vincent Turner. He was named after a Don McLean song called Vincent. But Vincent wants you to call him… Frankmusik. Cause of his grampa’s name was Frank and also musik. Cause of after Vincent dropped put of the fashion school he got really into … music. So it’s like grampa + music = Frankmusik.
Enjoy.
Comment by sdferr on 9/22 @ 7:57 pm #
You are welcome cynn, (though I’ll grant aforehand you may have perfectly justifiable second thoughts once you’ve done with Mises’ rompin’ stompin’ Chapter 23 there).
Comment by happyfeet on 9/22 @ 7:58 pm #
You can catch Vincent live this fall as part of the Perez Hilton Presents! Tour… so that is also exciting.
Comment by cynn on 9/22 @ 8:03 pm #
Happyfeet, fuck you and your heirs and assigns. Good luck.
Comment by Snowcone on 9/22 @ 8:04 pm #
a serious economics discussion
Well, let’s see if we can’t revive it!
Let’s all post what we believe the private sector/government split on responsibility for last year’s credit meltdown was.
I’ll go first:
private sector 99% / government 1%
Comment by blow pop on 9/22 @ 8:07 pm #
I smell bluff snowie. Show us your work.
Comment by blow pop on 9/22 @ 8:08 pm #
or show us your tits.
Comment by Obstreperous Infidel on 9/22 @ 8:09 pm #
I’d like to second happyfeet’s opinions on this fantastic post. JHO and Ric (and others) are doing a fantastic job as usual. I tend to lean to the Austrian camp, but given Ric’s obvious capabilities, I appreciate his opinions on these matters.
Oh, and if I was Alphie, I’d be careful pining for China’s “solutions” to problems. Alphie, you know what they do to retards? You wouldn’t last too long.
Comment by N. O'Brain on 9/22 @ 8:11 pm #
“Let’s all post what we believe the private sector/government split on responsibility for last year’s credit meltdown was.”
It’s the Democrats fault, you retarded marmoset.
Comment by N. O'Brain on 9/22 @ 8:12 pm #
“I’ll go first:
private sector 99% / government 1%”
See?
Completely insane.
Comment by pdbuttonscone on 9/22 @ 8:13 pm #
the ghost and mrs. muir
hope and lange
frankly mr shankly…
wee we expected more
Comment by cynn on 9/22 @ 8:17 pm #
No, I’ll go with plus 90% guarantee on loss for the fuckheads, and $1000 per buck and beyond courtesy of the castrated government.
Comment by pdbuttonscone on 9/22 @ 8:19 pm #
more more more
[how d’ya like it /how d’ya like it?)
papa don’t take
no mess…
Comment by pdbuttonscone on 9/22 @ 8:22 pm #
oh yeah.. guvmint
yawn
u win
say rumm tum tugger
my half hard out be you
twice
Comment by geoffb on 9/22 @ 8:35 pm #
@ #100
Would that it was just that and not the foul mixture of corruption, love of power over all else, and greed, which incompetence enabled and will be used as cover for the most evil and corrupt.
Comment by cynn on 9/22 @ 8:39 pm #
I won’t go there.
Comment by B Moe on 9/22 @ 8:48 pm #
A true man of faith.
Comment by cynn on 9/22 @ 9:08 pm #
I believe in fiction…like my kid’s future..
Comment by JD on 9/22 @ 9:17 pm #
Meya ain’t gonna let snotnose and William win without a fight.
Comment by geoffb on 9/22 @ 9:25 pm #
It’s a stupid throwdown. Let the blather begin.
Comment by epobirs on 9/22 @ 9:27 pm #
Actually, JHoward, we can make gold. It’s currently far too expensive to be a worthwhile goal but we’ve known for many decades how it would be done with nuclear fusion. If we ever perfect a fusion process that is cost effective for energy generation, the price of gold goes down the drain, along with a number of other elements regarded as rare on this planet.
Comment by epobirs on 9/22 @ 9:31 pm #
Meya, you’ve got it wrong. The blame isn’t being cast on the minorities and poor. The blame goes to those who exploited the minorities and poor in their pursuit of power. The CRA wasn’t created by the poor. It was created by the poverty pimps who prey upon the poor. There is a critical difference there.
Comment by Snowcone on 9/22 @ 9:32 pm #
Even Darleen admits the capitalists share responsibility.
Is her audience here made up almost entirely of know nothing dittoheads?
Comment by JD on 9/22 @ 9:36 pm #
What channel is Rush on here, yellowsnow?
Comment by peter jackson on 9/22 @ 10:25 pm #
A year later and it’s still so hard to tell what’s going on. Money is still being both destroyed and created at a furious clip, to the extent that no one can really tell where the money supply is currently up or down, or where it’s going to end up.
Comment by Alec Leamas on 9/22 @ 10:42 pm #
I have done some Foreclosure work in the past for Bank clients. The “lawyers” getting all the “fees” for representing defaulting borrowers are most likely public interest losers who don’t actually get paid by their clients. A lot of the trouble is made in so-called judicial “Mortgage Foreclosure Diversion Programs” and other procedural hoops that are added into the mix.
I’ll just add a brief primer on Mortgages. The Promissory Note is the instrumemt which evidences the debt undertaken by a Borrower. The Mortgage is an instrument that “secures” the debt, embodied in the Note, against the real property. Most of what you are referring to are “Purchase Money Mortgages,” which are Mortgage Loans used for the purchase of the real property against which the debt is recorded. Some may not know that you can make a Note and Mortgage against property you own for anything you’d like, so long as you have enough equity in the real property and the new Mortgage does not cause a superior Mortgage to default. If you want any chance of ever enforcing a Mortgage against real property, you get the Mortgage (but not the Note) recorded in the chain of title of the property. The “chain of title” issue noted in the RS piece where Mortgage debt is bought/sold/assigned ensures that the real Creditor/Mortgagee is the party seeking to enforce the debt; otherwise, you could have all sorts of shennanigans going on.
Just so everyone knows, a Mortgage Foreclosure action is what lawyerspeak would call an action in rem, meaning that the Creditor is theoretically moving against real property and not the Borrower. Remember too that since the Mortgage merely secures the debt against real property, the Promissory Note is still enforceable as a personal debt even if Mortgage Foreclosure is unavailable as a remedy. The Creditor always has the option to enforce the debt (if the Creditor is smart, there will be an acceleration clause in the Note) against the Borrower, and, if successful, collect the debt by attaching the real property owned by the Borrower. There are Lien priority and Bankruptcy issues to deal with, but there you have it in a nutshell. All is not necessarily lost if the remedy of Mortgage Foreclosure is unavailable.
Having said all of this, the overwhelming majority of Foreclosure actions proceed to judgment by default because by the time there is an active case, the Borrower has not paid the Mortgage for several months, has no substantive defense, and may be too embarassed to become actively engaged in a defense.
Comment by Rusty on 9/23 @ 5:04 am #
#124
But mostly congress. Care to answer the question? I didn’t think so. Stck with the meme, son, it will get you far in this administration.
Comment by meya on 9/23 @ 6:11 am #
“The “lawyers” getting all the “fees” for representing defaulting borrowers are most likely public interest losers who don’t actually get paid by their clients.”
Some places are also using law firm deferral lawyers for this. People who racked up debts thinking of 150-120K starting salaries and now won’t be making anywhere near that.
Comment by Old Texas Turkey on 9/23 @ 8:07 am #
B Moe,
I think there are a lot of Americans who would be willing to spend 5 or 10 years in jail if they first got to live an equal number of years as a billionaire (Madoff, etc.).
There is no deterring these people.
You want to back that assertion up with some facts? Cite source please. (Your ass does not count)
Comment by Ric Locke on 9/23 @ 8:41 am #
Quick note, because I have more to do today:
Googling around gives inconsistent results, but it would appear that the US GDP — the value of all goods and services exchanged — is (or was, before the meltdown) something like $14 Trillion-with-a-T dollars. It’s generally estimated that the US economy is somewhere around a fifth of the world’s, which gives a guesstimate for world GDP of about $50 trillion.
All of the exchanges that added up to that value had to be mediated by some form of currency. Indeed, the values above are based on records of currency exchange, not on exchange of goods and services.
Wikipedia sez:
A tonne is a megagram, a thousand kilograms. If we turned all the gold ever mined into ten-gram coins (they would come out the size of a dime but about half as thick) we would get 15,800,000,000 or about sixteen billion of them. To get a 50,000 billion world economy using 16 billion such coins, each of them would have to be used — exchanged — three thousand times, a little less than ten times a day.
It isn’t obvious that this is practical.
In order to get past that limitation we use currency, something that’s valueless in itself which can be used to mediate exchanges without schlepping all that gold around. In (an admittedly oversimplified version of) JHoward’s ideal the currency would be “backed” by gold, that is, a person holding currency (itself valueless) can always exchange it for gold, which has “real value”.
This is already “fiat” — that is, somebody says the currency is valuable. They provide assurance to back up the promise by offering to exchange it for “real value”, but what if they lie? Or simply make a mistake? –it’s happened often enough in history; it’s called a “bank run”.
If the essence of “fiat” is “declared into existence”, you’ve already lost the argument. That has to happen, or there’s no way we can lubricate the commerce necessary to support seven billion people. All currency is “declared into existence”. Bryan was wrong — you can, in fact, crucify Mankind on a cross of gold — but it’s a stupid way to proceed.
No. The essence of “fiat” is “because I say so!” And who is the “I” in that statement, or the “they” and “somebody” two paragraphs back? If I had a stack of gold, there is nothing (bar US law, which can be changed at the whim of a Senator) preventing me from issuing currency and promising to exchange it for gold if the holder desires. Hell, even if I don’t have any gold, I could still do it! But what would my promise be worth?
Government, hah. The single error common in society today that is most frustrating to me is the apparently universal assumption that there is some existential or mystical distinction between “public” and “private”, some bolt from the blue or Lady-given Excalibur that separates “government” from “business”. There is not. A “business” is a group of people working together for a common purpose. A “government” is the same. Details do not a fundamental distinction make.
The word “intrinsic” is a lie whenever uttered. All currency is fiat, because all value is existential, dependent on the desires, wants, and needs of people. Currency is necessary to support commerce, and commerce is necessary to feed, clothe, and house people. An economic system dependent on currency is subject to fraud, peculation, and a whole host of other ills; those ills cannot be eliminated, any more than friction and other Second Law of Thermodynamics losses can be eliminated from real machines. Like friction, they can and should be minimized to the extent possible, but anyone expecting to eliminate them entirely is expecting perpetual motion, and anyone promising to eliminate them by implementing The TRVTH is a fraud.
As for the “lots o’money bad bad bad” argument: One cogent criticism of Creationists is that they cannot internalize the immense spans of time over which evolution works. The corresponding (very common) mistake in economics is being unable to realize the scale at which an economy of seven billion people has to work. Factories have to be paid for, and they’re expensive. One of the foundations of our current society is electronic equipment. Electronics depend on integrated circuit chips, and integrated circuit chips are made in a factory called a “wafer fab”. A commercially viable wafer fab these days costs something like two billion dollars. If nobody is allowed to have two billion dollars because it’s unfair that anybody should be so rich, then there is no wafer fab, there are no integrated circuit chips, and nobody gets a cell phone, a computer, or any of the other electronic gadgets we depend upon — and peculation amounting to one percent of the cost of the wafer fab yields the peculator twenty million bucks!
Regards,
Ric
Comment by Ric Locke on 9/23 @ 8:49 am #
Ooops. World economy comes out more like $70 trillion, doesn’t it? Never mind, it makes my argument stronger.
Regards,
Ric
Comment by JHo on 9/23 @ 9:49 am #
I’ll come back to this when I have time, Ric. In short, you’re conflicting yourself. Obviously, you cannot simultaneously play the indivisibility and government notes cards, especially when you deny the point here, which is constraining fraud and loss. If/when gold is indivisible, it simply trades in representative notes. (Frankly, I’m amazed you’re float the notion it somehow could not.) As would flax, linen, lumber, and any number of other stores of value rendered otherwise unsuited to daily physical exchange.
Having dispensed with utility, we come to worth and value, neither of which stand when the medium of exchange is base and ubiquitous. This is why you’re wrong when you claim that dirt could be money. Dirt is not money, even when if is declared money by fiat. This is because it is ubiquitous and because its use would obviously immediately fail. Why? It has neither value or security, at least in the medium you propose it be constructed in so as to make your point. I. e., money.
Just because perfect money does not exist does not mean that all money is equivalent. Somewhere between real units of undebased and nearly universal (but imperfect) value on the one hand and dirt on the other lies the US federal reserve note. You cannot defend the present system by equating its note with any material that has real and unavoidable costs associated with it. I understand “the full faith and credit of the American people”, but you need to accept that its just that which is abandoning us and the world. Such would not be the case had we not chosen this path.
Comment by Grammatiknazi on 9/23 @ 10:01 am #
But US Dollars are valuable because by law they are “valid for all debts, public and private”.
The USGOV has used its power to, by fiat, force people to take these pieces of paper whether they agree they are valuable or not
Comment by The Monster on 9/23 @ 10:02 am #
Damned sockpuppet. That was me pointing out how “fiat” does in fact apply.
Comment by Ric Locke on 9/23 @ 1:30 pm #
The Zimbabwe dollar is also “legal tender”. Back when there was such a place, the DDR’s mark was, too.
Whether or not there are people with guns to enforce the declaration, the definition of “fiat” currency is “because I say so!” If people agree, it works. If people don’t agree, it’s worthless.
And you aren’t looking at the Big Blue Marble. Everything on it is dirt, including us, and nothing on it has any “value” except where we agree that it’s so.
Regards,
Ric
Comment by Rusty on 9/23 @ 4:37 pm #
#134
Yes indeed. But in something like gold, everyone agrees there is value there and no coercion is necessary. It’s intrinsic worth is that everyone agree it has value.
Comment by meya on 9/23 @ 5:41 pm #
“Googling around gives inconsistent results, but it would appear that the US GDP — the value of all goods and services exchanged — is (or was, before the meltdown) something like $14 Trillion-with-a-T dollars. ”
GDP is going to be value of goods and services produced. Exchanged will be much bigger. Which only adds to your point.
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