Recently we have been working with some wonderful producers to make many of our volumes here at The Mint available in audio format. The experience has been great as those with talent in the voice department, such as Robert Fox, who brought our newest audio offering, Bitcoins: What they are and how to use them, to life.
We imagine the producers get a good chuckle as they read our prose, to which Long-suffering readers of The Mint are accustomed. We know we do!
Why the Fed will take Baby Steps when it comes to raising rates
The US Economy added 280,000 jobs in May of 2015, which was positive no matter how you slice it. To our readers, this should come as no surprise, every one of our key indicators indicates an economy that is roaring ahead. Take the price of oil, which continues to hover near the $60 per barrel mark. While to some, a lower oil price may signal weakness in demand due to a slowdown in underlying activity, we see it as incredibly positive for US consumers, as oil, which translates into gasoline prices, acts as a quasi tax for many consumers whose demand is relatively inelastic.
We also see the steady prices of copper, around $2.70 per ounce, and corn, clocking in at $3.60 per bushel, as signs that the United States economy is on extremely solid footing looking ahead. These prices tend to tank when bad omens are on the horizon.
The only negative (depending upon who you are), as reflected in the Jobs report, is that wages have not risen at a healthy pace. This is great for employers and the Fed, who can maintain their margins on the backs of the working class, but not so good for those employed.
We sense this will change, as the productivity gains of the past several years are not likely to replicate themselves over the next several. The economy is transitioning to the second half of the chessboard (as Thomas Friedman would say) and it will take a ton of work to get it there. Once it is there, we will see hyperactivity in the economy, it will be a whirlwind that people will either embrace or run direct the other way from. To an extent, humankind will benefit, but mother nature will suffer perhaps a fatal blow.
If proletariat wages remain low, then why has the stock market reacted negatively to what would otherwise be considered most excellent news? We can only guess that equity traders, who at times are clairvoyant to their own detriment, look around at the plethora of good news and smell a Fed rate hike on the horizon.
They are correct, of course. However, we believe that the Fed learned its lesson back in 2008. The blind 0.25 per month basis hikes that were implemented to cool off the sizzling post 9/11 economy were blunt and oversized for the sheer breadth of the Fed’s economic sphere of influence. It is doubtful we will see such blunt and misguided policy from the current Fed.
Instead, we see baby steps, increases of 0.01 basis points emitted over time so that the economy can absorb the shocks in a manageable way, rather than taking them square on the kisser as it did in 2008.
Will it work? Only time will tell, but for the moment the US economy looks like it’s running full speed ahead, and nobody at the Fed is interested in being the next Ben Bernanke.
Could it be that it is not how, but what we use as money that matters when contemplating the root causes of Climate Change and other global problems? This is the question that is at the root of our Economic and Philosophical Treatise which bears the cryptic name:
Our Monetary Magnum Opus is now available in print at the following embedded links on Amazon.com and Createspace.com.
While there seems to be an endless debate as to what humankind should do in order to reduce our impact on the environment, ironically most of this and indeed countless other political debates result in more action being taken, either to cease and desist an activity or mobilize to clean up and reduce future environmental impacts of certain actions.
However, every action brings about some sort of reaction, often in the form of an “unintended consequence” which serves to negate any good that the carrying out of the well intended initial mandate had managed to accomplish.
Despite Al Gore’s call to action, realistic and manageable solutions to Climate Change remain elusive. As such, where Gore and other Climate crusaders have failed, we have been compelled to step in. You see, there is really a quite simple, certain, and palatable solution to Climate Change that could be implemented today.
The solution lies not in well-known solutions such as recycling, Cap and Trade schemes, development restrictions, technological advances, or taxes and other social engineering methods. In fact, it has absolutely nothing to do with what people do or what they or their governments spend their money on.
It lies in What we use as money circa 2013.
What the world uses as money is not really money, but a highly liquid debt instrument. While the difference is imperceptible to most, the accumulation of mistaken incentives and resulting actions on behalf of humankind which are inherent in the insane debt as currency model are beginning to manifest themselves in nature, and nature itself is beginning to bring itself into balance unilaterally.
Where humankind and the land once lived in a peaceful, mutually beneficial balance with one another, the relationship has become antagonistic and will remain so until the defects in the money supply are remedied.
How, then, can these defects be remedied? Ah, fellow taxpayer, it is for this reason that the above mentioned book contains 400 pages, for while the answer is simple, it will require that humankind let go of some deeply ingrained ideas which a vast majority of us do not even know we hold fast to.
Our long awaited Treatise on Economy and Philosophy, Why What We Use as Money Matters, is now available in various digital formats at Smashwords.com and on Kindle at Amazon.com. With any luck, we will have a print version available before we leave for the Southern Hemisphere.
What kind of book is this? It is largely up to the reader to decide. For us, it is the fruit of two years of wrestling with some of life’s deeper questions with regards to Economics, Politics, and Philosophy. It has answered many of them and, in turn, has raised other issues, for in our exploration, as you will see, the current state of affairs is laid bare for all to examine, and our recommended courses of action may be unpalatable for many.
Nevertheless, there it is, altogether thick and challenging, yet refreshingly simple, the key to reversing the effects of climate change.
In a sense, it culminates the first phase of what we set out to do here at The Mint. There will be more to come, but for the time being, we leave you to ponder the following brief excerpt:
“The natural world strives daily to achieve a perfect state of balance. Events and occurrences that, taken by themselves, appear chaotic and devoid of meaning are together part of a constant rebalancing of the earth’s delicate state. Each event is a splash of color across an oppressive gray sky that hints at a rainbow that will soon appear. “
A quick peek at the financial markets over the last two days may lead one to think the world is ending. From what we can tell, investors are attempting to front run what they perceive to be an earlier than anticipated FED exit from its unprecedented support of the Bond market to let it fend for itself.
Lest us be clear, the Federal Reserve will not exit when anyone expects it. The mere prospect of it, which began to transmit itself through the markets on Wednesday, caused Treasuries to collapse towards normal and overnight lending in China to seize up while leaving equities and commodities as collateral damage. M1 even managed to collapse again to $2.4 trillion. These are hardly long-term (or short-term, for that matter) Fed goals.
If Fed history is any guide, it shows that the Fed knows absolutely nothing. For example, can you predict what GDP or unemployment will be in one, two, or three years? Neither can the Federal Reserve governors, who are tasked with controlling such matters. The only difference between the man on the street and a Federal Reserve governor with regard to such matters is that the wild guess of the man on the street is more likely to be accurate than that of the Fed governor, but that is a tale better wound by those more qualified to explain such matters, such as Lee Adler at the Wall Street Examiner.
We are gearing up to publish our Treatise on political economy, Why What We use as Money Matters, before we head out on holiday this year. It is more than a treatise, it is our calling (more below).
The current plan is to copy-edit and self publish this important work unless we are successful in landing an interested publisher in the interim. It is urgent that mankind examine what is in their wallet, for it is currently an invisible hand steering mankind towards a myriad of disasters that are either unfolding or about to unfold. These man-made disasters can be undone, if only a few can grasp what we have to share.
Stay tuned for the release and enjoy the brief introduction below!
Introduction: The Calling
Owen Meany had a calling. The hero in John Irving’s 1989 New York Times bestseller A Prayer for Owen Meany which was later loosely adapted to the feature-length film Simon Birch, believed himself to be God’s instrument in an unswerving and often shocking manner. Owen Meany’s calling was as clear to him as it was confusing, for while he could see the end result, he could not foresee nor fully understand the varied circumstances which guided him to his encounter with destiny.
We believe that, like the fictional Owen Meany, every human being that is alive or has ever lived has a calling, something specific that is to be done in this world that only they and they alone can accomplish. The task may be ignored, but it cannot be delegated. It may require the collaboration of many to accomplish, but the burden and drive to complete the task rests with one individual.
If the task does not get done, it does not get done, and the world will be all the worse off for it. On the other hand, if it is accomplished, all the host of heaven will applaud, for every calling that is recognized and pursued is not simply another task to be completed, it is an indispensable stitch in the fabric of what may be if only all of humanity would accept the call to a higher purpose that, far from being reserved for the exceptional, is the birthright of every human.
The following nine volumes are our calling. Taken individually, they are a winding exploration of philosophy, monetary theory, economics, dual entry accounting, climate change, and eschatology. Taken together, they are a treatise on political economy of such gravity and importance that, if fully understood by even one person among a million, will bring the activities of mankind into a perfect balance with nature.
Our latest ebook offering here at The Mint, To Build up the Land, Thoughts on Mankind’s uneasy intercourse with Nature, is now available on Smashwords and Amazon’s Kindle.
It is a thought provoking look at the root cause of climate change and the origins of mankind’s interaction with the land.
From GMOs to CAFOs and back through to the elusive Garden of Eden, To Build up the Land explores how the modern day urban centric worldview has given rise to both the myth of overpopulation as well as the all too real phenomenon of climate change.
However, rather than searching out the usual suspects of increased carbon footprints, fossil fuels, and over development, we masterfully pinpoint the root cause of climate change. It is a cause that is seldom recognized or addressed, yet it lies at the heart of the myriad of crises which increasingly besiege our planet.
As a special offer to our loyal readers, you can pick up a free copy here at The Mint until June 11th. Just click here and follow the check out process.
The following is an excerpt from our upcoming ebook release, “To Build up the Land, Thoughts on Mankind’s uneasy intercourse with Nature,” due to hit digital shelves late this week. Enjoy!
To Build up the Land
The Land Needs Rest
There is indeed a perfect balance between the time for building up the land and that for allowing the land to rest. It is commonly known as the Sabbath, it is a pattern of time that has literally been encoded into the creation itself.
The Sabbath is best known, at least in the United States, as part of Jewish religious observances. The base of the observance is taken from two passages in the Torah:
2 On the seventh day God finished his work which he had done; and he rested on the seventh day from all his work which he had done. 3 God blessed the seventh day, and made it holy, because he rested in it from all his work of creation which he had done.
Genesis 2:2-3
12 “Observe the Sabbath day, to keep it holy, as Yahweh your God commanded you. 13 You shall labor six days, and do all your work; 14 but the seventh day is a Sabbath to Yahweh your God, in which you shall not do any work, you, nor your son, nor your daughter, nor your male servant, nor your female servant, nor your ox, nor your donkey, nor any of your livestock, nor your stranger who is within your gates; that your male servant and your female servant may rest as well as you. 15 You shall remember that you were a servant in the land of Egypt, and Yahweh your God brought you out of there by a mighty hand and by an outstretched arm. Therefore Yahweh your God commanded you to keep the Sabbath day.
Deuteronomy 5:12-15
The seven day weekly cycle that is anchored by the Sabbath is so entrenched in the creation that every attempt by man to supersede it, the most notable recent attempts being the French Republican Calendar and the Soviet Calendar. Both were suspended after experiments that lasted roughly twelve years.
While the texts in the Torah, which form part of the Christian Bible, offer clear guidance of the divine to observe not only a seven day week, but a seven day week consisting of six days of work and one day of rest, religious tradition alone cannot account for the origins of the seven day cycle.
Cultures throughout the world have operated on weekly structures consisting of anywhere between three and thirteen days, notable ancient examples are the eight day Roman market calendar and the 13 day Mayan week. Indeed, it appears that even the Jewish Sabbath was not observed by the Jews until they were exiled to Babylonian captivity between 597 and 587 BCE.
Adding to the mystery of the seven day week is that it is they only time construct known to mankind that does not conform to any astrological, lunar, or solar cycle, as days, months, and years are designed to do.
The reason that the seven day weekly cycle, ordained in the Torah, has emerged as the dominant time cycle that is now observed by every large society on the planet, is that seven day cycles are deeply ingrained in both plant and animal life at a cellular level.
Dr. Franz Halberg at the University of Minnesota, is the foremost authority on natural rhythms which is the subject matter of an area of science known as chronobiology. Halberg’s research has shown that all rhythmic functions of the human body are likely to possess an innate seven day frequency.
The divine call for a day of rest every seventh day appears to fit perfectly with an unseen but deeply felt rhythm common to the interplay between all living things down to the most basic cellular level.
While an understanding of the seven day weekly cycle and the need to collectively rest on the seventh day is somewhat easy to grasp based on personal experience for most, what is harder to grasp but equally and perhaps more important with regards to building up the land is the need for the land to rest every seventh year.
In other words, the seemingly arbitrary command to abstain from work on the seventh day not only applies to the cycle of days known as the week, but the need to rest on the seventh year of a cycle after six years of production.
Again, the basis for the resting of the Land on the seventh year by abstaining from all productive agricultural activity can be traced to the Torah:
10 “For six years you shall sow your land, and shall gather in its increase, 11 but the seventh year you shall let it rest and lie fallow, that the poor of your people may eat; and what they leave the animal of the field shall eat. In the same way, you shall deal with your vineyard and with your olive grove.
Exodus 23:10-11
2 “Speak to the children of Israel, and tell them, ‘When you come into the land which I give you, then the land shall keep a Sabbath to Yahweh. 3 You shall sow your field six years, and you shall prune your vineyard six years, and gather in its fruits; 4 but in the seventh year there shall be a Sabbath of solemn rest for the land, a Sabbath to Yahweh. You shall not sow your field or prune your vineyard. 5 What grows of itself in your harvest you shall not reap, and you shall not gather the grapes of your undressed vine. It shall be a year of solemn rest for the land. 6 The Sabbath of the land shall be for food for you; for yourself, for your servant, for your maid, for your hired servant, and for your stranger, who lives as a foreigner with you. 7 For your livestock also, and for the animals that are in your land, shall all its increase be for food.
Leviticus 25:2-7
The command to rest the land every seventh year is often embodied in a practice that is known as crop rotation. Crop rotation is a method of agriculture in which a series of different types of crops are planted in the same area, usually a field, in sequential growing seasons.
The planting of different seeds on the same field each season helps the land to achieve balance because different types of plants require from and provide to the land different types of nutrients, allowing the land to replenish itself. An additional benefit to crop rotation can be found with relation to pests. By constantly changing the types of crops grown in a certain area, the farmer can avoid the possibility that a pest become entrenched in an area, as simply changing crops can deprive certain pests of the means necessary to establish viable habitats over long periods of time for their colonies.
Many crop rotation plans call for a field to lie fallow for a season. While the benefits of allowing the land to rest are numerous, the most common benefit of this practice is that it allows the water table underneath the Land to reestablish itself in anticipation of providing crops for the next six years. Given that water tables are not field specific, but cover large areas encompassing many fields, it is important that the fallow years for fields be coordinated to coincide with each other for the benefits of the Sabbath year to accrue to the Land and, consequently, to the land’s inhabitants.
We return today to complete our series entitled “To Build up the Land.” It is an exploration of the co-dependence of man upon the land, and the land upon man to build it up. While the former statement is obvious, what may be less clear in light of today’s political and environmental climate is the latter.
Does the land really need man to tend to it so that it, too, will prosper? The clear answer is that the land not only needs the activity of man upon it to survive and thrive, but also that of animals. However, the land does not simply require any type of activity, it requires human activity which helps the land to achieve balance.
Today, there are roughly 7.1 billion souls on the planet, more than at any other time in human history. If one watches the numbers roll on the page linked above and then sees that the world’s net population is on track to grow by roughly 80 million souls this year alone, it would appear that this population growth is nothing short of exponential and that the world’s population is on something akin to a warp curve when plotted out graphically.
World Historical Population courtesy of US Census Bureau
However, while 80 million souls per year seems a staggering amount, it is important to note that the actual growth rate, as a percentage of the current population, is on a gentle decline, currently at 1.1%, just half the growth rate experienced in the early 1960’s, which is the most recent peak in the growth rate based on United Nations estimates. The United Nations further anticipates that by 2050, the growth rate will again be halved to just 0.5%, and that the world’s population will stabilize at around 10 billion persons after 2100..
As we have explored earlier, overpopulation is largely a myth constructed by persons who both live in crowded urban areas and assume that current statistical trends will invariably accelerate.
The myth is intensified by the fact that a majority of mankind has chosen to live in urban settings and has left large swaths of land to lie fallow, something that benefits neither man nor the land. According to statistics in the 2013 edition of Demographia’s report on World Urban Areas, roughly three out of every ten, or 28.2% of the world’s population lives in an urban area of over 500,000 total inhabitants with an average density of 14,000 persons per square mile.
The current increase in urban populations and corresponding worldview has left an increasing burden on those who build up the land via agriculture to provide the food necessary for the 7.1 billion souls and counting to survive and be adequately nourished.
If one, for the sake of argument, were to make the broad assumption that those living in urban areas were completely reliant on their rural counterparts for their food supply in an equal proportion, this would mean that the rural population must produce, on average, 139.3% of their annual food consumption. In other words, they must produce enough food for both 100% of their own consumption and an additional 39.3% to be consumed by the otherwise occupied urbanites.
However, this is an overly simplified view of the actual dynamics of food production, for while it is clear that while a small proportion of urbanites may collectively achieve communal or territorial self sufficiency when it comes to food production, it is also clear that 100% of the earth’s rural inhabitants are not dedicated to agricultural.
What, then, is the true ratio? How many persons are spending their lives building up the land?
On average, each American farmer produces enough food to feed 155 people. This is up from roughly 26 people in 1960 and, in terms of statistics, would mean that one person armed with the proper agricultural equipment, technology, and favorable climate patterns, can produce 15,500% of their own caloric requirements.
This staggering advance in American agricultural productivity is largely owed to the extended period of peace which has reigned in America which gave birth to, or at a minimum coincided with, rapid advances in agricultural science and industrial machinery.
It may be said, then, that these advances in agriculture have made possible the urban centric worldview that is widely espoused today. This is not a bad thing, however, and the current awareness of climate change and its potential impact on the increasingly delicate food chain upon which an increasing majority of the world depends is rightly cause for alarm.
Agricultural Alarms
GMOs
While it is staggering that one American farmer can provide nourishment for up to 155 persons, the question that is at the heart of the present debate on the merits of using Genetically Modified Organisms in seeds and the modified seeds’ reliance upon pesticides to ensure adequate crop yields is the following: At what long term cost does this productivity come?
It is an important question, for the long term security of the world’s food supply may hang in the balance.
Genetically Modified Organisms, or GMOs, are a prime example of mankind’s attempt to control nature. It is a form of conservation in that it attempts to conserve the current balance of food production by creating crop yields in excess of that which would occur under normal conditions.
It cannot be argued that GMOs have played a major role in human population growth. However, it is also clear that there are many direct and indirect side effects to exerting this type of control over the food chain which have yet to fully manifest themselves.
First and foremost, the staggering crop yields that the combination of GMO seeds, fertilizer, and pesticides provide come at a high price for the land itself. Rather than achieving a balance with the land, allowing it to produce and rest in natural occurring intervals with intermittent obligatory rests in the form of Sabbath years for agricultural land and herd rotations for pasturelands, mankind’s GMO induced yield highs convert the land into an addict, unable to function without regular shots of fertilizer and irrigation.
Again, fertilization and irrigation are important parts of farming and the building up of agricultural land when done in moderation. However, when these tasks are taken to the extremes under which they are practiced today, they rob both the land and mankind of their most important survival mechanism; self sufficiency.
CAFOs
Another less known but equally widespread practice that may ultimately threaten the food supply is the increased reliance upon Confined Animal Feeding Operations, or CAFOs. The proliferation of CAFOs, which are facilities where animals are raised in relatively cramped quarters and fed things that are not part of their natural diet (the equivalent of fertilizer in the GMO example above) and injected with antibiotics (the equivalent of pesticides in the above example) poses a twofold threat to the environment.
First, it produces animal based foodstuffs that have been proven to be harmful to humans over time. Second, and perhaps more importantly for reasons that are obvious, it limits the animals’ natural and mutually beneficial interaction with the land which robs the land of an important means of natural fertilization and rejuvenation, urine and manure.
After a personal epiphany regarding the detriments of setting apart land for conservation, a practice that is widely thought to be beneficial, Ecologist Allan Savory has made it his life’s work to reverse what he now sees as a dangerous policy of conservation.
For over a century, well meaning ecologists like Mr. Savory have labored under the belief that desertification, the fate that awaits the land when mankind and animals cease or severely limit their intercourse with it, was the direct result of large herds of animals grazing upon it. The initial conclusion of attributing desertification to large scale animal grazing is a logical one. After all, if one has seen the relative devastation that large herds leave in their wake, one can only conclude that the animals alone are responsible for desertification, as they leave the land barren and trampled.
Yet Savory holds out that this first analysis is incomplete. In fact, it is necessary for animals to consume, trample on, and leave their excretions on the land so that it may be left in peace to rejuvenate itself with the necessary fertilizer and just the amount of greenery necessary to thrive.
Part of the logic of Mr. Savory’s approach is that if the animals are left to graze freely, they will leave the land for greener pastures, as it were, once they have eaten the top layers of grass and shrubbery, the equivalent to pruning a plant. Furthermore, the animals will quickly tire, as anyone would, of tromping through their own excrements in search of food, leaving the land both pruned and fertilized. The land will then rejuvenate itself in time for the next grazing cycle.
While it has remained on the fringe of land management, Mr. Savory’s work has received the endorsement of royalty. At the 2012 World Conservation Congress, none other than the Prince of Wales gave this endorsement of Savory’s methods:
“I have been particularly fascinated, for example, by the work of a remarkable man called Allan Savory, in Zimbabwe and other semiarid areas, who has argued for years against the prevailing expert view that it is the simple numbers of cattle that drive overgrazing and cause fertile land to become desert. On the contrary, as he has since shown so graphically, the land needs the presence of feeding animals and their droppings for the cycle to be complete, so that soils and grassland areas stay productive. Such that, if you take grazers off the land and lock them away in vast feedlots, the land dies.” {via wikipedia.org}
While GMOs and CAFOs may appear to be nothing short of modern miracles with respect to food supplies, they are a result of man attempting to control the land as opposed to working with the land for mutual benefit. Left to its own devices, mankind will destroy the land to the extent that it wishes to unilaterally exert its will upon it. What is needed, then, is an acute awareness that to destroy the land through an exertion of unnatural control over it, is to destroy ourselves.
Conservation dooms the land to desertification
It is clear that the land, mankind, and animals live together in a delicate balance. Maintenance of this balance requires both constant interaction between mankind and nature and a measure of restraint, a general recognition that nature cannot be controlled in a healthy manner.
The opposite of the action of building up the land is a term that implies something that could not be farther from the truth: Conservation.
The term conservation implies the maintenance and upkeep of something. In terms of land management, it may be mistaken for actions taken or not taken to build up the land. However, in practice, conservation has come to embody a form of forced abstinence on the part of man with regards to the land.
There is much debate and scientific evidence which points to the activities of mankind being the ultimate cause of climate change and desertification. These findings are true to the extent that mankind’s activities are not aimed at building up the land. However, the only thing worse than mankind working to throw nature further out of balance by chasing a misplaced monetary premium is for mankind to abstain from interacting with the land altogether in a vain hope that the land would be better of without us.
The land needs mankind, and mankind needs the land. Both the land and mankind need animals to freely roam over the land rather than suffer in the constraints of a CAFO, the equivalent of prison in the animal world. All efforts to halt this natural interaction are an unwitting step towards squandering what arable land remains on the planet.
Natural Law and the Theory of Economic System Fluidity provides the theoretical basis for allowing the strengths of each economic system to peacefully work together to achieve this end and examines both the natural laws which govern economics as well as the moral basis for the existence of the nation state.
It is volume VI of the Why what we use as Money Matters series, and perhaps the most important, for it forms the philosophical core of our thesis.
We are pleased to offer it in PDF format for free here to our fellow taxpayers at The Mint, just click on the following link:
Additionally, it can be had for a mere $0.99 over at Amazon’s Kindle store and for free in a myriad of other eBook formats over and at Smashwords.com for the next month. Be sure to use coupon code: WF75E at checkout to receive the discount. The offer is good until May 25th, 2013.
As the financial world continues to turn in an ever inflated manner, we have been diligently working to complete the latest volume of the Why what we use as Money Matters series before the joyous distractions of summer in the Northwest call us away.
The following is an excerpt of Volume VI in the series, entitled Natural Law and the Theory of Economic System Fluidity, is perhaps the most important volume because it forms the ideological core of our economic treatise.
Enjoy and stay fresh!
Marx and Rand together in perfect harmony
It is increasingly important that mankind take adequate time to pause and reflect as to what ideology is being tacitly or actively pursued as a guide for his daily toils. As the collective efforts of mankind reach an effectiveness that was unimaginable a generation ago, the throws of human action are having a profound impact not only on an increasingly interconnected global economy, but on the very earth which mankind has been entrusted with.
Natural Law and the Theory of Economic System Fluidity
It is no longer a safe assumption that the natural world can perpetually work to correct the mistakes in favor of mankind. A deep examination of our motives in light of the Golden Rule is desperately needed to ensure a prosperous future for many. The key to material prosperity is allowing mankind to tacitly coordinate his varied productive efforts by promoting the ideals of true capitalism in large scale dealings, for it is the ideology which best allows mankind to respond to the incessant demands of natural law. Continue reading Marx and Rand together in perfect harmony set for release!→
The world keeps turning and has become quite unpredictable. Check that, it has always been unpredictable, the realization of one’s inability to predict what will happen comes with age.
On one hand, money supply measures around the globe are going through the roof, as is indebtedness. On the other had, the underlying economy, which had barely picked itself off of the canvas, appears to be up again, ready to be pile driven once again. What is one to make of it?
The Bitcoin is once again racing ahead in USD terms, while Gold and Silver peel themselves off of the pavement after encountering a steamroller in their path (as an aside, it will be interesting just how much $1,350 gold and $23.50 silver can be delivered, our guess is, not much.)
Will Karl Marx dance with Rand?
Our upcoming eBook, Natural Law and Economic System Fluidity – Marx and Rand together in perfect harmony, wrestles with unexplained economic phenomena such as the seeming impossibly of Capitalism and Socialism coexisting in harmony with one another, which are rapidly becoming important.
The following is a brief excerpt of our latest offering, scheduled to release late this month. Enjoy!
A Tale of Two Responses to Anarchy
In the current economic debate that rages between the productive virtues of what is referred to as Capitalism and the humanistic virtues of the Socialist ideal, it has become fashionable to assume that the virtues of one system, were its guiding principles put into action at once by all of the members of society, would eventually bring about the virtues promised by the other system in a peaceful manner.
This narrow, apologetic view taken by Capitalists and Socialists alike ignores the fact that the systems are wholly incompatible. It also ignores the fact that mankind is in a constant struggle to bring order to surroundings that are inherently anarchic in nature. The only laws that must be adhered to are natural laws, which are explored in section II of this volume.
For purists on either side of the ideological fence, compromise on any point is a slippery slope, and in the sense that the two systems are wholly incompatible, the view is technically correct. However, most economists miss the fact that it is perfectly normal and beneficial for each system to operate side by side. In fact, it is the only way in which mankind can reap the benefits of both systems at once.
All humans live and operate in both systems to some extent. The Capitalistic system is best equipped to organize resources on a grand scale and provide material goods for the greatest number of people, the Socialist system is the system that offers refuge from the rigid and unrelenting demands of the Capitalistic system’s incessant response to anarchy and the demands of natural law.
This refuge is commonly referred to as the family, and it can be observed operating the world over in all shapes and sizes.
The inescapable fact that Capitalism and Socialism are at once incompatible and completely reliant upon one another is the basis for the Theory of Economic System Fluidity.
More to come as we hack and slash our way through the draft.
We leave you this Friday with some foor for thoughts on Nature’s struggle from our upcoming eBook. Enjoy!
The natural world strives daily to achieve a perfect state of balance. Events and occurrences that, taken by themselves, appear chaotic and devoid of meaning are part of a grand rebalancing of the earth’s delicate state. These events are the splash of color across an oppressive gray sky that hints at the rainbow that will soon appear.
The natural world exists in a constant state of subtle agitation and violent quakes, yet each ebb and flow in the natural world is the physical expression of a desire to achieve a state that by definition will never be perfected:
Homeostasis.
Homeostasis, the tendency toward a relatively stable equilibrium between interdependent elements, is all at once a state of being that already exists and one that will never exist, for the natural world’s constant striving towards this state ensures that a perfect balance will never be achieved.
Yet despite the constant struggles in the natural world, the clashes between immovable objects and irresistible forces, the interplay between predator and prey, and the aggregation of slow processes which unite to cause large scale natural spectacles and events, are living proof of the laws that they are governed by, a set of rules that we hold out as natural law.
Mankind, for all of its virtues, has tacitly adopted a large scale delusion with regards to the natural world. The delusion is this, that all of nature’s struggles, interplays, and slow processes can be tamed or manipulated to bring about a constant state of balance in which he can plan, build, and operate with a high degree of certainty.
The widespread belief in this delusion, while seemingly noble and painstakingly practical, has flourished and proliferated under the current monetary system, in which the monetary premium, which is the highest expression of value that can be attributed to a good, has been completely removed from the natural world and is largely attributed to debt instruments, which ultimately rest on nothing more than the well intended promises of men.
Mankind’s day to day activities, which are the result of the choices that each man or woman individually take, often unconsciously, are largely dedicated to obtaining an increased portion of the monetary premium. With this given, it holds that the activities of mankind, to the extent that they succeed in their pursuit of the monetary premium, serve to throw the natural world ever further out of its delicate balance, which in turn gives rise to nature’s need to rebalance itself in order to comply with the immutable natural laws under which it must operate.
This volume, which is the most important and forms the basis for the previous five and all subsequent volumes in the Why what we use as Money Matters series, deals with natural law and mankind’s most suitable response to its many and varied demands, the capitalistic system.
It does so by presenting the ideologic basis of the true capitalistic system, a system rooted in the principles of freedom and private property. It further examines the specific demands of natural law and mankind’s failed response to it, which is the large scale socialist system which is violently forced upon mankind through the mechanism of large scale government. The concept of the large scale socialist system is referred to throughout this volume as a product of the “might makes right,” mentality.
While mankind is a mere forty years into the present monetary experiment in which the monetary premium has been increasingly associated with debt instruments, the effects of the removal of the monetary premium from the natural world are already evident. The consequences are staggering, and are currently manifesting themselves in the natural world through a phenomenon that has been labeled climate change.
The label is woefully misleading, as the climate is not simply changing, rather, the natural world is becoming increasingly unstable as it desperately seeks to balance as the activities of men, which previously worked in relative harmony with nature, with the immutable demands of natural law.
The current debt based monetary system and its tendency towards centralized planning and decision making has not only caused significant imbalances in trade and resource allocation, it is increasingly causing the earth itself to react more and more violently as it alone strives to comply with the demands of natural law.
For mankind, once the earth’s unwitting yet faithful custodian, has become its well meaning adversary. The root of this growing antagonism between man and nature is money, and the only remedy is to return the monetary premium to its rightful place in the natural realm.
For so long as it rests solely on the hopes and dreams of mankind, the power of the monetary premium is in the employ of the most destructive force on the planet.
The following is an excerpt of our brief, hastily compiled yet infinitely useful practical guide to the evolving world of Bitcoins. It is an encouragement to dive into Bitcoin acceptance, a monetary analysis of the Bitcion, a high level how to guide, and a word of caution all with a lesson in character embedded within its pages.
With any luck, it will hit digital shelves before the Bitcoin hits $200 USD, which will be tomorrow. Enjoy!
The Difficulty of Bitcoin Denominated Debt
Bitcoins: What they are and how to use them
Another rare but often unrecognized barrier to Bitcoin acceptance is the inability for the widespread formation of debt markets denominated in terms of Bitcoins. The reason that debt contracts will not be created in terms of Bitcoins has to do with the very thing that makes Bitcoins valuable in the first place: The mathematical limit on their issuance.
As of this writing, slightly over half of the 21 million Bitcoins scheduled to be created are in circulation. The rest will be emitted in decreasing increments over the next twenty years. The trajectory of the Bitcoin logarithm against the national currencies is negative, which is causing the inverse relationship in their prices.
Again, in layman’s terms, it would be a fools bet to take promise to pay a debt in Bitcoins, as they will, by definition, become increasingly difficult to obtain. If anything, one would need to factor in a Bitcoin appreciation to the debt instrument, meaning that it would have in implied negative interest rate. While we can foresee the emergence of such instruments, we also foresee that they will be too complex to be understood by most. As such, an important medium of currency acceptance, the existence of deep and liquid debt markets, will be lacking in the case of Bitcoin. While this is not a bad thing, it must be recognized by anyone who deals in Bitcoins.
The book will hit digital shelves near you shortly.
In the Bitcoin/USD market, the world is getting a rare glimpse of the power of the monetary premium. Today those who watched witnessed the Bitcoin briefly race up to $147 USD before retreating to around $115, where it stood yesterday.
Over the past few days, we have been participating in a discussion of the merits of the Bitcoin over on Google+ with the Austrian Economics group. It has been interesting to see how we wrestle with the concept of what is money. Trying to pin it down to one thing in the physical world. For if money were just one thing and one thing only, one of the world’s great mysteries would be put to rest, and the rest of the mysteries may even become less mysterious.
However, the concept of money remains elusive. It will remain elusive, and it is good. Here is why.
For the many things that it purports to be, the Bitcoin may be best described as a decentralized digital currency. As such, the only value that can rationally be attributed to it consists entirely of what we call a monetary premium. In our worldview, money is a concept. As such, there is no physical thing or concept that can claim a divine right to being money. Not gold, silver, nor national currencies.
What fools man into clinging to these things and insisting on calling them money is the notion of a monetary premium, which we define as a set of characteristics when make something a chosen store of wealth, medium of trade, and unit of account. For more on this, please read our eBook “What is Money? A quest to answer the question of the ages.”
We return from this shameless plug to the Bitcoin. The Bitcoin is not a physical good. If anything, it boils down to an arbitrary string of the zeros and ones that form the basis of all computing. However, this non-thing is beginning to absorb a portion of the monetary premium.
This partial absorption of the monetary premium by a string of digital numbers serves a proof that money is a construct of man, and for all of man’s efforts to capture it, measure it, and make it his, the concept of money, or what is better understood as the monetary premium, is a fickle and fleeting thing.
For this reason, Jesus warned us,
“No one can serve two masters, for either he will hate the one and love the other; or else he will be devoted to one and despise the other. You can’t serve both God and Mammon”
Neither YHWH or the monetary premium can be seen, but man must choose to serve one or the other. One is fickle and fleeting, the other faithful and constant. One’s answer as to which is which will reveal whom they serve.
Choose wisely.
Yet the Bitcoin and the fickle and fleeting monetary premium that it is interacting with gives those of us who are paying attention a chance to examine our character. For our reaction to the fluctuations in the Bitcoin / USD ratio may help to reveal hat kind of man or woman we are.
Whether one finds themselves serving the monetary premium or YHWH, they are likely to find themselves identifying with one of three basic examples of behavior and motivations.
These examples were first presented to us in the summer of 2004 at a Kings Kids European summit in Tarragona. Far from the lush EU summits which are the hallmark of today’s famous Troika mismanagement, the Kings Kids operate on a wing and, most literally, a prayer.
With our Castilian Spanish skills still lacking, we spent a mid summer’s week in tents on a high school campus (naturally, school was out) with minimal bath and shower facilities with hundreds of adolescents, young adults, and not so young adults from across Europe and the UK (indeed, we were acquainted with a long lost cousin from Wales at the event). It is in these settings where YHWH moves and provides his most profound lessons and training.
It was in this setting, then, that the examples were presented by our Pastor Curtis Clewett of La Iglesia El Lokal in Barcelona. Each time we recount the impact of this teaching to him, he recalls it as something that he threw together at the last minute.
So it was, on a warm summers eve on the Mediterranean coast in a place which more or less resembled a gypsy camp, we gathered to hear el Reverendo impart the three examples of what we will call spiritual maturity. Read them carefully and please, take no offense at the blanket statements that the descriptions imply. We understand there are many shades of the following professions, and it will quickly become clear that it is the description that matters more than the professional title:
The Soldier: The soldier is in training. He is fit, well equipped, and he is at the ready. However, the soldier does not represent the ultimate in spiritual maturity, for he is lacking two things: Initiative and autonomy.
The soldier is trained to take orders. He does not dare act on his own for fear of retribution or failure. He is limited by not only the rules and regulations of his trade, but also in his physical movements and the ability to act independently of the orders given by his commanders. As such, he cannot act on his own initiative and, if he does, it is in a very small sphere of operations which is dependent upon others following similar orders.
Being a soldier is not a bad thing, indeed, it is admirable, but the path to spiritual maturity demands that he move past this necessary first jaunt down the neverending path towards spiritual maturity.
The Athlete: Unlike the soldier, the athlete is, by definition, acting on his or her own initiative. They may depend upon a coach for guidance and encouragement, but their motivation to obey the coach comes from a desire to improve, not fear, as was the case from time to time with the soldier.
The athlete desires to excel at a certain sport or event, and relies on set intervals of competitions or time trials by which to receive feedback and praise for his or her efforts.
Again, being an athlete is not a bad thing, and the emergence of personal initiative and the desire to train, as well as an increased degree of autonomy represent a further journey down the path to spiritual maturity, however, even if the athlete reach the pinnacle of their chosen field, they are still lacking in one very important aspect, an aspect that is fully embraced by the farmer.
The Farmer: The farmer does not have a drill sergeant yelling at him in the morning, nor is he told what to do and when to do it. The farmer is not restricted in his movements or daily activities.
The farmer does not train on a daily basis and is not accountable to a coach. Indeed, the farmer takes on responsibility not only for his own training regimen, but for understanding when and where to compete.
The farmer knows exactly what to do and waits for signals from his natural surroundings to tell him when to do it. He constantly looks after his surroundings and understands that both the land and the animals within his care have been entrusted to him. Indeed, so have his family and his neighbors. Even those whom he will never meet indirectly may rely upon the success of his efforts to be able to put food on their table.
The farmer’s efforts may appear volatile, oscillating between sloth and frenzies of chaotic activity. When there is nothing to be done, the farmer drives to the café to drink coffee and play cards all day. When there is work to be done, he awakens early and does not rest until his equipment or the lack of daylight put an end to the day’s efforts.
The farmer not only understands what needs to be done, he understands that all efforts, to be effective, must be put forth in their season. He can prepare, and often does, but he understands that the time to exert himself will become known in its due time, but it will not happen on a schedule which he can set.
Still, he accepts the responsibility of his post, both the long days and the stinging boredom, with joy, knowing that ultimately he is doing the work of a master, and is providing for many who live well beyond the county line who he may never personally meet. He may never be thanked by them, or recognized formally for his work, yet in the work itself, he finds life’s greatest contentment.
As you can see from the above examples, to understand one’s own character, it is as important to understand who we are serving as it is to understand how we are serving, for the key to contentment lies in choosing well on both accounts.
The monetary premium currently attributed to the Bitcoin will take wings. If one is a soldier or an athlete, they are likely to get burned by the sudden movements. However, the farmer, in a sloth like manner, will pick his spot and wait patiently for an opportunity to present itself.
Then, in a sudden, measured frenzy, he will then labor day and night until the work is finished.
Pastor Clewett is still in Barcelona. In the true spirit of the farmer, he continues to pastor in addition to his duties at Planting Together, where he is on the Executive team. Planting Together is an organization which organizes tree planting and pruning excursions, where they partner with the government of Senegal and many others to help build up the Great Green Wall, a wall of trees and foliage which is successfully fighting back the encroachment of the Sahara in northwestern Africa.
Thank you, Curtis! Many blessings on your head. May we all learn to sow and reap as you have.
At long last, the much anticipated fifth volume in our “Why what we use as Money Matters” series is available in on Amazon’s Kindle and over at Smash words.com for your immediate reading pleasure.
Pacioli’s Gift or Bernanke’s Curse?
The volume has a hero, Luca Pacioli, the Franciscan Monk who not only taught mathematics to Leonardo Da Vinci but dissimenated to Western Civilization nothing short of an economic super power.
It also has a villian, Central Banking, born of the super powers of dual-entry accounting, it uses this super power against humanity and has become dual-entry accounting’s arch nemesis.
How will it end? At this point, you’ll have to shell out $0.99 and a couple hours of your time to find out. However, by doing so, you may end up changing the world for the better. Not a bad return on investment!
We pray you will enjoy it.
Today, Bitcoins traded near $100 USD, silver and gold continued to mysteriously get crushed, and US stocks, perhaps more mysteriously, continued to defy gravity. What does it mean?
The events in Cyprus have once again caused a sort of flight to safety. Unfotunately, the flight to safety is a very crowded trade, and is causing the US Dollar to suffer from an unwelcome bout of strength, or potential deflation.
Bernanke and the Fed will never stand for it. US Dollar strength cannot be tolerated, and will be swiftly dealth with. As it is dealt with in the coming weeks, Bitcoins, gold, and silver will seem like a steal at today’s prices.
Then there is the matter of the brewing war in Persia, but speculation on that scenario must wait, for the Passover is at hand.
Today, we present to you the “postre” of our most recent eBook offering, which we have entitled, after much deliberation,
Pacioli’s Gift or Bernanke’s Curse?
It is slated to arrive on digital shelves this evening. What started as a book about the irony of dual-entry accounting enabling central banking, therefore making man’s greatest wealth producing innovation the agent of his greatest wealth destroying menace.
While it accomplishes this, it naturally spreads its tentacles into sound money, economic thought, and monetary history.
Enjoy desert, the main course will be available shortly.
Conclusion
While free markets and Free Banking represent mankind’s best hope for averting disaster, many people look at the scene on the water bed and side with the 300 pound man, who represents the central bankers of the world. After all, isn’t he the only one taking action to capture and sedate the 800 pound gorilla, whom in our metaphor represents the world’s financial markets?
Summa de Arithmetica, Geometrica, Proportioni et Proportionale – Pacioli’s great gift to Western Civilization
What this analysis fails to recognize is that the best course of action when dealing with an 800 pound gorilla is to observe it from a distance. Once the gorilla feels like it has an understanding of its surroundings, it will become docile and predictable unless it gets hungry or senses danger. If the gorilla gets hungry, one should let it find something to eat. If it senses danger, one’s reaction should not be to calm the gorilla, rather, to focus on the source of the gorilla’s agitation and act accordingly.
The 800 pound gorilla is not the problem. In fact, it can often be counted on to recognize threats and, even though its reactions may seem unpredictable, gyrations in financial markets serve as early warning signs to potential economic problems on the horizon. Once recognized, economic imbalances can be recognized and remedied.
To silence the gorilla, or the gyrations in the financial markets, is to rob mankind of an important early warning system. Circa 2013, as the efforts of the world’s central bankers to sedate the gorilla by force escalate, many a Chihuahua (our metaphor’s personification of the government) is getting trampled and the water bed of world economic activity is on the verge of springing any number of leaks.
This is an outcome that Luca Pacioli could not have envisioned, for he lived in an age and in a place where Free Banking and free markets were more or less givens. It was an age where capital formation was accelerating and the capital base from which we still operate today was being formed. All thanks to Pacioli’s unwitting effort to disseminate the methods of dual-entry accounting throughout western civilization from his humble Franciscan abode.
While it is a great irony that a Franciscan Monk, sworn to poverty, would refine and articulate the greatest wealth generating innovation known to mankind, it is an even greater irony that this innovation would enable the large-scale employment of man’s greatest threat to this wealth, modern central banking.
The unconventional measures employed by the world’s central bankers in increasing measures over the past 100 and are not only failing to achieve their stated goals of increasing employment and economic growth, they are triggering what is quickly becoming an unmitigated disaster in the fixed income markets. These markets, once the bedrock of global finance, have now been conditioned to do nothing more than attempt to front run the central banks’ interest rate cues up and down the yield curve.
Fortunately, the choice of whether to use Pacioli’s gift for good or for evil is always at hand. Even as the world suffers under the grip of modern central banking, the ultimate solution of Free Banking, the banking that Pacioli and the Venetian merchants had assumed would always exist, is waiting in the wings to save mankind from its own penchant for error. In fact, Free Banking is not something that requires a great deal of compromise and administrative rule writing as most modern legislation does.
Free Banking operates under the rules of natural law, and it can be implemented via a simple political decision to get off of the water bed and leave the gorilla alone.
Unfortunately, it is a political decision that modern governments, whose fate and existence depends upon the modern central banking model, will never take on their own. In the absence of political action, it will take the wholesale collapse of the central bank itself to rid the world of its menace.
It is the catastrophe to come, and it will leave the fortunes of many laid waste as it indiscriminately dismantles the erroneous divisions of labor and implied daily activities that it has caused mankind to organize itself under.
It is not a question of if, but when. For modern central banking will eventually give way to Free Banking out of necessity. When it happens, mankind will be allowed to continue its self-correcting path toward civility and peace.
And Luca Pacioli, if not Christopher Columbus, will be vindicated.
Today, we offer a second course on the menu of our upcoming eBook release, Pacioli’s Gift vs. Bernanke’s Curse, it is a chapter on the importance of a monetary constant when employing the methods of dual entry accounting. Enjoy!
The Presumption of a Monetary Constant
Luca Pacioli was first and foremost a mathematician. He understood that mathematics relies upon certain constants to remain, well, constant in order for the calculations that depended upon them to be meaningful. Whether or not Pacioli was conscious of the fact, implicit in his presentation of the methods of dual entry accounting is the assumption that the money in which he was directing merchants to keep their accounts on the basis of was sound money. The use of the monetary unit as a unit of account implies that he understood that money was to the economic world what constants were to mathematical calculations.
Also implicit in his assumption was that the monetary units which were to be used as units of account on the accounting ledger contained a constant weight of silver or gold which existed in the natural world. Silver and gold that had been hewn out of the ground and struck into coinage of a set weight and metallic alloy by the men at the old Zecca, the Mint of Venice in the Rialto district which preceded its famous successor was completed in 1545. This was an important assumption, as dual entry accounting only works when the accounts balance. By design, it implies that physical goods are in existence or are reasonably expected to come into existence and become available for exchange.
When Pacioli penned Summa, the Venetian Zecca was one of the largest and most reputable mints in the world. This reputation was born in no small part of a scandal at the Zecca which consummated with the Doges, who ruled Venice at the time issuing a decree on the 11th of November, 1457 against then noted variations in the weight and purity of the gold and silver coins that the Mint at Venice. As a result of this renewed commitment to monetary purity, the coins which circulated in Pacioli’s time and locale, the Silver Ducat, Soldo, Lira Sequin, and Gold Ducat, served as the standard of trade in the world known to Pacioli.
Given that the Venetian merchants could count on this sound monetary standard on which to base their accounts and, by extension, their choice of activities, their use of dual entry accounting not only benefited their own interests, but had the side effect of benefiting all who circulated and traded the Venetian coinage, whether or not they had mastered the art of dual entry accounting.
Summa de Arithmetica, Geometrica, Proportioni et Proportionale – Pacioli’s great gift to Western Civilization
For those who had mastered the art of dual entry accounting in this environment, the ability to properly recognize and record their transactions and to make sense of the results gave them a sort of super power. This super power, the ability to recognize the value of transactions over longer time horizons and therefore direct investments over longer time horizons, was further refined by Pacioli, who employed the use of Arabic numerals and proposed a system of mercantile accounting that could apply uniformly to all trades and nations.
However, dual entry accounting, as mankind is now coming to understand, is a two-edged sword. For dual entry accounting to work in favor of those who practice and/or rely upon it, the unit of account must hold a stable value. The assumption of the relatively stable value of the monetary unit in relationship to the natural world is essential for interpreting the primary output of dual entry accounting, the profit or loss signal. The stable unit of account is also essential when evaluating the worth and employment of items that are represented by entries to the balance sheet, upon which the profit or loss signal ultimately depends.
In short, the stability of the monetary unit of account was essential if dual entry was to be relied upon for sound decision-making.
For the Venetians, this requirement was met by virtue of their relatively stable monetary unit. As such, the Venetian Mercantile class rose to dominate the Western world. Indeed, with few notable exceptions, dual entry accounting has rendered an invaluable service to mankind and has allowed human progress to follow a generally upward trajectory in terms of material well-being ever since Pacioli made his bequeath to mankind.
As a stable currency enables the super powers of dual entry accounting to operate, an unstable currency, of which there are numerous examples in the largest economies in the world today, circa 2013, is its kryptonite. A currency that does not have a relatively stable value over long time horizons, specifically the time horizons required for large-scale investments of capital to be planned with the precision required for them to be successful, serves to render the gift of Pacioli powerless.
In doing so, an unstable currency threatens to take mankind from the comfort of their large screen televisions, sofas, and smart phones, and throw them back into the dark ages, from which the world that Pacioli lived in had recently emerged.
In the irony of ironies, mankind has unwittingly made use of Pacioli’s gift to create the largest system of unstable currency that the world has ever known, the one that has operated for the past 100 years. This disastrous invention is known as central banking, and it has quickly turned the world’s economy into an unmitigated catastrophe waiting to happen.
On our two year anniversary here at Davidmint.com, we wish to take a brief moment to thank you, our fellow taxpayers, for tuning in and reading from time to time. We pray that you are well and that we can continue to be of service to you.
In honor of this occasion, we have two announcements:
1. We are giving away 100 PDF copies of our latest eBook, “What is Truth? On the Nature of Empire” for free over the next 7 days. Click here to download your copy from our new store.
Click here for your free download – Limited time offer
2. We have launched a new store right here on the site. We are taking measures towards accepting Bitcoins and, should the need arise, other forms of digital currency in exchange for our silver coin offerings.
While the first announcement is essentially shameless self promotion, the second is one that we suspect will be taken by any number of merchants in the Silver and Gold bullion space in the not too distant future.
Why? While we do not advocate holding a significant amount of long term wealth in digital formats, it may become important to do so in the short term. It may also be important to be able to transact in Bitcoins, regardless of whether or not the proceeds are held in Bitcoins or converted via an exchange to a national currency.
As the events in Cyprus continue to unfold, we here at The Mint have taken the decision to accept Bitcoins as a form of payment for Silver bullion products. While we accept that the Bitcoin, as a purely digital medium of exchange, is not without its risks, the mere prospect of a week long banking holiday, like the one the Cypriot banks are currently on, occurring closer to home demands that we create a contingency plan.
Being locked out of the bank, as the residents of Cyprus appear to be, can be downright lethal for commerce. Should the unthinkable happen in your neighborhood, it will be essential to have a backup plan.
Silver bullion is the ultimate backup plan. Should the lights go out, it is the most likely to function as a medium of exchange once the inevitable chaos wanes into some sort of order. Should the lights stay on and one’s bank accounts be randomly frozen by a government official, the ability to trade in Bitcoins will be essential for any merchant to be able to operate.
Will it work? Only time will tell. We can already foresee one possible glitch: Bitcoins have the distinct advantage of being anonymous. This is both their strength and weakness when it comes to selling bullion via mail, as in order to properly ship coins, this anonymity is likely to be temporarily relinquished into our care (silver coins are not like delivered pizzas as they must be paid for up front). While we have no immediate plans, other than to subscribe our customers to The Mint, something we see as benign, if not beneficial.
Beyond having a plan B should the banking system become “Temporarily Unavailable” on an individual or collective basis, in theory, accepting Bitcoins is beneficial as they should theoretically continue to appreciate in value against the fiat currencies of the world. The reason for this, for the uninitiated, is that Bitcoin creation is set to occur on a fixed timeline and to be ultimately finite. As of this writing, Bitcoin adoption is running well ahead of the logarithm, which is causing massive deflation in terms of Bitcoin pricing.
Mind you, Bitcoins can be traded fractionally up to 8 decimal places. Should Bitcoin adoption continue to take off, the Bitcoin’s rigid logarithm will not allow for the Bitcoin’s continued use in commerce. This has been described as its fatal flaw. The Bitcoin will, in theory, take its place in the digital realm as “Good money” in the terminology of Gresham’s Law and exit circulation. In its place will appear a plethora of digital currencies which would then come into existence via their own logarithm and trade against the Bitcoin, as today’s fiat currencies do.
In this sense, Bitcoin is the current gold standard of digital currencies. As such, our planned acceptance of Bitcoins for Silver is like trading physical silver for digital gold, as Bitcoin’s trajectory will theoretically track that of gold with one notable exception: Barring any subsequent changes to the logarithm, there will be no new “discoveries” of Bitcoins to augment the stock.
It seems like a good trade, and one we are willing to engage in to a point. However, we must reiterate that wealth must be held in the real world to be of any worldly good, and trading in Bitcoins, while temporarily solving the problem of rapidly depreciating fiat currencies, will serve to further throw the earth out of balance. For man’s activities to achieve balance with the earth, the monetary premium must be attached to something in the physical realm, not an inordinate amount of credit or data stored on a servers.
Besides, credits and data on servers has a strange knack for disappearing when you most need them. Silver typically does not.
One last word to the wise, NEVER, EVER GO SHORT BITCOINS IN FIAT CURRENCIES, as doing so places one on the wrong side of a trade against a deep pocketed adversary: A fixed mathematical limit.
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