[MD] Fw: No more SOM and no more money!

[Laird Bedore]

Hi David,

Economics feels like some sort of bizarro world to me. When I look at it 
I see deeply-rooted paradoxes that make my head spin. I'm glad I work 
computers and ones and zeros and boolean logic where it's simple and 
rigid and easy. :)

Ultimately, all economic systems require a basic human resource: 
motivation. A sense of worth or value keeps people happy and working and 
the gears churning. Before the times of abstract paper exchanges, people 
measured their economic worth in their resources - in cows or bushels of 
wheat or woven mats or whatever. Bartering allowed people with resources 
to get other resources they needed, but it was extremely hard for 
someone to start with nothing and earn something. The amount of 
resources in the overall system was finite and tangible. Inflation in 
that system was practically zero, but the system was slow and rigid.

With the abstraction of money and the desire for the have-nots to become 
"haves", people wanted the sensation that they were getting a little 
more than they were giving. Intangible resources (money) made the 
virtual size of the whole system flexible. People needed to borrow money 
and banks needed a reason (profit) to lend money. People needed a way 
(more profit) to pay back the loans. So, people started driving up the 
price of their goods in order to make more for themselves. Slowly but 
surely what goes around comes around, everybody's price goes up, and now 
salaries have to go up. People get the sensation that they're making 
more for themselves - taking a bigger share of the world - but it's the 
same physical world with the same physical resources as before... It's a 
useful but strange illusion - we have naturally created inflation purely 
by our action of trying to make better for ourselves. Inflation is the 
cyclical motivation required for an abstract (money-based) economic 
system to persevere.

I don't really see inflation as a bad thing. It's a thoroughly awkward 
abstraction that makes me feel uneasy, but I can't imagine the modern 
economy getting by without it. As long as the inflation rate stays 
manageable (ie no 25% APR mortgages like in the S&L bomb of the 1970's) 
it serves the purpose of keeping people indirectly motivated through the 
sense of improving one's own worth and avoids mass panics. Sure, there 
are times when we have deflation - the economy correcting itself of a 
major imbalance. That just recently happened in some of the US real 
estate market. However if the idea of inflation were to just *poof*, I 
think people would slowly but naturally (in our eyes catastrophically) 
return to a barter system. Fields of work that yield abstract or 
extremely-indirect value (like quantum computing research) would not 
fare well at all, and many such pursuits would either vanish or be 
relegated to the backyard tinkerings of the mad-scientist types!

Eventually it'd be nice if everyone saw it as an unnecessary abstraction 
and we found a way to work without it, but I'm definitely not holding my 
breath!

-Laird

David M wrote:
> Hi Laird
>
> Funny how our media seem to so highly value low
> inflation when it's such a good thing
> for people with big debts. And how we
> ensure people have big house buying debts
> by limiting/controlling the market in house building
> and creating artificial shortages so that home owners
> feel wealthy and keep spending to help prop up
> growth because no growth no profits due to
> increased price competition, so you gotta keep
> the thing driving forward, but what happens
> if you take your foot off the accelerator?
> Like when you spot the cliff edge or just get
> sick of the pointless speed?
>
> I really think the choice is one of growth
> versus leisure. And the drive for profits
> means we are being persuaded that we
> cannot choose the latter. If we did would
> the system collapse? What do you think?
>
> David M
>
>
>
> ----- Original Message ----- 
> From: "Laird Bedore" <lmbedore at vectorstar.com>
> To: <moq_discuss at moqtalk.org>
> Sent: Monday, November 13, 2006 6:55 PM
> Subject: Re: [MD] Fw: No more SOM and no more money!
>
>
>   
>> Hi David,
>>
>> I've been trying to find some perspective other than my default (which
>> thinks inheritance is perfectly fine and great) to look at this, and it
>> struck me that the current situation is already damn near perfect. A
>> nice, notorized Will and Testament gives each person the CHOICE of how
>> their earnings and possessions are divvied up in their stead. If they
>> earned 'em, hell, it's their call. If someone wants to give their wealth
>> to the poor (say, through an organization, church, whatever), they can
>> do so. They can give it to their kids if they so choose. More likely,
>> though, is that most philanthropy will be done during their lifetime
>> through donations if that's really what they want to do with their 
>> earnings.
>>
>> We have the capability in the current system to help our fellow man by
>> choice. The fact is that many people choose to help strangers, but most
>> people choose to help their families first out of a sense of "need". I
>> don't think this comes as a surprise to much of anyone. By merit of the
>> dynamics of our economic system, we maintain a partially-contrived
>> struggle (measure of wealth) where the balance point of peoples' sense
>> of need and possession (selfishness vs self-comfort) is tested. Interest
>> rates and inflation, both artifices of our economy, are adjusted to
>> maintain the highest steady pace possible. Due to these dynamics of our
>> world economy, I doubt we'll ever reach an utopian future where everyone
>> feels they have more than they need and always help their neighbors.
>> Unless we somehow obviate the need for inflation and thus destroy the
>> perceived decline of vested value over time, but I can't figure a
>> feasible way for that to happen.
>>
>> -Laird
>>
>> David M wrote:
>>     
>>> I kind of thought most of you would realise
>>>  that I am talking about people inheriting wealth
>>>  when their parents die and they are typically in their
>>>  thirties. Children in the sense of having parents
>>>  not in being young!
>>>
>>>  David M
>>>
>>>