Sunday, April 4, 2010

Refining the mission

Blogs are about finding a niche.  In the case of real economics, that niche was supposed to be a site where I would mount a defense of the Economics of Prosperity that Progressives invented and then proved so successfully.  But what I have discovered is that I have mostly posted on the subject "Are the moneychangers just a bunch of crooks?"  And I don't much like it.  It's lazy--I mean, the supply of stories out there on the subjects of fraud and corruption in the financial services business is almost infinite.

The difference between what's legal and illegal to the financial types is usually a tiny distinction because their real goal is to maximize their cut of the economic output of other humans.  Since the purported benefits of financial "services" is an insignificant fraction of the cut the moneychangers want to charge, the rest must be fraud of some sort.  Any business that is founded with the primary goal of ripping off other humans is going to resent any restrictions on their abilities to meet that goal.  So it not surprising that the laws we passed to contain the predatory excesses of the moneychangers have been routinely ignored.

Fraud can be petty like the payday lenders who charge interest rates in the hundreds of percent or massive like the bailout of AIG or Goldman Sachs.  But none of these even comes close to the frauds surrounding the creation of money.  For the simple task of creating and stabilizing the money supply, the Federal Reserve System bills the citizens of the USA BILLIONS of dollars.  The whole system is an obscenity that literally prevents us from either addressing our real problems or employing our citizens.

What this REALLY means is that I feel I must address the divisive subject of Monetary Theory on this blog.  It NOT like I don't have things to say about this subject--I grew up in rural Minnesota where Monetary Theory was discussed in church basements and barber shops.  I heard my first explanation of fractional banking at 12--a full two-hour sit-down session with a guy who had a serious "son, you are probably going to want to know this" attitude.  Been following the subject closely ever since.

On the other hand, I am quite aware that many, perhaps the overwhelming majority, of folks with opinions on Monetary Theory are misguided at best, and often insane.  The subject will do that for you.  It pretty hard to understand why a funny-looking piece of paper or a reprogrammed computer chip can actually have value.  Coming up with a theory for why it is obviously true will take a toll.

So even though I know that Monetary Theory is a minefield that I would rather avoid, I am going to make it more a focus of this blog--mostly because it is a subject that can no longer be ignored.  It is also a subject with a lot of renewed interest because of Ron Paul.  Unfortunately, Paul maintains the positions and arguments of the traditional "hard-money" folks--the ones who believe in the gold standard and worry about the evils of inflation--he is on the side of history that brought us ever-recurring economics disasters.  So SOMEONE has to remind us that there have been other far more successful Monetary Theories in history. So in spite of the known minefields out there, I guess that someone should be me.

As a practical matter, this means I will be generating more original content.  This in turn means I will be posting less often.  I'll still post on financial fraud if the story is interesting enough.  But mostly I will try to create lessons on Monetary Theory that will result in an outcome where a regular visitor to this blog will be as literate in the subject as their grandfathers probably were.

Wish me luck because this is important.

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