Dollar Value Equivalence

Thomas Lee Abshier, ND
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The Christian Constitutional Republic
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by: Thomas Lee Abshier, ND

Value and The Dollar
by: Thomas Lee Abshier, ND
11/14/2011

On Mon, Nov 14, 2011 at 11:43 PM, Thomas Lee Abshier, ND
wrote:

Thomas A: This is a response to your communication last week, but is relevant to the questions you asked after our discussion this week.

Thanks for spending time with us this and last week. I always enjoy the debate, challenge, and fellowship. Yes, I am learning. Some of your questions and concepts are so far away from anything I have ever considered, so completely different than my understanding of money, the markets and the world, that I have to go to new levels of simplicity and elementary analysis to justify and communicate my understanding and arguments. [John F: I know it is a stretch. I've been reading this caliber of stuff for 30 years, and it is all I can do to keep the stuff I know in my head against the onslaught of constant propaganda and false assumptions by a rebellious culture. Gotta stop drinking the Kool-Aid.]

Thomas A: I was attempting to be charitable in my statement that it was “so far away from anything I have ever considered. What I meant to say was that I disagree with a number of your assumptions, and that I am attempting to explain a new way of looking at life to you. So far I have been unsuccessful in explaining these concepts, hence the need to speak in ever more elementary terms and concepts. I’m sure God is working to purify our hearts and make us more fit for His service.

You brought up lots of interesting case studies regarding price changes in various commodities. I shall attempt to give a general answer that will address all the scenarios you bring up around this issue.

I am proposing that the entire banking system should respond with the appropriate monetary policy to keep the value of the dollar stable (not stable according the prices/profits/loss in any one commodity/company/industry/sector, but stable in terms of the most honest estimate of the cost of the basket of all goods and services).

Thomas A: You have underlined, and bolded my word “should” a number of times, and then you rebelled against my use of the word “should” as though I was attempting to legislate/mandate how everyone must act, and under penalty of law. I understand this interpretation of the word “should”. But, as used in the above case, my intent was to note that this reflects a Godly mandate. And as such, men “should” attempt to do everything possible to comply with such important principles. And in particular on this point, the value of the dollar “should” maintain a constant value. This is a good and Godly goal for the money supply, and a beneficial end point of monetary policy if achieved. I believe God would find this goal pleasing.

John F: I think this is what we agreed is humanly impossible. No I did not agree to that concept in the way that you are using it. It is humanly impossible to know the totality of allvalue, and the totality of alldollars, and to hence impossible to exactly calculate that value from deductive reasoning. But, it is not impossible for the invisible hand of the market to assign a number of dollars to a value (as judged by the individual, and ultimately larger numbers of people, who thus reach a marketplace consensus as to the value of goods and services.

John F: The COST is whatever a potential buyer decides to trade for it at any particular time. Sure, there are averages, and we must use such data for our planning, but to attempt to "control" such things is to arrogate to yourself the prerogatives of God.

Thomas A: You have made assumptions about my position which are not true. I am leaving the assignment of value and the corresponding number of dollars totally up to the individual and group that is making dollar for value exchanges in the free market. The only “control” that I am suggesting is that we as a society/economy/world must increase the money supply as the amount of value available for consumption is increased. Ideally there would be a percentage increase in money supply that corresponded to the increase in consumable value. I suspect that whatever system was used would approach a steady state, appropriate, (I proposed that individual banks loan out new money (in addition to saved money) at a rate that was judged prudent with the goal of maintaining a constant value to the dollar, and appropriate according to the economic statistics, the market prices, the advice of agencies, think tanks, associations of banks, leaders, and customers -- essentially voting, and reaching a community consensus)

Nor can you do this without stealing from some people and giving undeserved benefits to others. What if "keeping the value of the dollar stable" turns out to be something like trying to "prevent" crime.

Thomas A: I believe that God would approve of value created now being redeemed for equal value later. I would like that for myself, and I would like that for my neighbor. But, having stated that as a goal, I don’t believe regulation of the dollar-value exchange rate at an unchanging rate is possible. The dollar-value exchange rate will vary up and down over time according to many factors, internal and external. To favor either the lender or the borrower would skew the economy toward inflation or deflation. I use as the contract between seller and buyer to deliver promised value as the underlying principle that society should seek to facilitate. Of course it is impossible to regulate the value of the dollar by force, as this is simply another name for wage and price controls; this strategy leads predictably to shortages, excesses, and mis-allocation of resources in relationship to demand. I am in favor of the letting the markets find their own equilibrium point in terms of the dollar-value exchange rate. But, to do that when gold & Silver is the medium of exchange, requires that money be created only when there is more gold or silver mined. And yes, the increase in the dollar-gold exchange rate will stimulate the increase in the production of gold. But, unless we are all going to carry around gold coins for daily expenses, and transport large numbers gold coins in armored cars to buy houses, businesses, and land, we are going to have to introduce paper and digital money into the system to facilitate such large value ownership transfers. And, once paper money is in circulation the question then becomes what is the percentage of gold/silver/oil/platinum... kept in reserve compared to the number of bills in circulation (100% reserve, or a fractional reserve? If 100%, then money supply is totally at the mercy of the mining industry... Which is only peripherally related to the actual business of producing value.)

And, regarding an absolute mandate to keep the dollar-value exchange rate constant, it is not even desirable for there to be zero variation in the value of money. A stable dollar-value exchange rate is desirable as it provides a stable platform from which business can compute the cost of doing business, and hence can compute the risk vs reward equation with reasonable certainty. But, as desirable as a constant dollar-value exchange rate is for business, life is inherently unknown, and contains risks and unexpected forces enter into it.

On the microeconomic (corporation, industry, and sector level) there are myriads of forces that raise and lower the cost of doing business. As the size of the economic unit under consideration gets larger, many of the ripples of the microeconomic milieu are smoothed. Thus, the larger forces of sectors, and international relations, will be the major forces that cause changes in the dollar-value exchange rate at the national level. Thus, while maintaining an absolutely stable dollar-value exchange rate is impossible at any level of population, it is nevertheless a worthy goal. Just like stopping the use of drugs, or curing cancer is a worthy goal.

I do not want to reduce life to total predictability, nor eliminate all uncertainty on any level, (that is, I desire neither chaotic randomness, nor total determinism). But I would like to have as many variables as possible moved within a reasonable band of variation.

I would like to be compensated for not consuming now (interest), and I don’t mind compensating other people for allowing me to consume now, while delaying their consumption. All this to say, I believe it is a good thing for society to attempt to maintain as much stability and steadiness as possible. And, I believe this will only become reality as we as a culture submit our hearts to the Lordship of Jesus Christ, and His Law.

Should we punish people for violating this highest of principles? No, God is the judge of such matters. Should we punish people for judging the macroeconomic tides and improperly controlling the issuance of new money in return for debt? No, but we as a righteous society should be vigilant, and participate as part of the larger societal organism and let our voice and view be known. Such is the essence of a government of the People.

The real point you are making here is that the government should not be in the business of coining money. And of course, that is not a constitutional principle. Government was given that mandate, and they should do it well, and I believe the best metric of that compliance with that mandate is the degree of maintenance of the stability of the dollar-value exchange rate.

We cannot prevent crime, we can only try to efficiently punish it the way God says. If we try to do more/better, we discover that we are guilty of horrible atrocities and injustice. You might have had to have read CS Lewis to appreciate this. Maybe Margo has read his stuff on punitive theory. But if we try to retain honesty in money, lo and behold, we find that prices might just be as stable as is humanly possible. And if not perfectly stable, at least satisfactorily predictable, so that businessmen/investors/savers can at least make wise decisions.]

I believe that the focus of monetary policy should be the rate of lending to primarily productive or consumptive purposes, and the associated rate of release of new money.

[How can you do this and still honor property ownership/free trade? Don't you have to central-manage, i.e. coerce? Why do you believe this? Why do you prefer this over being honest or respecting property rights? The people most highly motivated to make the best decisions on the "rent"/interest rate to loan property (dollars or otherwise) - are the owners of the property - not some coalition, committee, confederation of Business Leaders, Bankers, or Bureaucrats. The owners of the money "should" be free (instead of coerced - under your proposed system) to determine the rent on their property (money).]

Thomas A 2: I agree. The interest rate should be established by every bank. If each bank were free to lend, and borrow, according to rates established by the market, there is no coercion involved.

Thomas A 1: The point of entry for new money, and the decision to do so, should be at the level of the individual bank, but that decision should be through a consensus of the entire banking community, which includes the network/body of all banks, the Fed, and academia.

[John F 1: Do all of them together constitute the owners of the property, then, such that they can make decisions about how it is to be disposed of? Who owns all the money in the world such that they have the right to artificially raise or lower its market value by increasing or decreasing its quantity? You keep saying "should" like there is an ethical issue here. Which of His laws will the Lord Jesus Christ use when He disciplines/judges the men who make up this consensus if they miss the mark about how much new imaginary money should be created so that the widows' savings are reduced in terms of how much food/rent they can be traded for?]

The banks should execute monetary policy using the tools of regulating the rate of loans for production or consumption, as well as changing the rate of release of new money as appropriate.

[When you say "should", do you mean sin (God only will punish), or crime (God will punish men if they do not punish the criminals in the way God requires). How are these committees going to know how much is appropriate?]

The tools should be exercised in response to both the guidance of the economic academic/research and regulatory community, as well as the sentiment of the banking customers (both creditors and debtors).

[What mechanism do you propose for all these men to work together like this? Are you saying they should be dishonest wisely for the greater good? Or have I won you over yet, to help me encourage Christians to be honest about measure and substance? What monetary mechanism do you think God designated in His law for the thousands of years of human history before we figured out how to so foolishly and destructively utilize fraudulent, imaginary credit and currency?

Here's another ethical judgment to make: Which of God's laws (Ten C's) do I get judged for violating if I say there is now $million more in the dollar supply by "printing" $100 bills on my copier? These bills represent value (assuming they cannot be distinguished from the Bureau's handiwork) as surely as the Fed saying there are more electronic dollars, according to your "frame". Make it harder. Let's say the Federal Reserve severely underestimate the number of dollars that should have been added to the pool this year and I, with my greater perspicacity, recognize this and crank up my press to make up the difference. What should I be liable for, before God, for improving the global monetary imbalance?]

The punishment for maladaptive loaning should be the natural consequences of error, the customers will abandon the bank due to mismanagement of funds, and/or the criticism that arises in the media due to mismanagement.

[I think this does happen if a fair amount of the populace are trying to utilize honesty in measure and substance. Even the Free Bankers who say, "let the counterfeiters and Fractional Reservists go hog wild, and good luck keeping the confidence of your customers. Just make sure the civil government requires double-restitution for any breach of contract. That would make people more careful about which bank, which Notes, which type of money they committed to using. Govt would not participate at all in this, other than punishing breach of contract and having to set what arrangements it would accept for tax levies. The opposite danger comes with a National Bank or a World Bank. There becomes nowhere else to go if you don't trust them. You cannot choose between the honest bank and the less-honest bank. You cannot prefer good money over bad, because it is all the same. If we had a OneWorld Bank, there would really be no place to hide. If they increase money in China, we get robbed. If they increase money in Italy, Brazil will suffer.]

There will still be a place for the Fed in this scenario, but it will not act alone and dictate monetary policy unilaterally as the top authority commanding action.

[Who is going to reign the Fed in, after it has utilized its power to create money to dominate all of the educational, finance, government, law enforcement, military, and media forces of the nations of the world? Why has this not been done in the last 99 years? Consider that men in 1914 probably had a better understanding of our Constitution and conservative values than the majority in the last 40 years. You are sure this way you propose would be better than any of the old ways of doing it. Are you basing your design on the principles of the Bible, and, if so, do you have an explanation why no one else in human history thought to come up with this before the flagship dates of monetary change in America: 1913, 1933, 1964, 1971?]

I am seeking to develop a model where the control of the money supply is regulated by a synthesis of market forces and a voluntary compliance with the recommendation and sentiment of the regulatory/academic opinion, which is a the recommendation of the representative democracy (i.e. the group mind – which will only be a proper regulatory standard when it submits itself to the control of the Righteous Authority of God).

[This sounds too complicated for me to understand. I know Congress is too stupid to be able to grasp this type of thing intellectually. They do not even know when they have no money to spend, and no credit to borrow. And if they were so smart, when have they ever proven they would respect the property rights of others in any of this? How many years have things become more corrupt since Crockett's "Not Yours To Give" was written?]

Thus, the banks would exercise judgment individually, and autonomously (but under the influence of the environment and the various groups), in implementing the desired force to execute the appropriate monetary policy to deal with inflation or deflation.

[Who are thy going to kill, rob, or kidnap with this "force that is desired"? Are they going to hurt innocent people, or guilty people? Assuming you had honesty, and respect of property going on -- what is it that should be happening, that is not happening such that they have to use "force"?]

Two problems I see developing in my mind about our "above the line" fraction ratio of "All Value" divided by "below the line" "AllMoney" that represents value. We say there is a separation between the two, but this contradicts reality. The wheat above the line, we keep thinking has inherent value, and the money that just represents the value of wheat doesn't have inherent value, it just represents the value of the wheat. But we are forgetting that VALUE is not something that can be inherent. Value is something that a human will "puts on" an object. People value the wheat and the gold. But people also value the money below the line. So we find we have to draw our circle of "AllValue" around both sets: Top (stuff), and Bottom (money). If you think about it, you should remember our arguments about saying that those who create money are creating value.

In other words: There is no such thing as "Below the Line" money. There is no such thing as money that represents value, but is not value itself. Truth is that people value both, and you cannot increase anything that people use as money without also increasing the totality of things that people put value on (or, to say it another way - what people are willing to trade stuff for). If this is true, it is meaningless or impossible to increase some abstract quantity of "representative" money - so somehow balance out, or match the AllValue of goods and services of the World.

You are stuck with the reality, that if dollars are nothing, adding any amount of them does not really change anything. This is not the same as saying that if you deceive people in a successful way, you can alter who ends up controlling the stuff that does exist. But if dollars are something instead of nothing, when you start adding them, you are adding to the Pool of Value, which would supposedly exacerbate your Value/[Representative of Value] ratio even worse. This is not to say that, in reality, the 'creation' of new money does not create, but only reduces the tradable value of the dollars that existing dollar-holders hold in bank accounts, and it moves that wealth/property to other people. It does it in a way that no human being has the capability to monitor/track. But even without being able to exactly trace it, we can still make an accurate moral judgment about what is happening. It is stealing. People get away with it because the true nature of what is going on is obscured by misrepresentation and complexity. Property-owners are being robbed blind, in other words.

Maybe it would helpful to think of it in this way. Before there was imaginary money, people had to use quantities of measurable substance for money. You have heard that sometimes money is defined as the "most marketable commodity". SO you draw a big circle around "All Value". There is no lower story of imaginary money, because no one had gotten away with believing that you could do away with measure and substance about what you trade - yet. So two commodities within the AllValue set were used as money. Rice had a relative value vis a vis gasoline, and people used the most marketable commodities (gold/silver) as a means of exchanging their rice for gasoline, or between any of the million things they produced or needed. Of course there were slight fluctuations about how men valued any thing between one time and another, prices were relatively stable. The wider the marketplace (village vs. world), the better the technology/communication, and the better the honesty about what was being traded, and who it belonged to at any particular moment - the fewer variations there would be in relative values between substances. The relative value that people placed on the various commodities would be self correcting, self balancing if men were honest and honored property rights. If gold and silver became more scarce than non-money commodities, it would increase motivation to mine and refine more into money-form - since there would be a greater profit incentive to do so. There would be an incentive to dis-hoard what had been saved by the prudent, thus increasing velocity/circulation. All of these would have a balancing, stabilizing effect on relative values (that you seem to think is so important) without any dishonesty or theft, or any Group or Institution becoming so powerful so as to enslave, dominate, and plunder the world.

Follow the fantasy and see how ridiculous this sounds. Go back 100 years. Let's say now, that Society decides to give the Rothschild Committee the exclusive power and authority to create more gold and/or silver out of nothing without mining what Christ created in the ground. But they are all good men and true, so now they are trying to be faithful stewards to calculate the price of all the goods and services in the world (last year), and figure out how much gold and silver they need to create so that the prices will be the same next year. But what if it is a huge worldwide bumper-crop of Corn that year? Now you got a problem, because the value of coffee has changed relative to corn, which is rotting in the fields and the farmers cannot give it away. Even if you tinker with the gold/silver quantities, doesn't mean that quantities of substances will get out of sync and disrupt somebody's economy. But as long as no crime is committed, no one is deceiving, stealing, or defaulting on contracts without restitution. Humans are not responsible for the consequences. It is a God thing.

Then what do you do, if they have to annihilate the silver & gold to get the money supply down? Whether imaginary, or commodity money, the money supply is part of the AllValue that gets affected by the sum total of human action. Point being, it is impossible to perfectly even out the disparities between things in a supply-and-demand world. Adjustments happen, not just between whatever substance is being used as money and Stuff, but between This Stuff and That Stuff. I think only God has the power to know and determine what the causes and consequences will be in the economy. Our responsibilities are about obeying what His laws say to do.

Thus, a distributed monetary policy evaluation and execution is the model I am seeking to execute. The policy should be deemed most appropriate by the depositors/borrowers, banking community, the larger financial community including the regulators and academics.

[Are you sure you are not trying to describe what we call the free market, where people are allowed to own and control their own property without deceiving with the intent to steal? Adam Smith's Invisible Hand?]

This proposal is only in its skeletal stages, and it may not be realistic in its present form. But, it is an alternative to the top down, centralized, oligarchy that currently is probably a willing participant in administering pork by the government, (or as you believe, the driver of governmental policy to further the agenda of the bankers in world domination or enhancement of profits).

[I think if you could set this in motion you would end up with way more skeletons than you wanted. Look at all the Socialist and Communist countries whose essential banking and finance model has always been coerced; dishonest State ownership of property, money, and credit, central banks and fiat currency. How many men died in Russia? How many men died in China? How many men died in WW II because of what Roosevelt and the central banking had been doing at that time?] [It doesn't sound like an alternative at all, it sounds like you are describing the current forced system, aided and abetted by the all components of it - Everyman rushing to the spoil, but not realizing that everyone ends up being the subject of mass plunder.]

As we have noted, the worst case scenarios of a Fed-Government collusion are a totalitarian or collectivist state, or a catastrophic increase in money supply, hyperinflation, and societal breakdown.

The regulation of the money supply to maintain value [You almost described above several times a natural free-market regulation of quantities of measurable substance that would go far to stabilize prices/value/etc.] by introducing new money at a rate commensurate with the increase in consumable value, is not for the benefit of, or protection of, any one sector. This would be giving special privilege to a particular individual or class.

[The new money that is added to the money supply - Who does it belong to? Who benefits from it? Who suffers from it? Money loaned by the Fed or by the Member banks that is fiat-ly generated belongs to the banks while it exists -- when it is repaid it disappears and is no longer in existence to belong to anyone. They benefit by earning income on it. Debtors supposedly benefit from it (using it), because they are borrowing at less than price increases (11% inflation), if they are breaking even on what they are doing with that money. Other dollar holders suffer by the introduction of new money -- even if prices "stay the same" because they lose the benefit of prices going down, like they would have done if the dollar supply had not increased.

Thomas A 2: The competition between banks for the interest they charge on loans should bring the price of money down to a level that truly reflects the marketplace and the value of money saved.

This is either stealing from money-holders, or we must maintain that the Banks own this money making it their right to control the trading value of deposits of all dollar holders of the world.]

A relevant purpose of government is the enforcement of contracts, public and private, and making trade regular.

[What Biblical principle or law requires civil government to "make trade regular"?]

Thomas A2: This is a Constitutional concept, it is in the Commerce Clause, and was the actual intent of the Founders, as opposed to the distorted “Control of everything that is transported across State lines.”

The government’s role is in effect to provide a platform for commerce that facilitates the production and consumption of goods and services.

[Nope, not ever. All Govt can do is punish crime. It will either punish the guilty, and leave the innocent alone (per God's law), or it will err off course from that and end up punishing more and more innocent, and rewarding more and more guilty. Govt cannot provide a platform for commerce that facilitates without punishing the innocent and rewarding the guilty somewhere. Besides, what makes you think that anyone wants the prices to be static? The farmer wants the yield from his field to be more than average and his neighbor's to be less than average so that there is a shortage so that his produce fetches a higher price. He will not want your regulation. But he will want lots of cheap diesel and hay for his stock. The Shopper wants all products to be so abundant, that his costs are low to obtain what he wants. He will not want your propping up prices on him. The banker wants the interest rates to be high, the Govt and other borrowers want them low. Or the Govt/Bank partnership might have other reasons for wanting interest rates low, but the savers and investors want them higher. The miners want every body to be buying, using, investing in gold and silver to drive demand and price up. No one will be happy with your steady-state.]

Thomas A2: Not True. The loaners was the value to deflate and the borrowers want the value of money to inflate. Both have to be satisfied with constant value. No one gets an advantage, and no one should. To push it one way or the other is theft. The market will automatically regulate on the microeconomic level. The larger value of money question is the purview of everyone. The general basket of all goods and services is the standard upon which we are attempting to regulate the money supply.

Each industry [owner of his labor and his property] must exercise its own wisdom regarding the amount of goods and services to produce. The profitability and durability of any particular individual product/industry/sector, the demands of the marketplace, and the supply of the producer cause the price of goods and services to vary. The invisible hand is the moderator of the economic cycle. Protection from loss of any one individual, industry, or sector, is not the purpose of the regulation of the money supply.

[Yet one of the purposes of God's law, and we are all responsible to obey it, is to protect each one individual, industry, or sector from dishonesty and theft]

Each individual/industry/sector is in the sea of supply and demand, and there is a risk and reward to entrepreneurship, whether it is farming, mining, or any other tangible or intangible goods and services. The producer is the servant to the consumer.

I do not support controlling inflation or manipulating the money supply by increasing or decreasing the prime interest rate, [I am thinking banks loan their money to each other at zero interest rates, because it is really all one outfit that owns it all? Or-- the reason banks don't have to pay us any interest on what we deposit with them, is because none of us will trust our money to anyone else besides the banks who might be happy to pay us more interest?] or buying non-performing assets to restore excess reserves [This is really silly. If they have money to buy the assets, why don't they use that money for "reserves"?] .

Rather, when inflation rises (i.e. the cost of the generic basket of all goods and services rises [Remember, "inflation" is not change in prices, but the change in monetary quantity and causes higher bids (in money) for goods and services] ), I propose that banks individually increase loans [Do they own the money they are loaning? Where is this money coming from? Does the free market set the interest rate, or does someone else, who can increase the supply of money to lower the free-market interest rates if someone doesn't like how high they are getting?] to productive enterprises (preferably to production vs. loaning money for consumption. Government can and should help by informing the public of the state of the economic cycle and encourage saving during these times.

[One good way to encourage saving is not to expand the money supply. Then, folks notice that money will be worth more tomorrow than it is today and will want to save it for the gain.]

Likewise, in times of deflation, banks should prefer consumptive loans over productive loans. Government should encourage spending. Loans for consumption (cars, houses, boats...) cause an increase in consumption, and oppose a deflationary cycle.

[Again, you have fallen for the common fallacy, that inflation refers to prices of goods/services instead of money supply. Government is not able to encourage spending. If it pays the salaries of employees to speak, write, video, or legislate to "encourage spending", it will have to punish by fining/enslaving - removing property from those unwilling to voluntarily support such things. If they resist that, they will be kidnapped or killed. All it can really do is punish in one of these three ways. Also, I do not trust your consumption/production vocabulary. The bank is productive - it produces more money, more value is added to the pool of AllValue. That's good! More wealth for everybody? Wait. That money they produced is debt. That's not good. Now the debts of the society are increased. More slavery. And they didn't produce value, they just made more "representatives" of value, actually decreasing every dollar-holder’s claim on that pool of allvalue. That's not good, it is stealing. But that new money loaned gets spent (by the consumptive borrower), by trading that money to a producer (who produced whatever the consumer wants). So the new money created/loaned actually ended up in the producer's hands anyway? What is not to like? It is just that the consumer has nothing now with which to pay back the loan. He consumed it. And if he cannot pay back the loan, then that new additional money rattles around out there boosting prices and inflation is permanently ratcheted up. ]

Here's another model that may help you think outside your box. All the gold in the world collected into one mass, would be about the size of 4-6 double-wide modular homes. Let's say we have that stowed in Zurich and world money is based on title to that gold. Token coins, bills, and accounts trade title to quantities of the gold stored. This will be everyone's money that will be universally used to trade Stuff. Given the equation:

Quantity = amount of Substance / units of measure - or - Q * U/M = amount of Substance

Now let's say that World Stuff has increased and you want to keep prices the same. The Unit of Account is a tiny measure of gold. You are not limited to changing the volume of gold (since you cannot artificially change it). You could change the units of measures. Let's say someone has 10,000 grains in his account based on the gold that is being used as money. You want more units so that the prices of things in units of gold stays stable. Mining has fallen off and not much substance of gold is being added, but the world has been productive and there is a lot more stuff, so you want more money to match it. You could say, at a certain time, all the banks and gold vaults are going to adjust the units of measure for the worlds money. Instead of the Grain, that are going to use a unit of measure consisting of eight tenths of a grain (grainette?). All the accounts in the world will be adjusted for this new unit, and every money-holder will be reckoned to have 120% more quantity of what he had in his account before. Same amount of gold, but more units because we are dividing it in more pieces.

Well, you say, what's the point? We are just increasing the zeros following our significant digits. And if our friendly oneworld bank is doing this to everyone equally by the same percentage, where is the foul? All we have to concern ourselves with here is who got the benefit of the new money that divided out the market value of everybody else's percentage of the gold pool. The new money belongs to a bank who created it. That new money only exists, is only allowed to spring forth - in the form of a new loan to someone outside the bank. Banks cannot yet create money for their own use directly. At least legally. At least that we know about. Or at least that we object to. Anyway, they don't claim this in their publications, they only brag that they are creating non-existent, imaginary nothings that only exist in the faith of the Believers. So Banks are lauded for that great compassionate, beneficial function of creating new money for the benefit of Borrowers. This is necessary for prosperity and economic growth, they say. And those who believed them become their lawful prey. Bank creates the money, it belongs to the bank while in the borrowers hands, the same way your real estate belongs to your landlord while you are renting it. If borrower doesn't fork over the earnings of the rent/interest on the loan, the bank earns, instead, the real estate, or business assets, or garnished labor assets of the borrower. Or in the case of unsecured credit card debt that they cannot garnish for, they have to write it off and go create some more money (oh well, too bad about the ratcheted-up inflation and prices that are now irreversible).

From: John F
Sent: Sunday, November 06, 2011 6:42 PM
To: Thomas Lee Abshier

Subject: How do you measure?

One more shot for the day. This relates to the dreaded equation loop.

Dollar = x times value

Value = 1/x times dollar

solve for x, then solve for "dollar"

For any given global dollar quantity, all the stuff in the world is worth that many dollars if you are measuring GDP by "dollar" as a unit of measure. Next year, no matter how much you have increased or decreased the STUFF, or increased or decreased the "dollar" supply -- all the stuff in the world is still worth however many dollars there are. This is a tautology. This is by definition.

Thomas A: This examination of dollars vs. value completely misses the meaning and purpose of the dollar-value relationship. It is important to maintain the value constant over time because people save, and spend money later, or borrow, and pay back money later.

[John F: Think about it. Is there anything that you can own, that will not change in market value - relative to other things -- over time? Since no men have ever been able to control this stability better than being honest about measure and substance ,why not just do it the way God said? You will have all the people who would have benefited by the dollar increasing in value over time - Mad at you if you don't let the free market take it course.]

The contract of value for value should be kept, otherwise the society has enabled a time-mediated theft of value from the saver or borrower – neither is right, just, or good.

[OK, if society or any person has done something wrong here, Is it just a sin, in which case we do nothing except look to ourselves, lest we be tempted, or has crime been committed such that if we don't kill somebody, kidnap them, or take away some property from them in restitution -- God will discipline us all???? What "Wrong" has Society done?]

The dollars and stuff vs. stuff and dollars are not reciprocals. For example, if the number of dollar stays constant, and there is and increase in total available consumable value (which is of course subjective) in year #2, there is more value to consume after a year of increased productivity, thus each dollar is worth more. This is not a tautology, it is a changed ratio because the number of dollars has stayed the same, while the productivity has increased the totality of value. Thus:

(All value2/all dollars1) > (all value1/all dollars1)

[See other paragraphs about how we contradict ourselves by alternately insisting that 'all dollars' are inside 'allvalue' and that 'alldollars' are outside 'allvalue'.]

Thomas A2: This is entirely your concept. I do not agree with that concept at all. The value of the fiat money that is created is insignificant in comparison to the symbolic value represented by the money. You have entirely missed the point of my explanation and examination. You have redefined the terms that I have used, and then declared that my concept is wrong, and that you have won the argument. I do not accept your redefinition of money = value. Money is symbolic of value, and value is defined by the human nervous system/soul and its satisfaction. Money does not provide the same satisfaction. Money is only a potential satisfaction with value. Money represent hope, it is not the substance of the thing hoped for. There is a difference.

[But remember, if we were being honest about measure and substance -- why wouldn't the substance we were using for money increase slightly as well over the course of the year as well - not perfectly, but proportionately. That is what has happened with money all through History. Men are motivated to increase the substance that is being used as money, just like they are motivate to increase wheat. They get to trade the extra for more stuff they want. If there is not enough money substance, it starts getting more valuable, this motivates men to produce more of it. So it is a self regulating system.]

Thomas A 2: I agree with this concept, and it in fact does work this way. The problem with basing the amount of money available on the amount of gold that is available is that the expansion of the productivity of the economy is governed by the rate of gold/silver being mined. Such a restriction to the rate of expansion leads to an unnecessarily slow rate of growth in wealth, and prosperity the is possible due to people being willing to work is delayed for generations. The human suffering involved is unnecessary and arbitrarily limited by the rate of precious metal production.

I agree with your theory in that it is good and Godly, but God gives us the freedom to assign value to “allvalue” as much as he gives us the right to assign value to gold/silver. The Allvalue/(fiat money supply) ratio should stay the same. But, it is easy to increase the fiat money supply, where it is hard to increase the gold/silver money supply. Possibly men are too corrupt or foolish to be able to hold such great power in their hands. I do not agree, but you may be right. God will have to judge. I hold out hope that man can bow to the wisdom that God can give us through His Holy spirit, and we can listen, and as a group His voice can be heard. This is the center principle of the Republic upon which our nation and its Constitution was founded.

This is not a tautology. You have said that dollars equal value, when the two are totally different things. Dollars do not equal value.

[I'm confused. You are the one who is always telling me dollars have value, are value, represent value. If they are valuable, they are in the pool called "AllValue" and not outside of it. You are the one saying Men must make sure Dollars equal Value. AllDollars must equal AllValue.

It is only your disregarding the fact that there has been a change in value, but no change in dollars that gives you the impression of a tautology.

John F: It doesn't matter if you say, "Stuff is worth so many dollars"

or "Dollars are worth so much stuff". They are just reciprocals of each other.

Thomas A1: You have rightly noted that at any given moment the value of all stuff is equal to the amount of all dollars. But, dollars do not equal stuff. Dollars can be created without creating any value/utility to consume.
Thomas A2: Since you want to be precise, and cannot see the general principle I am illustrating, “Dollars can be created by expending only a comparatively small amount of work and resources, and of themselves represent only a small amount of value, which is of course part of the total supply of value, but it is many orders of magnitude smaller than the total value of all consumable value.

[So then dollars aren't valuable. They have zero value. If they had value, then you are increasing the top and bottom of the fraction at the same time, and this will never get "evened out" like you say you are trying to do. You were the one saying we need to have banks creating value, were you not? But let's say that Central Banks (with all appropriate advice from all your committees so it is done right) have to increase dollars by several billion. Now who owns those dollars? All the dollar-holders of the world do not own them. They only own the other dollars, those that weren't newly created. Who are the new owners of the new dollars that are getting the benefit of spending or renting those dollars? Why is it fair (especially for all the other dollar-holders, whose dollars now will not be purchasing as much as they would have otherwise) to let these new owners have all this money to spend or rent, while the old-dollar owners get shorted?

Thomas A2: The dollars have negligible value as symbols. The value that they represent in aggregate is all value (which includes a very small percentage of value associated with the dollar symbols). The banks do not create value, they contract with people to create value, and hold them accountable to keep their commitment. They perform somewhat of a motivational/managerial function for the city/state/nation, and for that they earn a fee, which should be earned at a competitive rate. The new dollars, when they come back to the bank will come back as profits, and can be loaned out again. The banks should not be allowed to spend this newly issued money on their own infrastructure, but rather should be part of their cash reserves.

Come to think of it, if you are having folks increase dollars, are you going to just one-way keep increasing dollars forever? What are you going to do when LESS Stuff comes up next year instead of more. Whose dollars are you going to take away and remove from the money supply, and why would that be "fair"?

Stuff can be created without increasing the quantity of dollars.

[only manufactured. - 6 days of creation happened a while back.]

Stuff does not equal dollars.

[But you want it to equal dollars. And it is easy, just change the units you are using to measure the stuff so that there is the same number of units of it to match the dollars. Shorten the hour, shorten the foot, lessen the pound.]

Thomas A2: This is where you are missing the point completely. I do not want stuff to literally equal dollars. Dollars are not stuff. Dollars do not give the same consumptive value to the nervous system/soul as stuff.

Both the number of dollars can change, and the amount of value available for consumption can change.

If the number of all dollars does not change, but the amount of all value increases, then the amount of value per dollar has increased, which means that the price would go down.

[Are you using dollars to measure 'allvalue', because if you are, there is no way for the dollar-value of all things to increase. You might increase pounds, or feet, or hours of the "stuff" of wealth out there, but no matter how much you increase the wealth measured in pounds, or feet, or hours -- you cannot increase its dollar-value, since there is just as many dollars to trade for the extra pounds, or feet, or hours of stuff. So there is never any need to increase your measuring stick by which you measure the wealth of the world. Unless you are in the business of selling gas pumps that enable 8 or 15 digits instead of 5 (assuming the coming hyperinflation). Consider what you do if you change your unit of measure. Instead of measuring the world’s wealth by 20 trillion dollars, you want to measure it by 40 trillion dollars. What good is it to now say your toe-to-heel is 3 feet instead of one foot. Do you have more foot? Same toes, Same heel. What is the point of doing this, and why is it so important for the saving of the world economy? How do you know you haven't been brainwashed by an agency that has had no practical limitations on its budget for 100 years?]

If the number of dollars goes up, but the amount of value goes down, stays the same, or increases at a lesser rate than the % increase in the number of dollars, then the price (number of dollars traded/unit of value) will go up.

You appear to be having difficulty making the distinction between the concept of dollars and value.

Dollars have value. Aren't they in the AllValue circle? Rice has value. You can use rice to trade for wheat, gold, gas. Wait a minute. If you are going to use rice to trade for barley (even if money is an intermediary) we need to make sure the ratio (value) of rice to barley stays constant, and we don't have enough barley. Who is going to create more barley for us so that we can keep the rice the same value/price!?

Dollars are a symbol of value

Value is an experience of the soul, somewhat of a synonym to utility.

[I still think value is either a measure (Constitution) or an expression of what someone decides to trade for something.]

Value is created by humans, by doing work on matter to create utility. Value is subjective and depends on people who want/need it putting value on an object. People do work to create value because they need to consume value to live in this world. Thus, by producing value of one type, in a job/profession/trade in which they are good, they can create an amount of value equivalent to the amount of value that they need to consume to sustain their life in the manner they desire.

Value has two types:

1) the amount that I value my work, and what I believe it is worth in the marketplace, that is, the amount of value I should be able to trade my work for, (i.e. the amount of value I believe the marketplace will give me in return for my work).

2) The amount you value my work, in comparison to how you value the work you do.

Value is a totally subjective experience of the soul. It is not a property inherent to goods and services. [Amen]

It could be categorized under various headings such as, art, beauty, ease, or utility. The human must interact with it and experience his response to it. Each man judges an object’s value by how the soul responds to it.

The (all value)/(all money) computation produces a calculation of the unit value/unit of money. A computation of the value per dollar is impossible in an economy that has not already been initialized in monetary trade. The equivalence and representation of value in terms of dollars can only be documented in the context of an already functioning production-consumption trade system mediated by money. Trying to assign a value in terms of gold, silver, or fiat currency, is impossible until the trade system is set in motion. The value assigned by the participants of an economy can be observed as empirical data, and recorded or documented. But, no prediction is possible for the ratio of value to dollars, or the value of any individual item, prior to letting souls interact with the monetary symbols and the spectrum of value available for consumption in the system. It is only in the actual trading of money for value that the dollars per value can be evaluated.

[So take your Robinson Crusoe desert island barter community. All they have is stuff and time, no gold, no silver, no imaginary fiat currency. You can find stories like this in mises.org. You, the banker, fly in and say, "Hey, we can really improve trade, prosperity, etc, but using my imaginary quantities." How will you distribute your money? Will you loan it at interest? Or, just give it away? How much should each person get? Does the money have any value that you are giving them? If so, why not give them twice as much, or half as much? If it has value, who is surrendering value so that recipient gains value? If everybody's calculators have 12 digits, what difference does it make whether you hand out a total of $1.00000000000 or $1,000,000,000,000?

The concept of value can never be made tangible as an isolated concept since “value” is a soul experience, it is not an object. Value is only a name given to a soul experience, and this experience has a near infinitude of varieties and subtle variation. Value is not money. Rather, value is the name given to the experience of satisfaction of a soul want/need/desire/hunger/taste.

[OK, now divide all this satisfaction by the quantity of dollars in the world?]

Some soul hungers are greater than others, and thus, one need fulfilled may have a greater value than another. Money is only used as a symbol to correspond to perceived value. Money is man’s effort to give the intangible and subjective experience of value a concrete expression – a tangible representation that enables commerce in the intangible in the world of objects and motion.

[You are saying that dollars are "concrete" and "tangible" things that we trade for "intangible" objects and motion like silver and wheat. I got it!]

There is a difference in the concept of the intangible symbol and the intangible value. Value is intangible, as is the concept of a unit of value. The dollar is the name we give for a unit of value, but having broken value down into a unit does not make it concrete or tangible, it is still a concept and intangible. Thus, to bring the unit of value into the world of the tangible, we create symbols that represent a unit of value. The dollar is the name we have given to the symbol of the unit value. Thus, the dollar is a symbol of a unit of value for purposes of trading stored value. But, the dollar also has a substance and form, and a value associated with its material. The material composing money may, or may not, be regarded highly. In the case of gold/silver, coinage out of these materials is widely regarded as valuable for the sake of the material itself.

[So tell me. When the Fed creates a billion dollars, and says to the Primary Dealer, "I authorize my Child Commercial Bank here to "owe" you that much" What tangible stuff is created again? Or another way. If the total quantity of coins and federal reserve notes, face value of silver dollars and gold dollars in the world right now, might be honored by the banks for 2.5 trillion dollars -- do the other 15-20 trillion dollars (the banks say they owe) have the substance and form, and a value associated with its material?]

Fiat currency has very little material value attributed to it when isolated from its symbolic value (as a symbol of value). Concepts such as “value” live only in the psyche. But, the concept of value becomes of central importance when men attempt to reach a point of equality/fairness to the exchange of value. The market is where men negotiate about their experience of value in an effort to fairly trade goods and services. The relationship of value produced by other people, compared to value produced by self, and the amount of money symbols in your, my, and our possession that provides the parallax around which dollars begin to acquire an appropriate representation of value perceived in a particular good or service.

The dollar is a symbol that is used to represent a unit of value so that value produced in one area of society can be converted into a fungible medium. The dollar is defined as (all value)/(all dollars). Thus the dollar is 1 unit of generic value.

[1 dollar = allQtyValue x Unitofmeasure x (Value extra term in equation)/allQtyDollars x dollar -- solve for Value

(This is an identity equation, not an equation that you solve for. This is the definition of the term “dollar”. You cannot solve for the identity, it is already in its most basic relationship. If you knew that actual numbers of “all qty value” and “all qty dollars” they you could move the equation around, but without actual numbers to put in the equation, there is no deeper meaning that can be derived from changing sides.

Plus, you put in an extra term, placing value in the equation twice in the numerator. And, you did not make a distinction between allqtyvalue and allqtydollars. Both of these terms have different numbers, and represent different concepts. They cannot be canceled out as though they were identities.

Your derivation proves only that you have assumed that the number of dollars equals the amount of value. Which is true, but the distinction between value and dollars is completely lost, and simply reinforces your preconception that dollars and values are identities, which they are not. There is an equivalence to dollars and value established by the market. It cannot be predetermined a priori by any calculation.

1 dollar x allQtyValue x dollar = allQtyDollars x Unitofmeasure x (Value delete this term)

1 dollar x dollar = Unitofmeasure x Value
(Apparently unit of measure to measure value is the dollar, so....)

1 dollar x dollar= dollar x unitofValue

1 dollar = unitof Value

Good thing dollars are not value and value are not dollars.]

The marketplace will naturally reassign the price (number of dollars) to reflect the amount of value the public (which is ultimately the sum of each trading pair) perceives is associated with every good or service.

It is no more true, loving, or righteous to lie and pretend to increase the quantity of real stuff, because that decreases the value of dollars..... than to lie and pretend to increase the quantity of dollars, because that decreases the value of stuff. Isn't it just better not to lie or steal?

11/16