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Monday, April 20, 2020

The default cycle begins

Which will mark the post-2008 transition from credit disinflation to actual deflation:
We didn't really need any more confirmations. In recent weeks, as the US economy came to a screeching halt because of the coronavirus pandemic, we have seen banks take over $20 billion in reserves  in anticipation of a looming default wave (a five-fold increase if not nearly enough based on historical precedent), Moody's predicting that as many as 30% of Americans with home loans – about 15 million households – could stop paying their mortgages if the U.S. economy remains closed through the summer or beyond, with the number of households that have already stopped paying their loans soaring by 1,496% in just six weeks, and even JPMorgan in the process of shutting down its entire net interest margin origination platform, by getting out of new loans and HELOCs and boosting the standards on new loans.

These are all clear signs that a wave of mass defaults has started and is about to break all across America as tens of millions of household suddenly lose their jobs.
2008 is when the post-war debt system finally broke. Since then, the Federal Reserve has frantically been kicking the can of consequences harder and harder, until now, when the can finally didn't move. All of the various estimates are meaningless, but we can be confident that the current system will be replaced, we simply can't know what the successor system is going to be as it will largely depend upon how the massive pool of existing bad debts are written off.

UPDATE: For those of you who are, apparently, still too stupid to grasp the obvious, THIS IS WHY USURY WAS HISTORICALLY BANNED IN WESTERN SOCIETIES. Because once the debt cycle starts, it ALWAYS ends this way, sooner or later. The only reason it took this long to go terminal is because, for the first time in history, the entire global economy was turned into collateral supporting the credit inflation.

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137 Comments:

Blogger Nihil Dicit April 20, 2020 5:56 AM  

it will largely depend upon how the massive pool of existing bad debts are written off

The "But I paid my bills!" crowd will ride their smug self-righteous straight down into the abyss, because they're the financial equivalent of conservatives.

Blogger Ronius_Maximus April 20, 2020 6:38 AM  

Wait, paying your bills is evil?

Blogger Robert Browning April 20, 2020 6:47 AM  

No more interests, but transaction fees instead. The new system will be based on transaction fees.

Blogger JamesB.BKK April 20, 2020 6:48 AM  

Did the prodigal son hassle his more sensible, reliable, and loyal brother before his brother had even uttered a word? Before this deflation there will be the most unbelievable series of money printing episodes and confiscations ever. The profligate ought not whine when the prudent - who've warned them repeatedly - aren't too keen to see the whole house brought down to help them escape the hazards of their and their fathers' and grandfathers' poor choices, and worse voting habits. And who among us is not in the latter group, now or formerly? The best result here will be the demise of the locust-swarm equivalent that is mob-rule democracy encapsulated in the one man one vote error. Bring back the poll tax. And the property ownership requirement. More responsible governance will surely follow.

Blogger VD April 20, 2020 6:49 AM  

Wait, paying your bills is evil?

Always nice to hear from the gammas. They have SO MUCH to offer the conversation.

And yes, the "X, [stupid, obtuse question]?" format is a 100-percent sure-fire indicator of gamma.

Blogger VD April 20, 2020 7:06 AM  

The profligate ought not whine when the prudent - who've warned them repeatedly - aren't too keen to see the whole house brought down to help them escape the hazards of their and their fathers' and grandfathers' poor choices, and worse voting habits.

You're completely missing the point. It is the idiot prudent who are now making things worse by behaving like the proverbial dog in the manger and fighting against debt forgiveness. Furthermore, the "profligate" are not to blame. They are the victims who have been preyed upon for decades.

It's akin to blaming the rape victim for being a slut. Whether she was a slut or not is irrelevant, she is still the victim.

Blogger Doktor Jeep April 20, 2020 7:15 AM  

Debt is going to be forgiven one way or the other.

Blogger Ronius_Maximus April 20, 2020 7:16 AM  

My apologies. Ignoramus here, no gamma. Interpreted comment as declaring bill-payers as "self-righteous conservatives". It's early.

Blogger ASH April 20, 2020 7:25 AM  

Is this a good analogy for whats going on? A con artist tricks people in two groups, Group A and Group B, into buying fake Rolex Watches. People in group A took a one year payment plan. Group B people took the 3 year payment plan. At year 2 the con man is arrested, but all the funds recieved so far have been wasted on hookers and blow. What we are seeing today is people from group A complaining that Group B need to continue making their payments because it's not fair Group A can't get any money back.

Blogger weka April 20, 2020 7:28 AM  

Jubilee. The banks themselves need to fail. Then civil debts max term six years, no property can be leased for more than 49, and usury is illegal for citizens.

Blogger Stilicho April 20, 2020 7:38 AM  

>The "But I paid my bills!" crowd will ride their smug self-righteous straight down into the abyss,<

As William Munney might say, "Deserve's got nothin to do with it" . might as well complain that a mudslide tokk out your house along with your neighbors e ven though you planted ground cover, built retaining walls, and installed drainage while he didn't. You both built on the same susceptible hillside because it was the only place you could build.

Blogger VFM #7634 April 20, 2020 7:40 AM  

Jubilee time!

Blogger Solon April 20, 2020 7:42 AM  

"The profligate ought not whine when the prudent - who've warned them repeatedly - aren't too keen to see the whole house brought down"

Of course the prudent wouldnt want to see the house brought down, it's not their fault that the house is collapsing.

What they're missing is that the house is collapsing whether they did anything to stop it or not. Crying "it's not my fault, I was smart with my money!" doesnt change the fact that others weren't smart, and now we're all in the same burning building.

All their tears wont quench that fire. It's time to stop complaining about other's behavior and start grabbing buckets, meaning discussing debt jubilees or letting the house burn down and building a new house from the ashes, not sobbing in a corner about how "it's all so unfair!"

Yes, it's unfair. Get over it. The whining from them is worse than useless, its demoralizing and weak.

Blogger VD April 20, 2020 7:46 AM  

My apologies. Ignoramus here, no gamma. Interpreted comment as declaring bill-payers as "self-righteous conservatives". It's early.

Fair enough. Insufficient caffeine is always a legitimate excuse. But if you don't want to be taken for a gamma, don't use their speech patterns.

Blogger Ronius_Maximus April 20, 2020 7:53 AM  

I hear and obey, oh great and merciful Supreme Dark Lord.

Blogger Azure Amaranthine April 20, 2020 8:08 AM  

"Furthermore, the "profligate" are not to blame. They are the victims who have been preyed upon for decades."

The easiest way to explain this is, you would punish a narcotic dealer on the corner selling to children, not the children. Some people have a hard time getting it through their head that certain other people will always be children on the subject of debt, but there it is. Some people will always be children in regard to debt.

Far be it from me to say that I myself have no vices or blind spots.... so I'll take care of other people's weak points when I am able.

Blogger FisherOfMen April 20, 2020 8:38 AM  

Putting aside all moral concerns about paying bills back and whether debt forgiveness is ineviable (it is), etc...

What can a poor, hardworking shlub of a nobody like me, who always paid back his debts ahead of schedule and who saves compulsively, do to take advantage of this situation? I am not joking or snarking when I ask, how can I use this situation to get a loan for some preppings I want to do, and minimize the chances of every paying it back? Or will it be impossible to "game" this development?

Blogger Ominous Cowherd April 20, 2020 8:48 AM  

Azure Amaranthine wrote:Some people have a hard time getting it through their head that certain other people will always be children on the subject of debt, but there it is.
Most people are idiots. Most people who aren't idiots have a hard time understanding that idiots gonna idiot.

Blogger ScottC April 20, 2020 8:50 AM  

Vox, I'm sure you've heard tbis argument a million times, but the Fed can increase its liabilities without limit. What's to stop the Fed from monetizing the stock market? Or the real estate market? Why can't the government send citizens UBI cards with accounts at the Fed?

Blogger John Regan April 20, 2020 8:52 AM  

Well, it's very hard to know what the plan is here, if any, and not only do I not understand the derivative architecture very well but I'm not sure anyone does. All I really know is that it's about risk spreading. Credit default swaps were a key component prior to the '08 debacle. Maybe they still are. But my understanding at the time was that a 4-5% default rate was enough to cause a big crash like the one we had. AIG had to get bailed out (they're a "reinsurer") and the fed began its unprecedented campaign of "extraordinary measures" which you rightly note is and has been just kicking the can down the road.

The ZH article refers to a consensus that we're looking at 15% default rate or more. To paper that over is going to require some kind of paradigm shifting adjustment by the fed. They did it before, at least in the sense that we've continued on for another 10 years or more.

I really have no idea what anyone at the controls could be thinking. I don't see a way out other than a jubilee, but I've been thinking that for years and for the overseers a jubilee is unthinkable.

Blogger Avalanche April 20, 2020 8:59 AM  

The problem is, when you're already skating way too close to the edge through no fault of your own, esp. e.g., medical bills, to see help and rescue given to the lazy, the shiftless, the profligate, ... those drug dealers Azure mentioned ... and no help whatsoever given to you because you're White, inherited a house, and didn't MEAN to have a kidney stone; it's SO hard to say: 'yeah, sure, rescue the ones who are carelessly running off the cliff edge' and ignore those of us who are clinging to the cliff's edge by our fingertips.

As an ant, I'm okay with letting the grasshoppers freeze in winter! Hell, I'd LIKE to turn up the snow-machine!

However, I unhappily acknowledge that the banker/farmer is going to poison us all -- the profligate grasshoppers and the diligent ants. So, letting the damned grasshoppers have all the 'food' seems like what's on offer. And it's an offer we cannot refuse.

Blogger VD April 20, 2020 9:01 AM  

I am not joking or snarking when I ask, how can I use this situation to get a loan for some preppings I want to do, and minimize the chances of every paying it back?

I would just go in for straight-up theft if that's how you're thinking. Those who were deceived and erred in ignorance are victims. This mindset shows a genuine lack of character which underlines the contempt with which some of the so-called "prudent" are being rightly held.

It's always intriguing to observe when the self-professed righteous are exposed for merely being cautious and fearful of being caught.

Blogger VD April 20, 2020 9:02 AM  

What's to stop the Fed from monetizing the stock market?

Violence. At some point, 320 million people will take exception to a few dozen people owning literally everything.

Blogger Ominous Cowherd April 20, 2020 9:08 AM  

FisherOfMen wrote:... how can I use this situation to get a loan for some preppings I want to do, and minimize the chances of every paying it back?
See Psalm 37:21. Don't go there.

Also, I doubt we're going to see an explicit or general jubilee. That would be the wisest course for our society, so it is the least likely. Much more likely we will see selective defaults which preserve the assets of the Ruling Class and the liabilities of the peasants. Don't be in debt.

Blogger Silent Draco April 20, 2020 9:28 AM  

We need a better grade of father and elder brother; few prodigals have that realization and return humbled.

Time for a poll tax again? Base it on net family worth, ability to pay a modest tax, and not being on the dole. Eliminates a lot of the 'voters' giving themselves money from the public coffers. Repeal women's suffrage too - fewer voters acting on feelings.

It's going to be a bumpy ride and landing, Prepare and hang on. Think about how to improve things on the other side, and how to reduce the ability to go back to this mess.

Blogger Mr.MantraMan April 20, 2020 9:29 AM  

So Vox do you still see the advantages of living in a "pre-collapse" society as you once said versus us residing in the American Dream?

IMO if Karl Denninger is a harbinger of reaction to come we are truly a doomed society.

Blogger VD April 20, 2020 9:32 AM  

So Vox do you still see the advantages of living in a "pre-collapse" society as you once said versus us residing in the American Dream?

More so than ever. You don't reside in the American Dream. It's been dead since 1965. You reside in the Fake American Delusion.

Blogger Ken Prescott April 20, 2020 9:37 AM  

Maybe GEOTUS should use the emergency war powers intended for post nuclear attack recovery to suspend interest accrual for the duration, and then use the prospect of mass debt jubilee to wrangle concessions out of all concerned.

Blogger FisherOfMen April 20, 2020 9:40 AM  

> This mindset shows a genuine lack of character which underlines the contempt with which some of the so-called "prudent" are being rightly held.

I can't argue-- but I came into this mindset late in life, and it's more of a throwing up of hands than anything. I feel we're well into the "looting phase" of our society, and as a small businessman who has unwillingly invested a great deal into keeping the society afloat when that money could have gone to my progeny, I would like to withdraw my previous contributions (I would not make a case for "looting" more than I paid in minus 10%).

For your amusement: I'm a second generation immigrant whose grandparents fled the (damned) communists of Greece, and my philosophies on society supports your philosophy that immigrants are not fully integrated for four generations. I've abstained from voting since having read one of your articles on the subject some years ago-- you made a lot of sense.



Blogger Newscaper312 April 20, 2020 9:50 AM  

The same thing to do, if not debt forgiveness, would be some sort of "debt holiday" for a few months, with no payments required AND no interest accumulating, all the way down, w Fed doing whatever magic needed at the bottom to prop it up w the funny money, like they seem to manage to do in every other situation.
After all, what's the point in foreclosing for mortgages, or eviction for renters, if theres little chance of finding another buyer or renter at this time?
So I guess little chance of it happening.

Blogger JamesB.BKK April 20, 2020 9:58 AM  

There is a definition issue. For example at 12/30/19 General Electric had or issued USD 236 billion in liabilities on 266 billion in assets. If the debt components of those liabilities are discharged, GE ought not keep those assets. If that property does not go to the lending creditors, where? On what rationale and justification? The cutoff between the group of victimized borrowers and the group of clever hugely leveraged debt financed enterprises - in many cases to design and construct high end tech - such as GE needs to be identified. Same for eg Skadden lawyers that borrowed for law school and eg hapless political science major borrowers working at PIRGs.

Blogger JamesB.BKK April 20, 2020 10:05 AM  

Fair points. However AIG was stolen and administered by fools into ruin.

Blogger Mr.MantraMan April 20, 2020 10:06 AM  

Off topic a bit but here in Flyover but still first world Post-Dream America the wife went grocery shopping at a major regional store and canned goods are emptying out, pre-packaged meats emptying out, and the great onion shortage of 2020 has begun, the fresh beef and pork are still available but the manager for that part of the store says his store cannot get people to work for some reason so he is a one man band.

Point being if trend continues I would not want to be playing Sooper Boomer pay your debts guy, like Colonel Kurt Shlicter of twitter fame.

Blogger Zaklog the Great April 20, 2020 10:16 AM  

@8 The problem is not the bill-paying. The problem is the self-righteous condemnation of people who are falling behind and being consumed by the debt monster.

Blogger Uncle John's Band April 20, 2020 10:18 AM  

" For those of you who are, apparently, still too stupid to grasp the obvious, THIS IS WHY USURY WAS HISTORICALLY BANNED IN WESTERN SOCIETIES."

Debt/collapse and jubilee posts have become proxy IQ tests. Not quite as comprehensive as the old SAT, but with a solipsism self-assessment component that other tests lack.

Blogger Kat April 20, 2020 10:23 AM  

What's the smart move if you have assets and no debts? Other than basic preps are there certain durable goods y'all would suggest acquiring? We've also looked at investing with local farmers.

Basically we'd like to get some money out of the bank, but the standard stocks and real estate advice doesn't appeal to us.

Blogger Shimshon April 20, 2020 10:24 AM  

In Israel, the trains never ran on time. Now they don't run at all. That's just some sardonic humor. I love living here. I have all my adult offspring in Israel with me, and the space for them. Thank God. It is a bit hard on the wife, but we have a great relationship, and things are good overall. I now try to walk the dogs together with her or one of my sons several times a day. I live in a small village of about 200 families, surrounded by a lot of farmland. About half the people I see wear masks, maybe less. Given that they are still mandatory, and the high level of fear among many, I'd say that's not so bad.

More relevant to the topic, just today, my wife told me a cleaning service told their local clientele that they received permission from the Ministry of Health to resume business, but no one is interested in taking them up on the offer. As discussed in the women's chat group.

That's not a default per se, but it does represent a legal business with several employees.

Blogger Ominous Cowherd April 20, 2020 10:26 AM  

FisherOfMen wrote:For your amusement: I'm a second generation immigrant ... I've abstained from voting since having read one of your articles on the subject some years ago-- you made a lot of sense.
Very wise.
If you are an outsider living in a society you like better than your own, DON'T VOTE! Your society's voting patterns made the shithole you fled. You can only destroy your refuge if you try to take part in its governance.

Blogger VD April 20, 2020 10:27 AM  

I came into this mindset late in life, and it's more of a throwing up of hands than anything.

If you believe that what is right depends upon what everyone else is doing, then you are not on the side of the Good, the Beautiful, and the True. You're just a particularly petty form of evil.

Stop focusing on the lollipops and fancy pants. It's easy to do what is right when everyone else is doing it. The test of your character is what you do when when everyone else is engaged in evil.

And this is how usury erodes character... even of the supposedly righteous.

Blogger Doktor Jeep April 20, 2020 10:33 AM  

I keep several years' worth of mortgage payments in the bank.
But would I just watch it dwindle? I'm not even thinking of a pandemic. I'm thinking of the next Obama style presidency or even a GW Bush style. Either way America just bleeds out commerce, jobs, and wealth. And both sides of the aisle are looking forward to going back to 2015. The people who hold the evidence from Epstein Island demand it.
So when it's back to same old same old, do I watch it dwindle or do I take the money and run and finally get that 20 acres in the middle of nowhere?

Blogger John Rockwell April 20, 2020 10:35 AM  

Ken Prescott wrote:Maybe GEOTUS should use the emergency war powers intended for post nuclear attack recovery to suspend interest accrual for the duration, and then use the prospect of mass debt jubilee to wrangle concessions out of all concerned.

Ancient Kings used Debt Jubilees to win support. Trump should use that to his advantage.

He should do Debt Jubilees too and win a lot of votes in doing so aside from Wall Street and other Financial vampires.

Blogger Shane Bradman April 20, 2020 10:37 AM  

The next stage of usury is debt deflation. If everyone is in debt, the economy collapses, and the currency deflates tremendously, what do you think will happen? The debt can't be paid off, the money isn't there anymore. The debts must be forgiven. Jesus told you this 2000 years ago.

Blogger John Rockwell April 20, 2020 10:37 AM  

Newscaper312 wrote:The same thing to do, if not debt forgiveness, would be some sort of "debt holiday" for a few months, with no payments required AND no interest accumulating, all the way down, w Fed doing whatever magic needed at the bottom to prop it up w the funny money, like they seem to manage to do in every other situation.

After all, what's the point in foreclosing for mortgages, or eviction for renters, if theres little chance of finding another buyer or renter at this time?

So I guess little chance of it happening.



Every 7 years there was a mandatory cancellation of Debts especially Private Debts:

"1At the end of every seven years you must cancel debts. 2This is the manner of remission: Every creditor shall cancel what he has loaned to his neighbor. He is not to collect anything from his neighbor or brother, because the LORD’s time of release has been proclaimed. 3You may collect something from a foreigner, but you must forgive whatever your brother owes you. "

Blogger Nihil Dicit April 20, 2020 10:44 AM  

how can I use this situation to get a loan

You're too late. It's gonna be NCNB from here on out, No Credit for Nobody.

Blogger Ben Cohen April 20, 2020 10:46 AM  

Vox, I'm reading Murray Rothbard in his history of economic thought and he paints it as a good thing that over time the Scholastics watered down the prohibition on usury until it was completely gotten rid off by John Locke and the North brothers.

Can you explain why Rothbard's reasoning is wrong that interest is just a charge to use idle money (similar to charging rent to live in an idle house) and that two parties should be free to transact since they are rational and both think they're gaining from the trade?

Blogger thethirdcoast April 20, 2020 10:48 AM  

Semi-OT:

It appears as though the GE has finally found something that will stick to the brown clown:
Trump Vows To End Obama Admin's Funding To Wuhan Virus Lab


https://www.zerohedge.com/political/watch-trump-vows-end-obama-admins-funding-wuhan-virus-lab

Blogger R Webfoot April 20, 2020 10:50 AM  

The idea that debt is money was very enlightening. It is bought and traded as a commodity that is supposed to pay regular dividends; it is also a commodity with the regular tendency to spontaneously self-destruct.

Blogger VD April 20, 2020 10:57 AM  

Can you explain why Rothbard's reasoning is wrong that interest is just a charge to use idle money (similar to charging rent to live in an idle house) and that two parties should be free to transact since they are rational and both think they're gaining from the trade?

Yes. I will address this on the Darkstream tonight. It's the Fallacy of Mutual Consent.

Blogger Phelps April 20, 2020 10:58 AM  

The bankers stopped telling each other the old joke: If you owe a million dollars to the bank and you can't pay it back, you have a problem. If you owe a billion dollars to the bank and you can't pay it back, the bank has a problem.

Blogger J Van Stry April 20, 2020 11:00 AM  

I've 'played this game' with debt in the past because I didn't know that there was any other way, and those were the rules we were all taught to live by. As I got older I started to realize the problems with debt and noticed that those people who didn't borrow money to buy cars, didn't use credit cards, etc, all were doing way better financially, even though they were earning less than I was.

So I adapted and changed my ways, and it has made a huge difference in my financials. Sure, it was painful at first, but the pain was worth it.

I think back a lot these days to something I was taught by the 'teachers' in school (70's). We were taught that in the middle ages and later that 'loaning money' and 'banking' was illegal - for religious reasons - for every group but one. Who became the 'only' people loaning money and because of the power they got from that, became hated.

It's interesting that my teachers back then weren't teaching us that Usury is what was illegal, they conflated loaning money, which wasn't illegal, with usury, which was. And of course then claimed it was all bigotry, etc, that the group making up 'all the bankers' were hated.

Heck, if you look up the definition if Usury, it's changed from 'lending money with interest' to 'lending money with too high an interest'. Who decides what's too high? Remember mortgage rates of the late 70's and 80's?

Yes, I'd like to see the morons who borrowed and spent hundreds of thousands on worthless degrees punished. I'd like to see the schools that took advantage of them punished as well. The first group will be punished by their own behaviors, they're just 'too stupid to live' and will 'Darwin' themselves out of existence, I'm sure, by poor life decisions. The second group? That's harder to say.

Blogger JamesB.BKK April 20, 2020 11:11 AM  

Doktor Jeep - a bolthole offshore with some cash is a good idea. Puerto Rico has great tax rules for the time being. But, it has a lot of Puerto Rican's. Economic collapse sure takes longer than anyone might expect. It's an old Hemingway line? "How'd you go bankrupt?" "Two ways. Gradually, then suddenly."

Blogger Akulkis April 20, 2020 11:12 AM  

"It's always intriguing to observe when the self-professed righteous are exposed for merely being cautious and fearful of being caught."

War zones and other chaotic situations are good at revealing the true character of many men.

Who uses the confusion to get away with everything up to and including murder, and who voluntarily risks everything up to his very life, for the benefit of a friend or neighbor.

Blogger cecilhenry April 20, 2020 11:20 AM  

The biblical Hebrew terms for interest are neshekh, literally meaning a bite, and marbit/tarbit, which specifically refers to the gain by the creditor.

(Jewish Encyclopedia, Wikipedia).


This was not the consuming bite of a lion, but the poisonous nip of a serpent.

Usury does not all at once destroy a man or nation with, as it were, a bloody gulp. Rather, it slowly, sometimes nearly imperceptibly, subverts the victim’s constitution until he cannot prevent the fatal consequences even though he knows what is coming. (S.C. Mooney, Usury: Destroyer of Na-tions, Theopolis, Warsaw, Ohio, 1988, p. 23)


The practice of lending to an enemy was “a means of destroying him.”

Blogger d April 20, 2020 11:30 AM  

"...depend upon how the massive pool of existing bad debts are written off."

The same way they always do it. We, the peasants, are looted to make them whole, and they find evermore clever and merciless ways of obligating us to their debts. After all, debt is just the mechanism. To forgive OUR debts is to liberate us, so that isn't an option our rulers would consider.

Absent any organized opposition, the current order, along with its progressive cultural degeneracy, will remain in effect, appling evermore macabe "living laws", well past the extinction point of Christendom.

That's why these "social networks" are stomping on any hint of any suggestion of effective opposition. Pre-Google, YouTube was morphing into a legit social network. They had true content discovery mechanisms. And groups. The instant it became evident that the peasants were overwhelmingly favoring membership in the pro-civilization (pro-Christendom) groups, Google bought YouTube and (incrementally) snuffed it all out.

That is to say, get used to your house arrest because this current obedience training exercise is revealing precisely what any antichrist cultist would have hoped for of their mark.

Or start organizing.

Blogger Ominous Cowherd April 20, 2020 11:31 AM  

Kat wrote:Other than basic preps are there certain durable goods y'all would suggest acquiring?
Heavy equipment.

If you buy the middle aged stuff used, it will hold its value pretty well, and you can definitely get your money's worth out of it if you have a few acres. Get wheeled machines unless you know how to maintain tracks, or want to learn. Have two, because you will want to use one to do the heavy lifting when you work on the other. Check parts availability for the brand you're looking at.

I have a couple of tracked loaders with backhoes.

Blogger Ingot9455 April 20, 2020 11:32 AM  

I just want a few of the correct people to be punished in the debt jubilee.
Is that so much to ask?
Yes, "Vengeance is mine," sayeth the Lord.
It is too much to ask.

Blogger Nihil Dicit April 20, 2020 11:42 AM  

since they are rational

I think I spotted the problem.


a bolthole offshore with some cash is a good idea

Most "offshore" places are chock full of people who will view you as nothing but an invader (shocking, isn't it?) and a perfect candidate for the ancient Roman art of proscription.

Blogger Robert Schecter April 20, 2020 11:48 AM  

"because of the coronavirus pandemic"

This is the biggest lie currently being foisted upon the American public. The damage and destruction is being caused by the government's insane reaction to this mild infection, not the virus itself. Until people realize this, our collapse will continue.

Blogger VD April 20, 2020 12:27 PM  

The damage and destruction is being caused by the government's insane reaction to this mild infection, not the virus itself. Until people realize this, our collapse will continue.

That is also a lie. The collapse is inevitable, and it is due to usury and the excessive amount of debt.

Blogger Sgt Polite April 20, 2020 12:37 PM  

I admit I was part of the "perverse incentives" crowd of debt forgiveness at first, but after doing biblical research and mulling on it in general, it HAS to be the way going forward. A nice side effect it will hit the synagogue of satan hard.

Blogger cecilhenry April 20, 2020 12:37 PM  

The virus is not the cause of this crisis, its the opportunity they were waiting for.


“There are decades where nothing happens; and there are weeks where decades happen.”


Lenin


We are seeing decades of issues coming together under this 'virus excuse'.

$6 trillion so far and counting.

Blogger Shane Bradman April 20, 2020 12:55 PM  

Another point about the argument that interest is making up for opportunity cost, risk, and change in time value of money:
On average, under this principle, the money lender will never lose money. They always recoup more than what they lent out. This means that money-lending is risk free for the lender and the borrower must take the burden of the risk. This is always a problem because the lenders have money and the borrowers don't have money. In the circumstance that the lenders don't have money, they will invent money to loan. A child can point out how unfair this is. Usury is extremely immoral and should be banned as soon as possible.

Blogger Grooveware April 20, 2020 1:04 PM  

Early 1200s French Cardinal De Vitry wrote moneylenders should be defiled by demons because he'd committed the sin of usury charging interest on loans De Vitry didn't care whether the rate was high or low because extracting a single cent of interest was evil.

Blogger Kat April 20, 2020 1:07 PM  

Ominous Cowherd wrote:Kat wrote:Other than basic preps are there certain durable goods y'all would suggest acquiring?

Heavy equipment.

If you buy the middle aged stuff used, it will hold its value pretty well, and you can definitely get your money's worth out of it if you have a few acres. Get wheeled machines unless you know how to maintain tracks, or want to learn. Have two, because you will want to use one to do the heavy lifting when you work on the other. Check parts availability for the brand you're looking at.

I have a couple of tracked loaders with backhoes.


That one is probably actually covered, but I'll ask my husband.

Thanks!

Blogger Doktor Jeep April 20, 2020 1:18 PM  

"The collapse is inevitable, and it is due to usury and the excessive amount of debt."

I regret only that Corona will get the blame and not usury and debt-based economies.
Around a decade after every bubble the people who wailed and gnashed their teeth are back to their old habits and acting like "it" will never happen again as they take out home equity loans.
Why we need Christian Kings, reason #1000

Blogger Damelon Brinn April 20, 2020 1:25 PM  

I'm no economist, but it seems to me that in a deflationary period, you want to have cash. (Assuming there's still enough of a functioning economy that people are taking it, of course.) People who had cash during the Great Depression were able to buy up stuff for pennies on the dollar. The story that always stuck in my head was of a family who sold the family silver for $10 because they needed food money.

Considering how many people today live paycheck-to-paycheck, even in the middle class, having some cash still looks like an advantage. Even if the average consumer's mortgage or credit cards are wiped out, his wallet will still be empty. I'm not saying pick him over like a vulture, but if you have cash, you should be able to provide for yourself.

Blogger Laramie Hirsch April 20, 2020 1:33 PM  

So, okay. Practically speaking, suppose there's a family man without any debts, save the house he just bought. He's not in any great danger of losing his job. Will this man continue on paying his house payments in the future? Will his dwelling be taken away?

Blogger ex-pastor April 20, 2020 1:39 PM  

IDK what Fisher meant by his comment; for myself Proverbs 22:3 comes to mind (“The prudent man sees evil coming and hides himself”).
As a bear of very little brain, I know my particular field but money/finance isn’t it. What should a righteous man do to prepare for the economic collapse?

Blogger Snidely Whiplash April 20, 2020 1:44 PM  

Laramie Hirsch wrote:Will this man continue on paying his house payments in the future? Will his dwelling be taken away?
Suppose there are bankers hanging from convenient lampposts and squads of armed men at every street corner. How does that figure in to your calculations?
Suppose that same man sees the value of his property drop by 80 because of a cessation of lending. Is he going to continue paying, or walk away and get an equivalent house for much less of his time and energy?
There are too many unknowns to know what the incentives will be in 5 years, and even if we knew them, there's no way to predict individual responses.

Blogger freddie_mac April 20, 2020 1:47 PM  

@9 ASH

A con artist tricks people in two groups, Group A and Group B, into buying fake Rolex Watches. People in group A took a one year payment plan. Group B people took the 3 year payment plan. At year 2 the con man is arrested, but all the funds received so far have been wasted on hookers and blow. What we are seeing today is people from group A complaining that Group B need to continue making their payments because it's not fair Group A can't get any money back.

Works for me. I admit to being part of the "it's not fair!" crowd, so I've been struggling to match the logical position against my emotional negative reaction.

Blogger map April 20, 2020 2:17 PM  

My take on the Bible was that the purpose of the debt jubilee was a warning to the Sovereign not to eat out the wealth of his people. Money is a non-interest bearing debt, held by the people to engage in transactions. In turn, the Sovereign can pay for the cost of governance by issuing this currency.

The debt jubilee was a check on the willingness of a government to "cheat" and move money around through usury, begetting money through money, which is merely collected through the labor and enterprise of the citizens, until the debt grows so large that the people can no longer hold on to the sovereign currency, which leads them to no longer accept the sovereign currency, which leads to the collapse of the Sovereign.

The periodic debt jubilee is a reminder to the sovereign why usury destroys his country eventually and it short-circuits the process so the kingdom is eventually saved.

Here we not only have the sovereign making money off of usury, the sovereign will even destroy economic activity to make the usury unpayable, triggering defaults and wealth transfer. And make no mistake about it...the sovereign has shut down the economy on several occasions to facilitate exactly this sort of pillage.

So, no, the jubilee is not an act of charity upon the grasshoppers bestowed by the ants. It does not matter if you "paid your bills" or not. The jubilee is a lesson on what not to be doing.

Blogger RC April 20, 2020 2:20 PM  

@Doktor Jeep asks, "So when it's back to same old same old, do I watch it dwindle or do I take the money and run and finally get that 20 acres in the middle of nowhere?"

Our family farm was purchased by my ggggrandfather after the War Between the States. During the Depression my grandfather was given the opportunity to buy a large, fertile, Platte River bottom ground farm at an unheard of price, but the bank required a mortgage on the family farm. Under the dire circumstances of that time he passed, but that kind of opportunity may reappear soon enough for those with cash or real money. Many farms are leveraged to the hilt.

Remote farming communities generally distrust newcomers unless you have family roots of some sort.

Blogger Snidely Whiplash April 20, 2020 2:29 PM  

"Fair" is a purely theoretical concept, with no applicability to reality.
It's like supersymmetry or string theory. It is impossible for there to be evidence as to whether it is true, but it makes the math in people's heads easier, so they believe in it.

Blogger John Regan April 20, 2020 2:38 PM  

@69

It's very hard to envision a debt jubilee in a tangible, meaningful way. The conclusion I came to years ago was that only two things could be exempted from cancellation: a) currency; and b) demand deposits in banks.

I also concluded that the rulers in the US - i.e., congress, etc. - would never, ever enact a jubilee by law. It would have to be done in populist fashion, through a constitutional amendment.

The two conclusions are related, because as a practical matter if you started down the road of considering exemptions from cancellation because, say, this or that kind of debtor was especially profligate or this or that creditor was more deserving, you'd never get to the end of it all and the amendment would never get drafted, let alone passed.

Blogger kurt9 April 20, 2020 2:46 PM  

This comment has been removed by the author.

Blogger kurt9 April 20, 2020 2:57 PM  

The elimination of debt financing is an interesting scenario. On the consumer side, the only things that would be dramatically affected would be the housing and car markets, as these were the only thing people used credit to buy when I was a kid. Perhaps the prices of both would decline to the point where one could realistically save to buy a house, for example, within a 10 year period or so.

The business side is a little more complicated. Most businesses use a combination of both debt and equity finance, with a proper gearing ratio of 1/1 or better towards the equity side. Some companies, most famously Apple and Microsoft, have been cash-only operations. I just wondering how an equity-only world would play itself out in the business world.

Blogger Doktor Jeep April 20, 2020 3:05 PM  

"Remote farming communities generally distrust newcomers unless you have family roots of some sort."

Oh good. That means I'd be left alone.

Blogger xevious2030 April 20, 2020 3:51 PM  

The entire financial system is faith based, and scarcity mitigated, with two functionally separate systems. The economy at the bottom level is entertainment, and the economy at the top is the entertainment industry. Usury as the problem is akin to saying gold has intrinsic financial value.

It is the extension of debt at the bottom, whether interest is charged or not, and in changing payment level requirements, which is the problem. Especially since the medium of exchange, as a governor, was removed from an item of physical scarcity. Western Societies were in part based on religious precepts, and TA would be a large influence as to how those practices were viewed. Even with the flaw of TA in his basic argument and premise, which undoes itself.

A $1,000 a month payment at a fixed rate, is same burden as a $1,000 a month payment without interest at all, in terms of ability to pay. And 5 of them by one borrower is the same increase in burden for a largely fixed income. Also, the upper levels can create grants to themselves at rates that match a “repaid” along the lines of, or in excess of, a usury level of return. Alternately, with the same sort of “promise to repay debt with debt” that exists under the usury scheme.

In a no usury situation, default by the bottom can still be induced by the movement of “money” between the above entertainment and the above industry economies, as a matter of influencing perception, so as to induce deflation and inflation, essentially creating a similar situation as a variable interest rate loan.

The problem is in the manipulation, not the system. It is the influence by the evil that is the problem. Just as it is not money, but the love of money that is the problem.

Blogger Freeholder April 20, 2020 4:50 PM  

It will hurt either way but the choices are simple,

either

a) Hyperinflation where people can pay off the mortgage by skipping coffee one morning

or

b) Massive deflation where the number of notes that become uncollectable exceeds the system and people by the notes for pennies from the bankrupt creditors.

We might even get both where hyperinflation first and then a collapse. This is actually what I suspect.

Blogger Meng Greenleaf April 20, 2020 6:49 PM  

I wonder what dreams the (((Money Changers))) are dreaming these days?

I met a 28-year-old Greek-Australian woman about 5 years ago (work acquaintance). She's very pretty. Marble white skin, green eyes, jet black hair. Thin and very well proportioned. I know it's a line, but by coincidence, I ended up sharing a coffee with her one morning and asked why she never dated. I believe part of the problem is she's introverted. I wish she had found someone, but, now in her mid-30s she's probably going to end up alone. When I asked if she thought about family, she told me she couldn't take the risk of marriage because she wanted to be independent (I know, talk about cliché) and she didn't want dependent on someone.

She probably does want to meet someone, but I imagine she is going to remain single, forever. Partly because she couldn't take a mental risk.

And yet, here we are.

I'd like to use a currency where waste, fraud, production, value and risk can be viewed in realtime. I'd like to log into a website and see Blackholes where various Government agencies, Academia, banks, companies sit (as in their headquarters). Watching them sucking in endless paper, increasing risk, devaluing the currency and producing nothing (or next to nothing) of value in realtime. And then, we could see Whiteholes where value is created, products are made, and risk is reduced.

Right down to the individual level.

That Greek-Australian woman ended up marrying her relatively low-level job. If she really was worried about risk, she should marry a Christian White male. Instead, she's sitting on the edge of a blackhole, and doesn't even know it.

That's the kind of information people need in order to make reasonable life decisions. Our money does exactly the opposite. So, I would like to see the European-male Christian population on a map as a hundred million Whiteholes. Meanwhile, New York could look like an imploding blackhole with violent red edges (if that is, what it is).

That's the new currency I want to use.

Blogger VD April 20, 2020 9:01 PM  

The problem is in the manipulation, not the system. It is the influence by the evil that is the problem. Just as it is not money, but the love of money that is the problem.

You're completely wrong, to the point of at least bordering on dishonesty. The system is absolutely the problem.

Blogger Azure Amaranthine April 20, 2020 9:19 PM  

"And then, we could see Whiteholes where value is created, products are made, and risk is reduced. "

The problem there is that as soon as the producers of black holes can see the producers of white holes clearly, they move to predation on them. You should expect any such emerging system to go rapidly from displaying white and black holes, to displaying nothing but grey swirls and streaks as people leverage that knowledge.

Blogger Azure Amaranthine April 20, 2020 9:21 PM  

"And then, we could see Whiteholes where value is created, products are made, and risk is reduced. "

Why do you think there are so many programs and rationalizations and moralizations as to why we are fair prey for anything and everything? It's already well recognized, it just won't be admitted.

Blogger JamesB.BKK April 20, 2020 9:55 PM  

An interest rate is a price. Putting aside the fake currencies and price manipulations for the moment, without a price, how would savers decide where to deploy their savings for investment?

Blogger xevious2030 April 20, 2020 10:31 PM  

"You're completely wrong, to the point of at least bordering on dishonesty. The system is absolutely the problem."

It would be stupidity, not dishonesty, if of the two. Usury being the dictionary concept of loaning with interest. "It is the extension of debt at the bottom, whether interest is charged or not, and in changing payment level requirements, which is the problem." The manipulation, with whatever system is the trapping of choice for the screw-over.

Blogger Snidely Whiplash April 20, 2020 11:01 PM  

JamesB.BKK wrote:Putting aside the fake currencies and price manipulations for the moment, without a price, how would savers decide where to deploy their savings for investment?
If you're investing, you're not saving. Investing is buying resources in the attempt to collect rent on them, without taking risk. That is the mere opposite of saving.
This is the mindset that usury has instilled in you.

Blogger xevious2030 April 20, 2020 11:24 PM  

The difference may be that I see the crash of 2008 as intentional, the crash of 2033 as intentional, not an artifact of blind greed. Timetables and plans, directions not happenstance. Which is the reason the mechanism receives less value than the intention.

Blogger Jack Amok April 21, 2020 12:09 AM  

Can you explain why Rothbard's reasoning is wrong that interest is just a charge to use idle money (similar to charging rent to live in an idle house) and that two parties should be free to transact since they are rational and both think they're gaining from the trade?

You can understand the basic destructive mechanism of interest payments by pondering Einstein's "most powerful force in the universe": compound interest. I loan out $100, get $110 back. I loan that out, get $121 back. And so on until after eight cycles, my $100 is now over $200. Where did that extra $100 come from? Where does the next $100 (which only takes 4 cycles to accumulate), or the next $100 (3 cycles)? Either the economy is growing at the same rate as interest, or I'm skimming an ever-increasing amount of society's wealth into my own vault. And if the economy is growing that fast, it has to accelerate it's growth to keep pace with compounded usury. Nothing can grow forever, and sooner or later, the strain's caused by the uncontrolled growth will tear society apart. We have high immigration rates in large part to fuel the "growth" required by the finance system.

The second issue is that - as Vox probably covered in his Darkstream - an economy where debt-fueled purchasing is possible is one where you really don't have a choice but to become a debtor - it's not a matter of rationally entering into what you think is mutually beneficial. It's a requirement. If you don't take out the mortgage, you'll be outbid on the house by someone who does. Only a handful of people can avoid debt in that environment, and even for them it's at a considerable sacrifice of the standard of living they would enjoy without wide-spread debt financing. And what applies to houses applies to businesses too. Corporate Raiders used debt to pillage well-run companies.

Blogger JamesB.BKK April 21, 2020 12:36 AM  

Snidely although your statements are conclusory and non-responsive, at least two errors could be identified. Let us address the errors. Savings preexist investment. If I provide excess funds on hand (ie my savings) to my brother to entirely fund the start of a business for a 30% share of the excess returns he earns, that is investment. Please assume his business would not otherwise come into existence. He enjoys a new enterprise and happily shares in the returns. He brings skills and work but no cash. I bring cash that I obtained from my own work. Thus investment brings new things into existence. This is different from providing liquidity, yes?

Would I be prudent to just hand him the money? What if he spends it on blow and hookers? My obtaining rights would keep him better behaved, one hopes. My obtaining rights therefore benefits him, and me. After all, I could say no and maybe buy a condo unit in Windsor.

Alternatively, what if he says he doesn't want to give up 30% of the business but would rather pay me back 110 for every 100 I provide? But I get paid before him, as preferred equity? Common and preferred equity are all investment without debt. Without debt, there is no usury. As for risk, there is plenty with even this most simple of investments. The key risk is money gone.

The question remains unanswered : How do savers identify worthy projects without price signals?

How about taxation (confiscation of savings) and investment (as bringing new things into existence) made by literal fiat?

Blogger Don Vance April 21, 2020 12:44 AM  

Great comments, thanks for the setup VD

I am 56, holding all cash, saving for retirement for the past 20 years. I envision my cash as debt owed to me by the bank. By the stated formulas, when the jubilee comes, my cash will be wiped out as debt owed to me by the bank just as the debt owed by the mortgage holder to the bank will be wiped out. Seems like a fair exchange? That really sucks.

Blogger Snidely Whiplash April 21, 2020 12:48 AM  

Saving is saving. Investing is spending it on something you hope to resell.

If I buy ice cream, where is my money?
It's no longer my money, I spent it on ice cream.

If I buy stock, where is my money?
It's no longer my money. I have stock now, that I bought.

If I buy real estate, where is my money?
It's not my money, I spent it on real estate.

If I buy a debt instrument, where is my money?
It's no longer my money. I spent it buying a debt instrument.

Blogger JamesB.BKK April 21, 2020 12:53 AM  

I loan out $100, get $110 back. I loan that out, get $121 back. And so on until after eight cycles, my $100 is now over $200.

Consider a case where you loaned out 100 * 10,000,000 to be repaid within 8 years to finance the debt portion of construction of a power generation facility with an operating life of 50 years to provide high quality electrical power to tens of thousands of people. And over 24 years 3 such plants.

Blogger JamesB.BKK April 21, 2020 1:07 AM  

Describing one type of potential investment - asset or maybe consumption goods purchases - is not adequate for describing all types of investment. Is it?

Blogger JamesB.BKK April 21, 2020 2:15 AM  

Don Vance you've probably heard this but physical gold and to a lesser degree silver are the only financial assets which are not simultaneously someone else's liability. There are of course storage and transport and quality issues. Minted coins address these in smallish quantities buried around the yard, in a good home safe, or in a safe deposit box (which could be inaccessible at the worst time). Also the guy with lots of assets at the house makes an early target WTSHTF. Certificated storage of identifiable quantities with highly trustworthy non-indebted custodians in highly asset and privacy protective jurisdictions addresses to some but a sub optimal degree these issues for larger quantities. Consider such insurance (don't go all in), but insurance it would be against the risk you identified, which exists without jubilee. Quoted gold prices are futures prices for paper claims. They fall WTSHTF but recover, as recently.

Blogger Scott April 21, 2020 2:49 AM  

I started reading Rothbard tonight after Vox's stream.

He completely dismissed Aristotle's observation from the Politics about the nature of wealth: rich people starve to death. Therefore, true wealth is having all of your needs met today and perpetually in the future.

He was also dismissive of Aristotle and other Greek's preference for farming, animal husbandry, and transportation (moving excess goods around) as superior to subsistence through the crafts and trading.

And yet, I can't help but observe that during the current economic crisis farms are still growing food, cows are still being milked and butchered, and truck drivers are still moving all of those goods around.

Maybe this insight was too simple for Rothbard to notice, but I don't know why he didn't even give it a mention. It blew my small mind away when I read the Politics and I continue to see it's implications everywhere.

Blogger Iamblichus April 21, 2020 4:17 AM  

Vox and big bear keep dishing out the gravy. Quality information daily

Blogger Azure Amaranthine April 21, 2020 5:31 AM  

"how would savers decide where to deploy their savings for investment?"

EZ. You invest in things that would naturally have benefits for you regardless. If you can't figure out what those things might be, then there's no one who can help or save you.

Beyond that, expecting to get a reliable return is identical to expecting to eat without working.

Blogger Azure Amaranthine April 21, 2020 5:48 AM  

"Would I be prudent to just hand him the money? What if he spends it on blow and hookers?"

Now you're just playing stupid. First off, he's your brother and if you don't know him well enough to answer that, and still intend to invest in him, you don't deserve a return. A contract won't even fix that, all it'll do is get him punished after he does the inevitable.

"Common and preferred equity are all investment without debt. Without debt, there is no usury."

Not true. If there were no debt he could skip with the money, or use the money and refuse to return you more than what you lent, or so on. You have legal recourse against any of these. There's no meaningful difference between this and debt. Hell, the evaluation is exactly the same as lenders "how likely the borrower can pay interest/usury/dividend..." the only difference is that you're not quite enabled to the point of lending an IOU and collecting interest on it. Oh wait, with leveraging you can do that too.

"The question remains unanswered : How do savers identify worthy projects without price signals?"

You're not talking about savers. You're talking about people who just haven't managed to invest yet. Even aside from that, why should anyone else care that they want to do that? Third, as above, you invest in people you know, if you must.

Snidely is correct. You're trying to use investment in exactly the same way others use debt. A turd by any other name.

Blogger Azure Amaranthine April 21, 2020 5:50 AM  

"I envision my cash as debt owed to me by the bank."

You're already in an even less advantaged position than you envision, Don. Might want to read those bank contracts.

Blogger JamesB.BKK April 21, 2020 6:13 AM  

You invest in things that would naturally have benefits for you regardless. If you can't figure out what those things might be, then there's no one who can help or save you.

I bet a committee of Soviet Commissars and their enforcers could sure help me.

Blogger JamesB.BKK April 21, 2020 6:22 AM  

You're trying to use investment in exactly the same way others use debt.

Words have meanings. Sharing in profits whenever they may appear if they do appear is exactly different from getting a first rank secured return on a loan or the assets or their sale proceeds on enforcement liquidation. You'd have it that anyone pooling their money with an agreed sharing of the fruits is evil? That doesn't sound right. Talk about atomizing.

Blogger Ominous Cowherd April 21, 2020 8:57 AM  

JamesB.BKK wrote:Consider a case where you loaned out 100 * 10,000,000 to be repaid within 8 years to finance the debt portion of construction of a power generation facility with an operating life of 50 years to provide high quality electrical power to tens of thousands of people. And over 24 years 3 such plants.
This is a case in which the electric company takes the risk, and you get a fixed reward.
Consider a case in which rather than loaning to the electric company, you hire the electric company to build and manage your $10^9 power plants. Your risk, your reward.
Preferred stock is a better way to go than usury.

In either case I'm assuming that you have $10^9 saved up from past production.
In neither case should the lender/preferred stock purchaser be allowed to counterfeit savings to invest by a ledger entry. That's pure grabblerism.

Blogger Ominous Cowherd April 21, 2020 9:01 AM  

Azure Amaranthine wrote:You're trying to use investment in exactly the same way others use debt.
Azure, I do think there is a fundamental difference between me investing my past production in your venture, and me investing a counterfeit of past production in your venture, even if the two are done on the same terms. Is that what you're saying, too?
The first is at least potentially legitimate.
The second, which is what banks do today, is not potentially legitimate; it's pure grabblerism.

Blogger Scott April 21, 2020 9:02 AM  

Correction: Aristotle's view on wealth included self-sufficiency of the production of all of your daily needs now and into the future in perpetuity. Money being a secondary and far inferior form of wealth.

With respect to Rothbard, I'm going to stick with Aristotle because observation proves him correct. A lot of rich people are seeing their fortunes destroyed, while farmers remain unaffected by the economic crisis.

Blogger Akulkis April 21, 2020 10:54 AM  

" Money is a non-interest bearing debt,"

Once again, you prove you're an idiot.

REAL money is specie (gold, silver, copper, nickel) which has inherent value, and represents work ALREADY DONE.

What you're talking about is FIAT CURRENCY, which is a fraudulent replacement for money.

Moron.

Blogger Akulkis April 21, 2020 11:01 AM  

"Usury as the problem is akin to saying gold has intrinsic financial value."

If you can't comprehend the concept that gold has intrinsic value which has made it the most valuable metal in coinage, then there's no helping you.

There's a reason why gold coins have ALWAYS been the most valuable coins, mass for mass, throughout the entirety of civilization.

If even ancient men could see the inherent value in gold (and this is before we had electronics, and needed it's fantastic conductive capabilities).

Clue 1: It's beautiful
Clue 2: It doesn't corrode easily.
Clue 3: Women just love wearing it. Go to Saudi Arabia, and in many families, the majority of the family wealth is literally hanging around the wife's neck, in the form of extremely gaudy lunette-shapped plates of gold hanging on gold chains. These are priced by the gram, not by the workmanship or styling.

Blogger Jack Amok April 21, 2020 11:26 AM  

Consider a case where you loaned out 100 * 10,000,000 to be repaid within 8 years to finance the debt portion of construction of a power generation facility with an operating life of 50 years...

You missed the part about needing compounded growth. I loaned the money out and 8 years later got double it back. Now I have $2B to loan out. Two more power plants? Then when that plus interest is paid back, I have $4B. Four more plants. Eight years later, 8 new plants.

By the time the first power plant's useful life is up, I'm financing 64 new plants to take it's place. At some point we have enough power plants. Perhaps you think I need to branch out to finance other types of things, but keep in mind, everybody is doing the same thing - everyone in every industry is expecting compound returns on their investments, so whatever industry I expand into is already facing the same outrageous demand for growth as mine.

The economy literally cannot keep doubling every few years to support the interest payments, no matter how wise the "investments" are.

Blogger Azure Amaranthine April 21, 2020 12:10 PM  

"I bet a committee of Soviet Commissars and their enforcers could sure help me."

Part of the joke and point I was making are that "could" and "would/will" are very different things.

"Words have meanings."

Yes, and synonyms have identical ones.

"Sharing in profits whenever they may appear if they do appear is exactly different from getting a first rank secured return on a loan or the assets or their sale proceeds on enforcement liquidation."

Because home, car, or otherwise secured loans are the only sorts of loans. Hint: They aren't.

Second hint: Money can be lost by the lender even for those that are.

Third hint: Usury/interest also comes out of future profits.

The easy way to see this: What is lending money at interest other than an investment upon the ability of the borrower to produce more in the future? Usury is still wrong even if you lent money you saved beforehand.

The primary difference is in whether it's objectively right or not, and as we've already seen, that someone may or does agree to something doesn't make it right. I've seen the argument that usury is only wrong if it's "fixed" to a person, and I have to reject it. It can be attached to their necessities, possessions, or even their desired things as well. The manipulation is softer and more sophisticated, yet otherwise the dynamic is entirely the same.

"You'd have it that anyone pooling their money with an agreed sharing of the fruits is evil?"

No, but to spare a long multi-point logical argument you might not want, if the system is set up so that you're even reliably breaking even on investments without any significant effort on your part, it's at least slightly unfairly tilted in your favor. Cause: Entropy.

"Azure, I do think there is a fundamental difference between me investing my past production in your venture, and me investing a counterfeit of past production in your venture, even if the two are done on the same terms. Is that what you're saying, too?"

Yes there's a difference. One precedes and indicates the path toward the other.

Investment falls into a greyer area. If you're investing in someone you know or something in your local area, that can be beneficent, neutral, or malicious depending on the terms and circumstances. If you're investing in someone you've never met, via a legally enforced or otherwise guaranteed system for return on investment, you're more in the black; there's no argument that can be made that you aren't at least wasteful, brother to him whom destroys.

Investing nothing more than an IOU is invariably evil, and that CAN be done by stock investors through at least one means that I'm aware of without even looking.

Blogger Azure Amaranthine April 21, 2020 12:20 PM  

"but keep in mind, everybody is doing the same thing - everyone in every industry is expecting compound returns on their investments, so whatever industry I expand into is already facing the same outrageous demand for growth as mine."

This is what tipped me off that the multimillion dollar investment-retirement plans financial experts routinely push for young earners couldn't be entirely on the level when I was around fifteen. Can't get something from nothing. It's like a Ponzi scheme promise, except maybe the money's instead being effortlessly extracted from someone who didn't invest.

Blogger Snidely Whiplash April 21, 2020 12:20 PM  

Akulkis wrote:"Usury as the problem is akin to saying gold has intrinsic financial value."

If you can't comprehend the concept that gold has intrinsic value which has made it the most valuable metal in coinage, then there's no helping you.


Gold is not definitionally money.
Silver is not the same thing as money.
Dollars are currently money, but could cease being money at any time.
Money is a cultural convention. Money is money because everyone accepts it as money. When FDR ended the gold standard and stole everyone's gold, gold coin stopped being money in the US, because most people would not accept it in payment. Same coin, same gold, but the change in cultural convention converted gold specie from money to interesting lumps of a valuable metal.
You need to get your head right about this.

Blogger Up from the pond April 21, 2020 1:08 PM  

Very good explanation. It won't make a dent in the heads of Group A, though. Their heads are solid rock.

Blogger Scott April 21, 2020 1:09 PM  

You can't eat money. Rich people starve to death. In a crisis the people with food won't sell it to you.

Grow or die.

Blogger Ominous Cowherd April 21, 2020 1:37 PM  

Azure Amaranthine wrote:If you're investing in someone you know or something in your local area, that can be beneficent, neutral, or malicious depending on the terms and circumstances.
If you go looking through the Bible for a prohibition on usury, what you find is ``don't oppress your brother.'' If it doesn't benefit your brother, DON'T DO IT! No matter how you structure the bad deal, it's wrong to oppress your brother.
Snidely Whiplash wrote:Dollars are currently money, but could cease being money at any time.
Dollars are currently currency, Snidely. Currency is one function money can serve. Dollars haven't been money for a long time, since they aren't a reliable long term store of value.
Snidely Whiplash wrote:Money is money because everyone accepts it as money.
Yes. Gold and silver are money because everyone, always and everywhere, accepts them as money. They aren't currency right now, but you can always convert them into currency, even when it's illegal.

Blogger Ominous Cowherd April 21, 2020 1:46 PM  

Scott wrote:You can't eat money. Rich people starve to death. In a crisis the people with food won't sell it to you.
I read somewhere that in the ancient world, you wouldn't keep most of your wealth in gold. You would keep cattle and grains and jars of oil and jars of wine and pieces of cloth and lumber and dressed stone, but you wouldn't sell any of that for precious metals unless you planned to go on a long journey and wanted to take some of your wealth with you.

You can't eat money is just a special case of the real reason to not keep your wealth in gold: you can't use money. You can put all those other forms of wealth to use, but you can't build a barn with coins, you can't milk them, you can't feed the hands at harvest time with coins. Cattle make more cattle. Money doesn't make more money.

In a society which was closer to autarchy, in which a little cluster of cottages could make most of the necessities of life and a lot of the luxuries too, there wasn't much call for liquidity, and there was great need to keep wealth in its most productive form.

Blogger Up from the pond April 21, 2020 1:50 PM  

The great economic challenge is to get from 0 to 1, where 0 is doing everything and getting nothing and 1 is doing nothing and getting everything. "Efficiency" is the measure of movement toward 1.

There is no fairness or morality that will remove the essentially predatory nature of life. Animals exist by eating each other. And as long as we're stuck on this fallen world, humans of all species have to follow the pattern, be either the teeth or the grass, 1 or 0.

Debt jubilees imply debt. Compound interest is a great way to prey and will exist, with jubilees as rest periods, until the trumpet is blown.

Blogger Snidely Whiplash April 21, 2020 1:52 PM  

Ominous Cowherd wrote:Yes. Gold and silver are money because everyone, always and everywhere, accepts them as money. They aren't currency right now, but you can always convert them into currency, even when it's illegal.
You are an astoundingly bull-headed moron, I'll give you that.

Blogger xevious2030 April 21, 2020 2:18 PM  

“If you can't comprehend the concept that gold has intrinsic value which has made it the most valuable metal in coinage, then there's no helping you.”

I know, a well-tailored suit, worth the same weight in gold, over time. You’re confusing a relatively comparable exchange rate over time, with intrinsic value. Go back on the blog about 12 years, and you’ll see the discussion on the suit. If there were found 327 Olympic size pool (Forbes.com) stacks of gold, divvied up to everybody, what would happen to the value (exchange rate) of gold (100 times more than current volume mined)? There is a value, over time, which you have mentioned, but that is not the reason for the lion’s share of the exchange rate. What happened to the value (exchange rate) of silver after it was brought into the marketplace from the new world, in the found volumes?

Blogger Azure Amaranthine April 21, 2020 9:28 PM  

"what you find is ``don't oppress your brother.'' If it doesn't benefit your brother, DON'T DO IT!"

This is in accord with the drive of my arguments.

Blogger JamesB.BKK April 21, 2020 9:54 PM  

At some point we have enough power plants.

Indeed. You mostly got the point but added in some things not suggested. Among these that all of the returns and original money be constantly plowed back in. Prices would quickly indicate that's not smart. It's ok to just acknowledge that it is not always the case that debt creates returns only off a skim. That's taxes' job.

Blogger JamesB.BKK April 21, 2020 10:23 PM  

No, but to spare a long multi-point logical argument you might not want, if the system is set up so that you're even reliably breaking even on investments without any significant effort on your part, it's at least slightly unfairly tilted in your favor. Cause: Entropy.

You'll spare me something? Next time how about sparing me recharacterization of what I write in the worst possible light? That would be a nice change. Yeah. Spare me that instead, please. But, as here, persuasive arguments I could use.

Earning and keeping savings require effort. The chance to lose the stored fruits of my past effort constitutes effort on my part. How could you think otherwise? Particularly so where my brother - as noted whom you don't know but let us assume would probably do fine on a flight full of Pakistani oil workers en route to Qatar if you know what I mean - has no respect for my past effort. How could we balance these risks? On your advice he gets no new enterprise funded by me. Too much risk for such a poor return under your rules. Don't you also know that usually one's brother hates the other after some co-venture? Brothers can be real jerks. And before you go there, yes. he assuredly would tell you that I am the jerk. See what I mean about brothers?

Blogger JamesB.BKK April 22, 2020 12:50 AM  

Because home, car, or otherwise secured loans are the only sorts of loans. Hint: They aren't.

To draw the starkest difference for a hand waving person that attempts to collapse meanings is not to seek to offer a complete definition. Let us try another way. Do you accept that there is a difference in a partnership with different people bringing different tools including funds and skills to the enterprise for a share of the excess fruits of the enterprise and a loan to the partnership (and each individual partner)?

Blogger Azure Amaranthine April 22, 2020 3:19 AM  

"You'll spare me something? Next time how about sparing me recharacterization of what I write in the worst possible light?"

There was nothing to recharacerize. Your expectation is an easy safe profit. No such thing exists above the moral table.

"Earning and keeping savings require effort."

Yes, and the reward of that effort is... YOU STILL HAVE THAT MONEY. Snidely's tried to point this out to you repeatedly and you still somehow are not getting it.

"The chance to lose the stored fruits of my past effort constitutes effort on my part."

No, it doesn't. It constitutes some amount of evaluation on your part. Effort is effort. Evaluation can happen passively. Even apart from that, the fruits of your past effort naturally degrade over time, no matter what physical form they might take.

"has no respect for my past effort. How could we balance these risks?"

By not investing in him? This is not hard. It's only hard if you're entitled with an expectation of things handed to you.

"On your advice he gets no new enterprise funded by me."

I'm not seeing the issue here.

"Don't you also know that usually one's brother hates the other after some co-venture?"

Yeah I hear that happens sometimes, to certain people. Others such as myself have done so without issue. Sounds like a personal problem. What's your point? Because your brother might possibly behave poorly you want preemptive legal chains placed on him? Yeah, no. Just don't lend him money if you're not willing to lose it and you can't trust him that much.

"Do you accept that there is a difference in a partnership with different people bringing different tools including funds and skills to the enterprise for a share of the excess fruits of the enterprise and a loan to the partnership (and each individual partner)?"

If all you're bringing to the "partnership" is funds, and you have the same protections as a lender, there's no difference. If you want to raise an argument you need to start with how your investment is actually different from a loan. Remember, words mean things, but synonyms mean the same things even while using different words.

Risk doesn't cut it. Loans at interest are risky too, and morally wrong even without the extra perversity of our system that guarantees them out of the public's wallet. Risk does not entitle you to anything.

Saving entitles you to nothing beyond your savings.

It's time for a Bible smack. "Rather, lay up for yourselves treasures in _____ where ___ and ___ do not corrupt nor _____ break in and _____." Earthly savings deprecate. The best use of them is to exchange them for eternal things as fast as possible lest they naturally deprecate further.

Now, where's your argument?

Blogger JamesB.BKK April 22, 2020 6:11 AM  

Your expectation is an easy safe profit.

Azure Amarinthine's mind reading gifts?:

Check minus

Blogger Azure Amaranthine April 22, 2020 8:07 AM  

"An interest rate is a price. Putting aside the fake currencies and price manipulations for the moment, without a price, how would savers decide where to deploy their savings for investment?"

Why must savers invest? JamesB.BKK's self awareness, check minus.

Blogger Ominous Cowherd April 22, 2020 12:17 PM  

Snidely Whiplash wrote:You are an astoundingly bull-headed moron, I'll give you that.
Is that hobby horse getting tiresome? I'll put it back in the stable for a while.

Blogger JamesB.BKK April 23, 2020 5:33 AM  

Why must savers invest?

Three (of likely more) reasons: 1. Waste is sinful. 2. There is a time when one's working life will end. He must prepare so as not to burden others unreasonably. Income - not necessarily as interest income - is required for this. 3. Investment often brings new things and technologies into existence improving lives of people.

Proposed definitions: Savings equals from to time to time production minus consumption (timely converted in form in cases of perishable or not-readily-exchangeable production). That's it. Investment means the use of savings other than by consumption or conversion (eg by purchase of alternative assets (putting aside whether there are or are not such things as those that are called intangible assets)).

In any case, my example was not about "must" but "may" given the many options and the (potential spendthrift) brother thingy. Regrettably, too much not stated or even loosely implied was read in by you. We'll mark it as time lost.

Blogger Azure Amaranthine April 23, 2020 7:00 PM  

"Waste is sinful."

This has no bearing unless you're assuming that not investing money is automatically waste. See: "easy safe profit".

"There is a time when one's working life will end. He must prepare so as not to burden others unreasonably. Income - not necessarily as interest income - is required for this."

Income is not required for this. It's something someone with no loving family might chase, like the boomers love to.

"Investment often brings new things and technologies into existence improving lives of people."

This is your primary good point, but it's not so strong as to be necessary since other forms of investment than monetary comprise the majority of investment. If you're only looking at the monetary return potential you are almost certainly focused suboptimally.

"Savings equals from to time to time production minus consumption"

Also minus decay. All material product is perishable, just at different rates.

"Investment means the use of savings other than by consumption or conversion"

You're way off the rails here. No such thing as your description exists. Investment is conversion or transformation, period, monetary investment or otherwise. This leads to the above point again, money is not the only thing to be invested.

Blogger JamesB.BKK April 25, 2020 1:06 AM  

Azure, I confess to being too dense to get what you are trying to do. I am talking about tools and their use in the world. You are talking about something else with now evident a tic that even where you agree you must still sound off with disagreement. (I have another brother that does that.) You even deployed "way off the rails" and then countered with a sliver of difference that isn't even relevant if identifiable. What about "wrong track?" Are you just showboating?

It must also be true that in the USA in cases a man that does not look after his retirement is content to have his party's government people point guns at others to pay his expenses during those years as a 35% slaver or uses his children as income machines or both. It is not a pursuit one "chases" to look after retirement while in earning years but a matter of prudence and stewardship. You may not be interested in this reality, but it is interested in you.

Blogger Azure Amaranthine April 25, 2020 2:43 PM  

"You even deployed "way off the rails" and then countered with a sliver of difference that isn't even relevant if identifiable."

I can't state a direct contradiction any more clearly.

You said investment is use of savings other than by consumption or conversion. Investment is always conversion of one thing to another whether or not either of them are money. We invest time and effort in some things, planning and patience in others, and so on. Every expenditure of any quantifiable and limited resource is an investment. It doesn't even have to be intended.

"or uses his children as income machines"

Or, you know, invest in them, providing, teaching and raising them well so that they will do the same for you in turn, because they care about you? The old-school plan from before school was a thing? I keep pointing straight at this and you keep managing to gymnastically twirl right past it with zero recognition. Bravo, 10/10 for style.

"It is not a pursuit one "chases" to look after retirement while in earning years but a matter of prudence and stewardship."

I agree, but one doesn't have to do it purely with money, or with money at all. Money is not even as dependable as some other forms of investment. Look how recent the Great Depression was and its effective duration, and how near before it were other depressions and collapses. Maybe two of three people in the grand scheme of things won't have a purely monetary stewardship shaft them, and that's probably too generous.

"You may not be interested in this reality, but it is interested in you."

Given our conversation and arguments so far, I have a broader, more adaptable perspective of the dynamic than you do. If this is because you're a decade or three older than I am, that may not necessarily be to your disadvantage at this point. Maybe you're already locked in to one mode.

My point in a nutshell: Money is relatively fickle, and acting as if a retirement can be secured solely by investing it is, or as if it must always be possible to invest it in a way that will return on investment, is... manically oblivious? I can't think of any more appropriate description for the mindset; it's dependent on a way of things that is abberrant at the larger scale, even apart from out particularly crap system.

Blogger JamesB.BKK April 26, 2020 11:20 PM  

I still think your mode of attack / obstreperousness is to create a limiting condition such as that I am referring solely to money as post-1972 US dollar currency unit federal reserve notes. Money is a medium of exchange with key features identified going back to antiquity across or perhaps shared by cultures, which is a tool or technology if you will. Here, I think there is a meaningful difference between for example purchasing units in a levered mutual fund and by some means not definitionally debt providing funds (or supplies and space and food) to someone to start up say an art studio / sales gallery that otherwise believe it or not would not exist and to share in the fruits. This is partnership or association by people bringing different skills or means which has existed since people. I am intentionally not talking about high end carry trades and arbitrage and nested corporate groups with thousands of subsidiaries and what-not. At a basic level that was all I was trying to point to, perhaps without sufficient skill and clarity. My proposed definition was to recognize that a share in am registered partnership is investing without conversion.

Just as I invest in my children's educations, am I not seeking to share in the fruits without conversion? Those fruits or even their nature are not identifiable at the outset. I would hope first for high quality grandchildren. That is by no means assured in this potentially dead end genetic government-programmed world. I could get hit by a bus. How can I convert something of value at present into something else that is unknowable? It is not conversion but a different type of use and an investment nonetheless.

Or, you know, invest in them, providing, teaching and raising them well so that they will do the same for you in turn, because they care about you?

One of the key lessons is : prepare for the future. What kind of poor father would I be were I not to teach this and to perform accordingly? I am surprised that one so hep to the groove as you with all that sassy youth and more updated knowledge would be arguing against pulling one's own weight and trying not to become an unreasonable burden on others. Maybe it comes from a habit of hating without case by case inquiry with compassion members of other generations for what exists in this world and using the related lens too often? About an old dog being incapable of learning new tricks, do you know how to make two different styles with different formatting simultaneously occur in the same paragraph in Word?

There are plenty of mothers with daughters working in brothels that nag their daughters for their monthly cut. This is a variant of the old school practice of raising your children to provide for you in old or even middle age. 'Nuf said.

Maybe there is a litmus test (an objection to the form of the test is itself a response containing information so feel free if inclined): who was the worst US President: Wilson or Lincoln?

Blogger JamesB.BKK April 27, 2020 1:53 AM  

There was a typo in the last at the bottom of the first paragraph that could be read in the worst light as conveying the opposite of what was intended. "a share in am registered partnership" should have been "a share in an unregistered partnership." Sorry.

Blogger Azure Amaranthine April 27, 2020 2:31 AM  

"I still think your mode of attack / obstreperousness is to create a limiting condition such as that I am referring solely to money as post-1972 US dollar currency unit federal reserve notes."

I've stated at least two and probably closer to five times different ways in that, while our system is particularly perverse, it would be for these intents the same with non-fiat money.

"My proposed definition was to recognize that a share in am registered partnership is investing without conversion. ....

Just as I invest in my children's educations, am I not seeking to share in the fruits without conversion?"


Everything's a gamble if you think of God as being like Madame Fortuna, instead of faithful and with specific promises. I can think of no frame of reference in which your statement and queston are not absurd, time itself is only quantifiable by the things that undergo conversion/transformation through it.

Show me something incorruptible and inexhaustible, and I'll show you something that is either directly of God or by no account exists. Everything else undergoes conversion, whether material or immaterial.

"How can I convert something of value at present into something else that is unknowable?"

We all do so all the time with everything we can, no matter what. There are different degrees of our expectations of the outcomes, yet only God could possibly know for sure. As you said, we can't even be certin of our own lives continuing instead of being hit seemingly at random by a bus. Everything is like that to us. The closest we ever come to knowing is what we believe of God and our relationship to him.

"What kind of poor father would I be were I not to teach this and to perform accordingly?"

See above. You may not love Madame Fortuna, but you place much faith in Mammon.

"I am surprised that one so hep to the groove as you with all that sassy youth and more updated knowledge would be arguing against pulling one's own weight"

I'm not. You're familiar with the saying that no man is an island? Even a complete hermit literally raised by wolves cannot have lived without being a burden on someone at some point, the important part is that you paid it off either before, after, or during, and it doesn't have to be paid in cash. I can't fathom your interpretation of my argument as having a cause other than you having a fixation on cash.

"This is a variant of the old school practice of raising your children to provide for you in old or even middle age."

I said the same earlier. This is the first time you've stated it though that I can possibly read you as saying something other than that that practice is bad, and I'm still not certain that you're saying so. You state only a negative variant. Do you have a problem with the practice in general, or just your cherry picked instance?

"who was the worst US President: Wilson or Lincoln?"

Both negative for some different reasons and some the same. Personally I dislike Wilson more, and can't think of anything objectively even benevolent in intent that he was involved in off the top of my head. Though, I don't think I have enough information to make a very meaningful selection without going and doing some long research on them both.

Mind sharing your criteria now that I've said my say?

Blogger Azure Amaranthine April 27, 2020 2:51 AM  

"do you know how to make two different styles with different formatting simultaneously occur in the same paragraph in Word?"

I've used OpenOffice instead for quite a while, so I'm not sure if this will work in Word, but in OO you highlight what you want then select "Character" under the "Format" tab.

Blogger Akulkis April 27, 2020 8:57 AM  

>> "The chance to lose the stored fruits of my past effort constitutes effort on my part."

> No, it doesn't.

At the very least, you have to guard it.
That requires effort.

Blogger JamesB.BKK April 28, 2020 1:32 AM  

Deploying correctly is a form of guarding. Misdeploying or coming up on a loss while a failure is nonetheless preceded by effort to guard.

Blogger JamesB.BKK April 28, 2020 2:58 AM  

Just to be clear, I have been stating it as "burden unreasonably." That must be construed to mean I accept giving some burden. I am talking scale and mitigating tools. I engage in all kinds of group activities including with people from several different countries and try to do so competently. I consider investing as a kind of sport which after nearly two decades am now at the edge of understanding, I think. Of course I cannot know this looking forward. It is hopelessly complex and involves placing bets on an unknowable yet somewhat predictable future. I'll consider your comments but don't (yet) see undue love of mammon as a driver. Would I like to obtain [hey mods] you money? Of course I would. Is that from love of mammon or a desire for independence and getting out from under thumbs of managers and institutions? Do I think it's likely? Not really. There's a good chance I'll come out materially poor with this coming depression, though this would violate my first rule of life, which is : 1. Don't be poor.

Where I am currently at is : Wilson directly caused the most permanent degradation and suffering with lots of help, but Lincoln created the conditions for him to do so. Therefore, Lincoln is the worst. I also go by the monuments in the Imperial City and the level of fake solemnity used to describe him and what he did in schools and other thought centers. Not very deep is it?

Blogger Azure Amaranthine April 28, 2020 6:19 AM  

Another way of stating that it requires effort just to temporarily avoid it degrading.

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