Judge…

In terms of been there are done that, I really mean Gabbard. But Rand Paul has been there and done that in health care. If there is a “bullshit economy” it is the health care insurance industry. They way I see it, that’s the next china shop and I can’t wait to see Paul rage through it and break every damn thing about it.

And now for money: No, all money is not fiat money. The reason you see it that way is because you evidently see money as a tool of the state. This really goes even further down to what we believe about the authority to govern. It either arises from credentials of one sort or another, or it arises from the consent of the governed. If you believe the former (Thomas Hobbes), your view of money will follow naturally as a tool of the state. If you believe in consent (John Locke), money is a utility contrived by individuals in order to engage in commerce.

If you study the relationship between the gold in the Royal Mint of England and how its confiscation by Charles I was used to fund the English Civil Wars (the Second Bishops War in particular) you’ll see what I mean. After Charles I paid back that forced loan, English merchants abandoned the mint in favor of local goldsmiths. These goldsmiths gave them receipts, and before long those receipts became a medium of exchange. Then the goldsmiths gave in to human nature (as everyone eventually does with money) and started issuing “extras” and lending them out at interest. Fractional reserve banking was originally a secretive exercise in deception.

When that was exposed was when laws started being passed which fixed a value between a specie (silver actually has a deeper and broader history as money — all Semitic languages like Hebrew and Arabic use the word for silver as the word for “money” — and the paper stand-in.

Here in the U.S., prior to the Civil War there was a fixed value between the dollar and both gold and silver. We took the dollar off that to fight the Civil Way. Then we restored the convertibility, but only to gold, not silver (there is an interesting political history there). That takes us to gold at $35/oz as a medium for settling international financial obligations in the mid twentieth century.

Without getting into why Nixon had to end that, what really matters is that the history teaches us that 1) fractional reserve banking was originally deceptive; and 2) fixing the value of paper money against a reserve asset like gold and silver was designed to secure the money supply against the kind of deceptions human nature and money inescapably lead to.

This is why I believe you are fundamentally mistaken when you say all money is fiat…

That is only true if money is ultimately a tool of the state. Originally, though, “money” was the natural result of a producer producing something a consumer wanted to buy. This is why it becomes so important we recover what exactly “wealth” is. A potter can take a $0.50 lump of clay and transform it into a $5.00 coffee mug; “wealth” is that $4.50 difference between the value of the useful thing and the value of its underlying raw materials.

And that is the only reason money exists… So people can acquire raw materials, turn them into useful things, and then sell them at a profit. And when the farmer grows the coffee and the potter makes the coffee mug, now someone open a coffee shop and the barista has a job.

Our problem is “fiat” money allows us to divorce the concept of money from the underlying creation of wealth. That explains why when I was 16 I mopped floors at the local McDonald’s for $3.35/hr. and today people are demanding $15/hr. This is a fascinating study in monetary history: In 1964 — the last year the Quarter Dollar was minted in 90% silver, the minimum wage was five of those Quarters: $1.25. If you take five Quarters from 1964 or prior, melt them down for their silver, you wanna know how much silver you have in today’s dollar? Somewhere between $15 and $16!

The federal minimum wage is actually a spectacular opportunity for both sides to come away with meaningful wins. You want a $15 minimum wage? Great… I want to return to sound money. Let’s deal.

Lastly, it is because Buffet has earned his riches in nominally inflated dollars that he does not understand gold. He is right, though, it is not an investment; it is money.

And he is manifestly wrong about its utility. Gold is a Noble metal (as is silver). What makes Noble metals unique is they do not react to oxygen — meaning they do not rust. So if you are going to store value in something where you measure value by weight, if the thing you use reacts to oxygen, it loses weight (and therefore value) over time. Gold and silver have been used throughout 5,000 years of monetary history precisely because of this objectively useful chemical property.

Bullshit (read: fiat) money has existed for all of 50 years in comparison. So let’s go back to the bullshit of telling the rest of the world how to live — you can only fund a bullshit objective like that with bullshit money. Or how about the bullshit of politicians making promises they cannot keep? You can only paper over those lies with Treasury Bonds denominated in a bullshit currency. And finally, the bullshit of the insurance industry propagandizing us into thinking health care is too expensive… that whole bullshit economy depends entirely on bullshit money.

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I am a charter member of the pocket-protector set, but old enough to make fun of them and otherwise have a healthy skepticism of tech. https://goo.gl/2z5Snr

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