Saturday, January 2, 2010

dear arianna

arianna huffington and rob johnson, a former chief economist of the senate banking committee, have a "simple idea" for punishing the producers of banking products for their recent tax-dollar fueled behavior: move your money.

If enough people who have money in one of the big four banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it's meant to be.


in an earlier day, people understood this intuitively. this is because they knew what capitalism was when they saw it.

a transfer of funds, these days, is done electronically. it does not matter where the cash reserves are physically located. they are fungible, interchangeable; one paper dollar bill can be substituted for one dollar of account for any human being anywhere on the earth who is within the american system. the paper dollars aren't all printed to account for all, well, accounts. an "account" at a bank today is perhaps the quintessential example of the orwellification of western thought and history, if only because everbody with a bank account can see for themselves that the cash reserves are simply not present. not accounted for. the digits are accounted for. they exist.

now you understand the interchangeability of reserves themselves. why don't you understand the fungibility of retail bank brands? this is not like comparing nike cross trainers to a competative reebok product. the banks provide literally the exact same deposit products, everywhere in the country. there are ridiculous, backwards laws to ensure all money and money products remain the same just as there are ridiculous, backwards laws to ensure that all shoes come from different designs as different "intellectual property."

assume you now have made citibank, bank of america, wells fargo, and jp morgan into little kittens. you have spread deposits amongst many, many banks, all of which are within the american system by law, as they all purchase FDIC insurance. fantastic! except, you no longer bank there. as a customer, you have a small claim on their behavior. no longer a customer, you have none. unlike other industries, banks do not answer to the loss of market share of deposits, they answer to the fed.

what if they get themselves bailed out again? they get fresh "taxpayer funds" from the fed. your "new" deposits are silently taxed by inflation. you believed the story about "systemic risk" because you have been corn-fed on the "evil" of corporate "bigness," and the two seem to go hand-in-hand. wrong. the connections are political. that the fed only has four big lending windows open currently is irrelevant. they'd be glad to open 1,000 more in such dire circumstances as those you intend to effect. that is simply more of the industry neatly held under their thumb.

a fiat currency is both established as money and sustained as money by political machination. force or fraud is required for this. as soon as the victim in this transaction obtains superior firepower to overcome force, or revokes their trust in the aggressor's shady behavior, and overcomes this force or fraud, gresham's law takes effect. the artificially overvalued money is no longer overvalued. the artificially undervalued money is no longer undervalued. the market value of each is revealed, as quickly as the communications technology of the day will allow.

how fast can you spend with your credit or debit card?

and how fast can your card be disabled by the lender who backs it?

"move your money" is not a bank run. a bank run is when a vast number of people actually withdraw their money from a bank. so, too, would a "withdrawal tax" actually require withdrawing funds, not moving their "account" from one retail outlet to the next one. how this is not obvious escapes me.

any true bank run would wreak havoc throughout the entire system. but, people filling up and then sitting on mattresses of dollars won't do, either, will it? try selling that sometime. "sleep on your money." if the fed is allowed to remain, it will inflate to save its favorite tendrils, and perhaps add a few more. this pseudo-run cannot do anything but increase the number of loyal bankers or simply give them more market share by decreasing the number of all other independent-minded bankers.

arianna huffington rediscovering capitalism is the only fascinating news, here. too little, too late.

yet, there is a light at the end of the tunnel. it is the reflection of divine providence on the face of one particular precious metal: gold. the one and only way to usurp the power of a central bank and spread it amongst the multitude is to be as they are, in your own humble way. store your wealth in gold coins. store them yourself, or pay for storage. locally, if you like. spend them as money; re-monetize gold.

we claim to trust in God right on our paper dollar, yet we do not use as money the commodity He gave to us, naturally! instead we substitute that paper dollar for the original dollar: the name of a weight in gold. if the market again chooses gold as its money, then market economics again function gracefully to invest when investment is needed, spend when spending is needed, and save when saving is needed.

is that leftist enough for you?

you and your friends need to form a small, temporary book club. you must first read what has government done to our money? by murray rothbard, and/or mises on money by gary north. once you understand money, you must then read the case against the fed by murray rothbard. once you have this knowledge, i am sure you will find far superior ways to organize those who trust you towards the liberty that you envision, even if you shudder at the thought of gold money and liberty for all.

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