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Hooray for Capitalism !

10:45 pm in Uncategorized by cmaukonen

Battle strike 1934

I thought I would list all the benefits we have experienced since feudalism was replaced by capitalism as the main economic model.

Feudalism exploited and enslaved the general populace – to one extent or another – to benefit a select few. Either through birthright or armed power. Quite often both. Under feudalism the means of production – both agricultural and industrial – were in the hands of the few. Acquired either from birthright or by force.

The end of feudalism was ostensibly to change this. It however did not. In fact empires grew the strongest under capitalism. Slavery and indentured servitude flourished under it. Countries and natives were colonized to acquire their wealth and resources to benefit the capitalist owners in the mother country. Displaced and quite often eliminated or enslaved.

Personal gain was the driving force behind nearly all endeavors. From adventurism to conquest. The monarchies that would continuously wage war with one another were replaced by capitalist and industrialists – who through their government servants – waged even bigger and bloodier wars. And in all cases it was the general populace that bore the brunt of the fighting and killing.

Banks and financial institutions began risky practices. Investing in and loaning money to anyone or anything that they were told was a sure money making enterprise. Profit was all and the quicker the better. Resulting in a long line of financial failures and economic crisis.

Capitalism’s quest for more and more wealth and gain. For continued expansion. Disregards any and all environmental and ecological concerns. Endangering the planet and those that live there. Capitalism requires continued growth in order to function.

Capitalists put monetary gain ahead of everything. Which is why the worst dictators in history were put in place and supported by capitalists – who also make the most from them. With total and complete disregard for what these people did to their citizens.

Contrary to popular believe capitalism does not encourage discovery, it stifles it. Unless a great deal of money can be made from it. And from the very start it will try to co-opt, defraud and steal ideas and inventions from those who make them. Such as RCA with Major Edwin Armstrong and Philo Farnsworth.

It will cut corners on everything to ensure greater profits. From wages to the workers, their working conditions and even the raw materials and designs. Knowingly marketing and producing items that are dangerous and even lethal. Like DDT, the Ford Pinto, numerous toys…to name but a few.

Capitalists are know to delay, sabotage and even kill any idea and/or product that may hurt their bottom line. Or attempt to gain exclusive ownership of it. The pharmaceutical industry is known for this. They will not develop a cure for anything they can make more money on by developing a continued treatment for.

They will use any means they can to get the consumer to buy into something and then blame them when it goes sour.

And contrary to popular belief, capitalists hate competition and will do what ever is necessary to eliminate it. Forming trusts and monopolies and fixing prices.

Yes people ow a lot to capitalism. Especially people like Hitler, Mussolini, Franco, Anastasio Somoz, Augusto Pinochet, Mubarak, Bashar al-Assad ……….. and various CEOS, Bankers, Stock Brokers, Military leaders and weapons developers.

You and me…not so much.

Lite Beer and the Segmentation of America

11:21 am in Uncategorized by cmaukonen

Lite Beer - Flickr Creative Commons

I am not a beer drinker. An neither were any of my parents. My father only really liked one brand in fact and rarely drink that much. I think this is a plus since Finnish people are more likely to go overboard on alcohol than most.

I did find this analysis by Kevin Horrigan in the Stl Today site on how we had a become segmented society all thanks to – not Wall Street – but Madison Av. That’s right the marketing people.

Before there was Lite Beer, there was just beer. There were a lot of different brands, but it was mostly the same: 12-ounce cans of lager or pilsner containing roughly 150 calories. You had to go far out of your way to find something different, like a Heineken or a Guinness.

One nation, one beer. Everyone watched the same TV shows and got their news from (you should pardon the expression) mainstream sources. There were rich people, sure, but they hadn’t yet begun to suck the marrow out of the middle class. The Vietnam War had been fought by enlisted men and draftees alike.

Then came Lite Beer from Miller, test marketed in Springfield, San Diego and Knoxville, Tenn. It was successful enough that Miller hired the advertising firm McCann-Erickson Worldwide to help roll it out nationwide. Pretty soon the “Tastes Great, Less Filling” campaign was everywhere. America’s common culture was doomed.

First came more light beers. And dark beers. And ice beers. And beer with fruit in it. The natural reaction to all of this terrible beer was craft beers and microbrews.

People no longer listened to rock music. They listened to soft rock, classic rock, metal, funk, punk, alternative rock, Christian rock. They listened to classic country and new country and alt country. They listened to R&B and urban and soul and hip-hop and rap.

Along with talk radio and specialty cable channels and focused news and on and on. We have become a nation of focus groups. It’s no longer “How does it play in Peoria”  but “How does it play in a particular suburb of Peoria, Atlanta, Indianapolis……”.  With data mining of all you do on the internet it has become more so and as Sam Smith points out this has permeated our politics as well. Quoting Sally Quinn of the Washington Post.

 

On the way home … I suddenly realized that this grotesque event signaled the end of power as we have known it. That dinner — which seemed to have more celebrities, clients and advertisers than journalists and politicians — was the tipping point.
Power in Washington used to be centered on the White House, the Congress, the Cabinet, the diplomatic corps and the journalists. Today, all of those groups depend on money for their very existence. The real power lies with the lobbyists, the money-raisers, the super PACs, the bundlers, the corporations and rich people.

 

That politicians have become nothing more than something to market. Like Lite Beer and Donuts and iPods. That the era of the states man and wise old men of Washington such as Clark Cliffard have been replaced by sound bites and celebrities.

These same bundlers that Sally refers to are the ones who sliced and diced corporate America and sold if off as pieces parts to the highest bidder on the Wall Street equivalent of ebay.

There was a time when most people were on more or less the same page. Now we are simply adds in some niche magazine to be exploited.   With our politicos merely hollow manikins marketed to us depending on the group involved.

Appearing as one icon to one group and a different icon to another.

Out causes and concerns also neatly managed and marketed as well. Be they environmental,  religious, social, economic or political.   Each with their own focus group.   More consumer than a culture. A Walmart nation with cheesy products and cheesy politicians. Willy Lomans in expensive suits.

Consumption! It’s the new national pastime. Fuck baseball, it’s consumption. The only true lasting American value that’s left – buying things! People spending money they don’t have on things they don’t need – MONEY THEY DON’T HAVE ON THINGS THEY DON’T NEED – so they can max out their credit cards and spend the rest of their lives paying 18% interest on something that cost 12.50! And they didn’t like it when they got it home anyway! – George Carlin

And we have bought it hook, line and sinker and have been sold up the river in the process.

Dependency

2:53 pm in Uncategorized by cmaukonen

Dependence

Dependence - Flicker Creative Commons

 

I lost my internet connect this morning.  We had some bad thunderstorms and I guess a lightning strike took out my providers equipment. It took a couple of hours to get it back. I was amazed how much I depend on it now. Pay my bills,  shop, research and oh yes blog.

Just look at how much stuff we have come to depend on now. Cell phone and cable TV and electricity and petroleum products (there’s a whole big list right there) and cars and pharmaceuticals and supermarkets and big box stores and air travel and plastic cards and on and on.

Now I know this has been brought up before and sounds rather trite and even a bit over done but needs to be looked at for this very reason.

Nearly all of this is now controlled by a few big corporations.

It was not like this when I grew up in the 1950s and 1960s. When I grew up we had a phone and it was provided by Ohio Bell. A mostly independent phone company. Electricity was local, Cleveland Electric Illuminating. The TV stations were all local – there were three of them. All the radio was locally owned. We had a well as did everyone else in the country and our own septic tank.

A local milk man that delivered. My aunt and uncle and cousins in the city, had milk delivered as well as butter and eggs. Most dairies were local. Only one super market at all close by, A&P.   We

When my family moved to Florida, the phone company was local as was the cable – four channels and a weather channel that had a scan of temp and wind etc.  There were only gas cards and store credit.  Banks were also local.

And we were not as dependent on any of this. If the electric went out, no big deal. Or the phone or the cable.

And to make matters worse, far too many now suffer from affluenza.

Simply put, affluenza is a harmful or unbalanced relationship with money or its pursuit. Clinically, Jessie defines affluenza in the individual as the collective addictions, character flaws, psychological wounds, neurosis and behavioral disorders caused or exacerbated by the presence of or desire for wealth.

. . . . .

In individuals, symptoms of affluenza can include: workaholism; an addiction to chaos; low self-esteem; depression; a loss of future motivation; an inability to delay gratification or tolerate frustration; a false sense of entitlement. Affluenza is frequently accompanied by all manners of addictive/compulsive behaviors. We can see the symptoms of affluenza throughout our culture:in those around us who have wealth; in those who are pursuing wealth; and in varying degrees within ourselves. One of the major causes of climate change, loss of biodiversity and the “legacy” we threaten to leave our children and grandchildren, is affluenza.

One of the big reasons, IMHO that people know what is going on and don’t know what to do is because of this dependence. They do not want to or even know how to let go of it.   But it is I think the one thing that needs to be done.  Since at some point a good part of it will be eventually taken away from all but the elite few.  This does not mean going back to the 19th century, it means scaling back and becoming willing to give it up if need be.  It’s this dependency that enables the elites to exert control. With out it, their control is greatly diminished.

Europe fiddles on the edge of a financial Event Horizon

6:05 pm in Uncategorized by cmaukonen

While we are all engaged in the OWS protests and hating those financial institutions that made this all possible,  the economic crisis that brought us all this entertainment still bubbles on. Still on the verge of blowing it’s top. This time brought to you by the European banks and the money they have tied up in countries like Greece, Italy, Spain and yes even France.  With France being the latest to get its debt downgraded.

With the likely hood of a Greek default being around 97% these days and the reluctance of the Germans and French to want to continue funneling money their way, the plan now is to re-capitalize the European banks that would be a risk when this occurs.  But the people of Germany and France now have little stomach for that either and both Merkel and Sarkozy are on shaky political ground now. And in my opinion this would be like closing the barn door after the horse has left, kicked over the lamp, set it on fire and burned it to the ground.

Merkel herself flopping in the wind like a flag in a hurricane. First saying that any resolution would take a while to implement and then announcing that a solutions is nearly at hand.  But the banks themselves are not happy about this solution saying that it puts a strain on them to keep so much capital on hand. Of course we all know that the real reason is that accepting the money would be tantamount to admitting they are in deep  trouble and continued investing in them would be a really bad idea.   By the way, continued investing in them would be a really bad idea.

Meanwhile Sarkozy and the French government are yelling that letting the banks fail and the governments default would mean the end of the Euro and Eurozone, that this would result in the return to the economic and political environment prior to WWII.   (cue Glenn Miller and Arty Shaw music)

Add to that the Chinese economy is now contracting and of course the financial sector is blaming the decisions of the Chinese government on that.  (Funny how they blame the government when things go sour and take full credit when they don’t)

What has this got to do with us ? Read the rest of this entry →

UN – World economic policies a disaster. They get it….

5:48 pm in Uncategorized by cmaukonen

But the world’s governments do not. According to a new UN study, the current policy of austerity measures being implemented by the majority of the worlds governments are driving the world economy to  disaster. As is being reported by Reuters.

The pursuit of austerity measures and deficit cuts is pushing the world economy toward disaster in a misguided attempt to please global financial markets, the annual report of the United Nations economic thinktank UNCTAD said on Tuesday.

The report, entitled “Post-crisis policy challenges in the world economy,” savaged U.S. and European economic policies and called for wage increases, stricter regulation of financial markets, including a return to a system of managed exchange rates, and a conscious break with market-led thinking.

“The message here is very pragmatic: we need to reverse our course quickly,” said UNCTAD Secretary General Supachai Panitchpakdi.

This has been stated before but now by a UN thinktank.  Numerous economists have also said the same thing. But their advice has been systematically ignored.    The report’s author, Heiner Flassbeck even goes as far to suggest a permanent recession maybe the result with high unemployment and stagnant wages.

The current policies were a disaster, said Flassbeck, head of the globalization and development strategies division at the U.N. Conference on Trade and Development, and a former deputy finance minister in Germany.

“If interests rates everywhere are zero, and if governments stick to the policy of not only keeping fiscal deficits where they are but retrenching, cutting public expenditure, then we will end up in permanent recession,” he said.

“Unemployment depends very much on demand. And if you have no demand then you need government to step in with a huge program for stimulating the economy. This was the U.S. scenario in the past. Now it’s worse because wages are rising less than in the past so you’re going to need a bigger stimulus program.”

The recovery from the financial crisis was not only jobless, which was to be expected, but it was also “wageless,” he said, with Americans, Japanese and Europeans — 70 percent of the world economy — expecting their incomes to stagnate.

In its last report a year ago, UNCTAD said a premature removal of stimulus policies might cause a deflationary spiral with attendant slumps in growth and employment around the world.

“Let’s not fool ourselves. This is a realistic scenario for the whole developed world, if we do not understand the lessons now, and really quickly, because we do not have other instruments any more,” Flassbeck told a news conference to launch this year’s report.

He puts most of the blame on a Herd Mentality. As well as to great a faith in the financial markets, which prove over and over to be unreliable at best.

“What we’ve seen in the past and we never learn is that countries seem to have excessive belief in the financial markets. And we’ve seen time and again that financial markets are not very sound in their judgment,” said Supachai.

“But still people keep thinking that they are doing these austerity measures because they want to please the markets so that the markets give them better ratings, including the rating agencies which do not always produce the best assessment.”

Flassbeck said the herd mentality was evident whenever equity markets and commodity markets all lurch in tandem on the same day, an effect that could not conceivably be caused by real swings in demand. But the world was ignoring it, he said.

“If the G20 negotiations were not confidential I would tell you that it’s ignored even there,” he said.

It’s as though the world leaders are behaving like economic and financial lemmings. All perfectly willing to run off of the the same cliff. And all convinced they are correct in doing so. Just to save a few worthless banks. No surprise though that this too will fall on deaf ears.

And who voted for this debt ?

4:41 pm in Uncategorized by cmaukonen

Well the self same people who are bitching and moaning and groaning about right now, that’s who. From Blomberg.

Yet the speaker, House Majority Leader Eric Cantor, House Budget Chairman Paul Ryan and Senate Minority Leader Mitch McConnell all voted for major drivers of the nation’s debt during the past decade: Wars in Afghanistan and Iraq, the 2001 and 2003 Bush tax cuts and Medicare prescription drug benefits. They also voted for the Troubled Asset Relief Program, or TARP, that rescued financial institutions and the auto industry.

Together, a Bloomberg News analysis shows, these initiatives added $3.4 trillion to the nation’s accumulated debt and to its current annual budget deficit of $1.5 trillion.

As Congress nears votes to raise the $14.3-trillion debt ceiling to avert a default on U.S. obligations when borrowing authority expires on Aug. 2, both parties are attempting to claim a mantle of fiscal responsibility. They both bear some of the blame: Many Democrats contributed to the expenses that are forcing lawmakers to boost the nation’s debt limit, as have Republican leaders at odds over how much borrowing authority to hand President Barack Obama and when.

“There’s plenty of blame to go around,” for the debt, said Robert Bixby, executive director of the Concord Coalition, an Arlington, Virginia-based group that advocates for balanced budgets. “If there had been no Barack Obama, we would still be bumping up against the debt limit.’”

In Washington hypocrisy and two faced lying is the order of the day.   As the Native Americans would say. “White man speak with forked tongue.”

5 Ways People are Coping With The Recession

7:52 pm in Uncategorized by cmaukonen

All though the rich and their republican and president flunkies love the idea of this extended recession depression  generating more galley slaves, that is not entirely how it’s turning out. As Josh Holland point out in this Alternet piece.  Here he list 5 ways people are coping. There are probably more.

1. Waiting to Strike Out on Their own

Living at home longer, with roommates longer. In other words staying right where they are.

2. Doubling Up
According to the San Francisco Chronicle, “Facing layoffs, pay cuts and furloughs, more people have turned to shared housing to help make ends meet.” Reporter Caroline Said found that listings for shares in the Bay Area on Craigslist are up 60 percent in the past 12 months, and agencies that match landlords looking to rent out a room with tenants eager to find affordable digs are overwhelmed.

And moving back in with parents or with relatives or roommate again.  To keep the cost of housing down.

3. Moonlighting
This week, McClatchy reported that with wages stagnant, more Americans are taking a second job to make ends meet.

With wages stagnant and even falling, doing what ever is necessary.

4. Running Up the Credit Cards
“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”

So even though most people are paying down their debt, a lot still have to use their CCs to pay for the necessities. I have a friend who is working on paying off as much debt as he can now and he has a good job as does his wife.

5. DIY
While people are running up credit cards to pay for the basic necessities, they’re also discovering they can do a lot of things for themselves they once paid others to do. The Washington Post reported that the Great Recession has “helped set off a change in behavior so pronounced marketers and businesses have coined a name for it. They call it ‘insourcing’: doing yourself what you once gladly paid others to do.”

We are not talking This Old House or Hometime  here. We are talking good old fashion Do It Yourself. From vegetable gardens to painting the house to repairing the car to sewing. And I can see a time when Kits will become popular again.  I am a single Boomer who has just retired and have done a lot of my own DIY for a long time. Mostly in electronics and radio. I enjoy doing it. I am also in the process of moving up north and hoping to get into the community gardening that is going on up there. So naturally I do not see this  as a bad thing. I was having a conversation the other day with a fellow boomer and we were talking about how when we were growing up in the 1950s and 1960s that this was common and natural. People did a lot more of their of stuff and not because they necessarily had to.  And saving was the order of the day.  You kept your car and maintained it and did not get a new one unless continued maintenance was to high. Extended families were also more common as well. I would say about a third of the people I knew came that or a similar situation.

I did a blog piece a number of years ago where I suggested that one of the outcomes of this down turn would be a change in behaviors that might last a while. Especially if the down turn continues for a prolonged period.  With luck this may happen.  A young Vietnamese who had trained in a Buddhist monastery told me once: “The more you have, the more you become slave.”  Sounds good to me.

 

How did the deficit get this big ?

2:57 pm in Uncategorized by cmaukonen

Here is a graphic from the NY Times that show us.

Bush and the republicans are responsible for $5 Trillion of the deficit. That’s 4 times more than Obama and the Democrats.
Now why the hell is this not being shoved up the republican’s noses 24/7 until they scream with agony ???

Who Holds Most of America’s Debt ? Hint…it ain’t China.

5:04 pm in Uncategorized by cmaukonen

Turns our we do. We – that is to say us here in America – hold most of the debt. From Information Clearing House.

Our friends at Business Insider know this, and put those two principles to work today in this excellent and highly informative little slideshow, made even more timely by the ongoing talks in Washington, D.C. aimed at staving off a U.S. debt default.

Here’s the big idea:

Many people — politicians and pundits alike — prattle on that China and, to a lesser extent Japan, own most of America’s $14.3 trillion in government debt.

But there’s one little problem with that conventional wisdom: it’s just not true. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it’s really Americans who hold most of America’s debt.

Here’s a quick and fascinating breakdown by total amount held and percentage of total U.S. debt, according to Business Insider:

  • Hong Kong: $121.9 billion (0.9 percent)
  • Caribbean banking centers: $148.3 (1 percent)
  • Taiwan: $153.4 billion (1.1 percent)
  • Brazil: $211.4 billion (1.5 percent)
  • Oil exporting countries: $229.8 billion (1.6 percent)
  • Mutual funds: $300.5 billion (2 percent)
  • Commercial banks: $301.8 billion (2.1 percent)
  • State, local and federal retirement funds: $320.9 billion (2.2 percent)
  • Money market mutual funds: $337.7 billion (2.4 percent)
  • United Kingdom: $346.5 billion (2.4 percent)
  • Private pension funds: $504.7 billion (3.5 percent)
  • State and local governments: $506.1 billion (3.5 percent)
  • Japan: $912.4 billion (6.4 percent)
  • U.S. households: $959.4 billion (6.6 percent)
  • China: $1.16 trillion (8 percent)
  • The U.S. Treasury: $1.63 trillion (11.3 percent)
  • Social Security trust fund: $2.67 trillion (19 percent)

So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.

So if we default, we default on our selves. Oh and here is a little slide show too.

What Is Money ?

6:57 am in Uncategorized by cmaukonen

Tally Sticks
Tally Sticks

I came across this paper by A. Mitchell Innes that was written in 1917 on Warren Mosler’s web site. It is a rather lengthy explanation of what money really is. That money per se’ is not the coinage or paper we pass around but rather a system of credits and debts representing goods and services given and owed. And that it predates coinage by thousands of years.  He begins by stating the old economic meme that people initially used barter and then precious metal coins.

The fundamental theories on which the modern science of political economy is based are these:

That under primitive conditions men lived and live by barter;

That as life becomes more complex barter no longer suffices as a method of exchanging commodities, and by common consent one particular commodity is fixed on which is generally acceptable and which therefore, everyone will take in exchange for the things he produces or the services he renders and which each in turn can equally pass on to others in exchange for whatever he may want;

That this commodity thus becomes a “medium of exchange and measure of value.”

That a sale is the exchange of a commodity for this intermediate commodity which is called “money;”

That many different commodities have at various times and places served as this medium of exchange—cattle, iron, salt, shells, dried cod, tobacco, sugar, nails, etc.;

That gradually the metals, gold, silver, copper, and more especially the first two, came to be regarded as being by their inherent qualities more suitable for this purpose than any other commodities and these metals early became by common consent the only medium of exchange;

That a certain fixed weight of one of these metals of a known fineness became a standard of value, and to guarantee this weight and quality it became incumbent on governments to issue pieces of metal stamped with their peculiar sign, the forging of which was punishable with severe penalties;

That Emperors, Kings, Princes and their advisers, vied with each other in the middle ages in swindling the people by debasing their coins, so that those who thought that they were obtaining a certain weight of gold or silver for their produce were, in reality, getting less, and that this situation produced serious evils among which were a depreciation of the value of money and a consequent rise of prices in proportion as the coinage became more and more debased in quality or light in weight;

That to economize the use of the metals and to prevent their constant transport a machinery called “credit” has grown up in modern days, by means of which, instead of handing over a certain weight of metal at each transaction, a promise to do so is given, which under favorable circumstances has the same value as the metal itself. Credit is called a substitute for gold.

So universal is the belief in these theories among economists that they have grown to be considered almost as axiom which hardly require proof, and nothing is more noticeable in economic works than the scant historical evidence on which they rest, and the absence of critical examination of their worth.

And then  goes on to give – in quite a bit of detail – historical proof that this in deed is not the case. That in the very earliest time a system of credit/debt was used and that coinage followed.

The earliest known coins of the western world are those of ancient Greece, the oldest of which, belonging to the settlements on the coast of Asia Minor, date from the sixth or seventh centuries B. C. Some are of gold, some of silver, others are of bronze, while the oldest of all are of an alloy of the gold and silver, known as electrum. So numerous are the variations in size and weight of these coins that hardly any two are alike, and none bear any indication of value. Many learned writers, Barclay Head, Lenormant, Vazquez Queipo, Babelon, have essayed to classify these c6ins so as to discover the standard of value of the different Greek States; but the system adopted by each is different; the weights given by them are merely the mean weight calculated from a number of coins, the weights of which more or less approximate to that mean; and there are many coins which cannot be made to fit into any of the systems, while the weights of the supposed fractional coins do not correspond to those of the units in the system to which they are held to belong.
…………snip……….

We are here fortunately on solid historical ground. From the earliest days of which we have historical records, we are in the presence of a law of debt, and when we shall find, as we surely shall, records of ages still earlier than that of the great king Hamurabi, who compiled his code of the laws of Babylonia 2000 years B. C., we shall, I doubt not, still find traces of the same law. The sanctity of an obligation is, indeed, the foundation of all societies not only in all times, but at all stages of civilization; and the idea that to those whom, we are accustomed to call savages, credit is unknown and only barter is used, is without foundation. From the merchant of China to the Redskin of America; from the Arab of the desert to the Hottentot of South Africa or the Maori of New Zealand, debts and credits are equally familiar to all, and the breaking of the pledged word, or the refusal to carry put an obligation is held equally disgraceful.

It is here necessary to explain the primitive and the only true commercial or economic meaning of the word “credit.” It is simply the correlative of debt. What A owes to B is A’s debt to B and B’s credit on A. A is B’s debtor and B is A’s creditor. The words “credit” and “debt” express a legal relationship between two parties, and they express the same legal relationship seen from two opposite sides. A will speak of this relationship as a debt, while B will speak of it as a credit. As I shall have frequent occasion to use these two words, it is necessary that the reader should familiarize himself with this conception which, though simple enough to the banker or financial expert, is apt to be confusing to the ordinary reader, owing to the many derivative meanings which are with the word “credit.” Whether, therefore, in the following pages, the word credit or debt is used, the thing spoken of is precisely the same in both cases, the one or the other word being used according as the situation is being looked at from the point of view of the creditor or of the debtor.

The paper also shows how coinage was actually used as a menthod to tax the populace by the Kings and Aristocracy by manipulating their value.

From the time of Hugues Capet down to that of Louis XIV (1638) almost the entire coinage was of base metal containing for the most part less than one-half of silver, and for at least two centuries previous to the accession of Saint Louis) in A. D. 1226, there was probably not a coin of good silver in the whole kingdom.

We now come to the most characteristic feature of the finance or feudal France and the one which has apparently given rise to the unfounded accusations of historians regarding the debasement of the coinage. The coins were not marked with a face value, and were known by various names, such as Gros Toumois, Blanc A. la Couronne, Petit Parisis, etc. They were issued at arbitrary values, and when the king was in want of money, he “mua sa monnaie,” as the phrase was, that is to say, he decreed a reduction of the nominal value of the coins. This was a perfectly well recognized method of taxation acquiesced in by the people, who only complained when the process was repeated too often, just as they complained of any other system of taxation which the king abused. How this system of taxation worked will be explained later on. The important thing to bear in mind for the present is the fact—abundantly proved by modern researches—that the alterations in the value of the coins did not affect prices.

That the use of currency was primarily to benefit the Kings and Rulers and that the populace really did not have any need of coinage or currency. All they needed was to keep track of the debts and credits which people had  been doing for thousands of years.

I am not going to go into the whole paper here as it is quite long and pretty detailed. But even in the early 20th century it was known that the primary purpose of coinage and currency was to the benefit of the government and not the people as a whole.  That currency (or gold or silver) has no intrinsic value itself but only as a matter of settling debts. Neither is useful for anything else. And these days it is computerized, networked financial transactions – almost an anachronism.   That most everyday transactions are simply acquiring credits accounted for in a bank or satisfying a debt the same way.  As is explained in Mosler’s book, “Seven Deadly Frauds of Economic Policy“. Both very good reads.