Thursday, May 1, 2014

God, Gold, and Fairy Tales

I would prefer to talk with God, the words crackling out of the burning bush, rather than store a tennis court-sized cube of gold in my back yard.  So, A conversation with God or all the Gold in the World?  What would YOU rather have?  Let's just think about how many people would really like to talk to God and how many would rather have all the gold in the world.  I say 50-50 but everyone's a lawyer now so we must frame the question carefully. Many Christians already claim to speak with God so presumably they would take the gold.  Atheists might insist on a real conversation, like Abraham or Moses had, or they would take the gold too.  I would be afraid the conversation could turn banal (due to my own stupidity) and I might regret not taking the money.  So do you think people are desperately spiritual and  90% would talk with God or are there more cynics out there, God? meh--Show me the money.  Do you think most would rather have the cash?  I propose this question speculatively since the answer would be illustrative.
     Is gold money or is it just a pretty hunk of metal?  Gold WAS money but most people have been talked out of considering it so.  Today gold (or silver) could be money but money is what most people will take in payment for something else they want.  Anything can be a unit of account (there is a presumptive wheat price for television sets) but the key is medium of exchange and store of value.  But today you cannot use gold at the store so it is NOT a good medium of exchange.  Paper money is shriveling fast and so is a poor store of value.  Gold might be better because of its scarcity BUT it first has to be certified as a medium of exchange.  If trading it is not allowed, then its natural value has been modified by state action.  If government says, "Use dollars" or I'll put you in prison like Bernard von NotHaus, then most are going to be compliant.  What if we insisted that taxes be paid in government money but otherwise freedom was the watchword--there would be an exchange rate between gold and other currencies.  Is that what we have today?   Can't you take dollars and buy all the gold you want?  I believe the answer is yes.  So is the current exchange rate between gold and dollars accurate? Or is it manipulated to make dollars look better than gold?  Gold is a commodity that gains and loses value with respect to dollars and is taxed on that change. We pay capital gains like on anything else if it goes up.  We are legally obligated to value everything in relationship to dollars, so changes in the value of the dollars themselves is merely a 'cost' to using it. It loses some value every year.  Each of us has a different dollar "decay rate" and I calculated mine at 9.5%.  The CPI or the GDP deflator are government statistics that show a smaller dollar loss but they may be biased.  Their average may not be your average.  Calculate your own.  I did the following:  I took a one year old Costco receipt with 25 items I buy periodically and found the new prices.  No prices had fallen, a case of Yuengling beer was still exactly the same, $18.97 and everything else was more.  9.5% on average more.  In July I get my Blue Cross/Blue Shield premium increase notice for my family policy.  Last year it was up 10%.  I received my daughter's college tuition bill in August--increase 8.4%.  State Farm wants 7% more for its premiums. In October the Utility Company went up by 6%.  I have a fixed mortgage and didn't buy a car so depending on how I weight my expenses, that will determine my personal inflation (or dollar decay) rate.
       Since gold is NOT MONEY it can be regulated.  A law can be passed that you cannot own it, buy it or sell it and so its moneyness may be adversely affected.  Gold today is an uncomfortable reminder of what money used to be. It is currently a money only for precious metal wingnuts.
    What is cash?  When financial advisors say to "hold cash" I mentally picture placing suitcases of small bills in the back of my closet or stuffing banknotes in the mattress.   I do not envision digits in a bank account.  A bank account is a loan to the bank.  Bankers dress up a big vault with a brick veneer building and open the vault so you can see how thick the door is and they put a lot of people with suits scattered around in cubicles but your money is not there.  It has been loaned to someone and you can have  some of your money now and the rest of your money next Wednesday if no one else is asking.  If it is in a Cash Account at some brokerage(Schwab or e-trade) they have swept it into some vehicle they can loan on and they could tell you to get lost, find a lawyer, we have other uses for your money.  John Corzine anyone?  So cash to me is a little nebulous.
Personally I love fairly tales.  They say it all about money.  Consider the story of the goose that laid the golden egg.  Richly human.  A sure thing if there ever was one and the dude kills the goose to get all the eggs--right now!  Could he do math?  Was he a Piaget simpleton--like not even 5 years old?  Couldn't he see that AT THE MOST there were six or seven eggs in there and the damn goose could live 5 more years!  No I guess he couldn't do any volumetric analysis or simple math and so he cuts the duck open.  I think that is exactly what we have done to the environment--I am not going to get into global warming, pollution, peak everything, and other environmental disasters but I would like to point out that there are approximately 2,000 wild bengal tigers and 7 billion people in the world now.  I am worried about us becoming more numerous that honeybees. ( I don't think we will ever catch ants.)
Take Rumpletiltskin. Perhaps a handbook for women or maybe just a reflection on money.  Be very careful of ALL the men in your life--they may be stupid or exploitative.  Who wouldn't have sympathy for the miller's daughter?  Big blowhard dad goes bragging about what a swell daughter he has and ends up almost getting her killed pushing her on a savvy prince.  The prince doesn't care about HER but about her TALENTS and so she has to put out to be queen.  (Where have we heard this story?)   The prince is a complete jerk--requires the girl to prove her competence 3 times. And then she's GLAD to marry him!  Guys--always looking for the sure thing. And then there's the troll.  The little man knows he's a troll and could never find a wife BUT what about a kid?  So he deals for the child.  Women plays him as well as could be expected and then ends up having to pull out all the stops to retain the child she should never have promised but had to or she would have been strung up or back in Palookaville baking bread at 3:00AM with a brood of hateful children. The little man has a kind and gentle streak and a hateful streak but is amazingly stupid living in a hut in the forest when he could spin straw into gold.  In fairy tales everybody's an alchemist--think nothing of producing all the gold they need, like rubbing Aladdin's lamp, and getting a camel train of jewels as big as oranges. What did they think was going to happen to the scarcity value of their talent?  They think themselves  blessed by the gods and end up living happily ever after.  Happily ever after is where the stories should start.
        But I like the Midas story too.  What did King Midas think would happen to the value of gold if he could create it by just touching something?   Did he consider that to make the most valuable things-common-might reduce its value?  Does Ben Bernanke worry about these things?  Is money good because it is all around, like air, making people do valuable things like work?  Can you make too much of it and people suddenly realize there is no point in working?  I think the answer is yes.  Lets agree we CAN have too little of it.  So in a depression no one has any money but is it not true that there is a lot that needs doing?  How do you get people busy at what needs doing?  Pharoah I suppose said, "hey, you, tote this stone to the top of the pyramid."  but our handlers are more subtle-do whatever you like and send me half.  That would be fine EXCEPT they have so many big important projects being elites they have gotten to where they need more than half.  They need it all.  So the top 1% have almost half the money and the bottom 50% have only 1% of the money.  Whoops...
     Karl Marx has been out of favor so long it is hard to remember what he wrote but I think the big principles were something like the rising accumulation of capital in the hands of the owners and the gradual impoverishment of the Industrial Reserve Army (called workers).  Something like we have now.  If we get a dictatorship of the proletariat out of obese SSI recipients I would be flabbergasted.  So who will inherit the earth?  Those with money or those that can do without it?

No comments:

Post a Comment