Posts Tagged ‘Contradictions’

This Could Be Us

At what point, or what is it going to take to get the uninformed (cons, libs, reps, dems, et al.) to see the gravity of our current trajectory as a nation. Our spending exceeds our revenue, which means we currently barrow money to function. It is difficult to visualize the amount of all three (our nation’s revenue, spending, and borrowing) without a visual aide.

The total debt our borrowing creates is so high that it’s difficult to visualize without the visual aide of skyscrapers.

The law of non-contradictions dictates that we cannot have our cake and eat it too. That means we cannot borrow money to spend it, and also have that money to pay back the debt. This also means there is a limit to how much our government can take from the economy (in the form of taxes) to optimize revenue and any more beyond that point reduces the revenue — we are likely beyond that point. People are hoping we haven’t reached that point and an increase in revenue — by 100% if we want to break even — will solve the issue. There are other options available beside everyone paying double in taxes across the board in return for nothing.

Assuming we want to pay down the debt, the options are as follows: spend less, print money, some combination of the first two which I will not discuss for brevity sake, or continue to do nothing.

If we go with option one, at some point our borrowing must stop and we must pay back our debt. That means our government will need to spend nearly half — if not more– of what it currently spends just to slowly (centuriesish) pay off the debt.

The alternative is to destroy our currency by printing money to pay off the debt. That means money would be worth practically zero, which will make everyone who doesn’t own objectively valued items (like a car, or gold, or a house, etc.) penniless, while the prices for services go through the roof. I’m talking people can’t even guarantee when their going to get their next meal. Any cash left in your hands would have more value as toilet paper or scrap metal than it would as currency — that’s why our government stopped minting silver dimes and quarters in 1974.  Who knows what would happen to our government, but the last time this type of inflation occurred in Germany, they found themselves ruled by the Nazi.  Who could blame them for wanting order from the mass chaos that ensued from a debauched currency?

The alternative to either of the first two choices, which are at least attempts to solve the problem, is to CONTINUE to do nothing. We will reach a point where we cannot physically meet all of the payments on our debt. When that happens our credit plummets like any other person who fails to make payment. That means the chances of someone lending us money at current interest rates drops to zero, if we can find a lender willing to lend us money at all. If we can’t barrow money, forget about it. We will be forced to cut our spending or print money (the first two options). If we continue to borrow at higher rates, this only delays the next time we fail to make payment… again. So if we haven’t lost the option to borrow before now, then the chances just went up — forcing us to options one or two. This process of borrowing and defaulting repeats until we proceed with options one or two or we have no more lenders left to borrow from and we are forced to options one or two.

Now if we have no intention to pay off the debt, we will still need to spend less since it’s safe to say no one will lend us money, or we need to print more money to keep up with spending. The first option will result in a similar outcome as option one above.  The second option will result in a similar outcome as option two above.  The only difference is that certain countries we owe money to may be required to go to war with us due to the impossible situation our permanent default puts them in (survival-wise). It won’t be too difficult to demonize us so that their populous wants our heads on a platter — their government will be all too happy to direct the angry attention of their masses away from themselves and use us as a scapegoat. I cannot guarantee we make it out of such a war since our permanent default will likely cripple both of our economies, and shear masses will mean everything in such a war.

So there you have it.  Without the ability of raising revenue, our choices ultimately are: we pay off the debt by spending less or printing money, or we permanently default and still spend less or print money. Out of the four, three will likely produce an outcome that will lead to our demise, which leaves us with one option that gives us a chance for a future — spending less money in order to pay down the debt.

I’ve suggested as convincingly as I can, for a couple of years now, that we need to limit government to its proper role of securing rights — and that’s it! This limitation is cheap and affordable. If we stayed at that limitation since 1776, the chances of such a state as we currently find ourselves in reduces to near zero — securing rights just ain’t that expensive. This limitation also gives us a decent out of our current situation — it allows us to pay down the debt by spending less money.

If not limiting government to an affordable size, then what is it that you would suggest? And remember, you cannot have your cake and eat it too.

Before you respond I have something I want some of you to consider. If you’re set on raising revenue, what if raising revenue isn’t possible over the long-run? Wouldn’t you want to know that bit of information? If you are wrong, and revenue cannot be raised to sufficient levels for the reason I stated, then you are essentially choosing the do nothing option, which will eventually force your hand anyway.

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In response to The above video advocating consumerism, specifically as it applies to job creation:

I will begin by saying that propagating false principles and ideas that cater to the fashions of the time is easy in that it can be brief; it takes length to root out the error(s) by catering to people’s reason.  The initial advantage goes to the fashionable, but in the end reason is what “sticks” if people are willing to make the effort to discover what is true and why.

Life is a process of self-generating and self-sustaining actions — look at anything that is alive today and you will see this to be a true principle.  This action translates into human action as production — the self-generated action of man to the production of goods that he requires for sustaining his life.  It is self-sustaining if he produces more than what it costs to produce — i.e., his actions are profitable.

If left alone, man must produce for himself, but once he has a neighbor there can be a division of labor and trade — there “CAN be”, meaning it’s an option.  Both traders can now neglect a certain action that they will trade for; they can now focus on producing more of what they will use to exchange for what the other will make.  This is the formation of the most basic job — of neglecting one thing and creating more of another, in order to exchange at a net gain (or profit) than otherwise would be possible.  Both traders increase their activities in one area — creating the option of a certain action in exchange for wages.  This principle applies throughout a free economy: division of labor and production reorganizes as a trade to the profit of all.

It is true that demand creates an incentive for production, and demand creates an incentive for creating jobs to support production, but without rich entrepreneurs and the super rich, most of those demands would go unfulfilled.  Neither a sea of tears nor an army of guns will create any value that is demanded.

When the rich are starting a business, he creates the option of work that wouldn’t otherwise exist in exchange for wages; and he creates an option to buy a product that wouldn’t otherwise exist in exchange for payment.  It is also true that without others to make use those options, then those options would go unfilled or unbought.  It is safely assumed that people choose, to the best of their ability, the best options for themselves; and if they take a job or buy a product, then it is the best option for them according to them.

If entrepreneurs lack the capital to start a company, they CAN look to others who have capital (the super rich) and create an exchange to the profit of both.  The super rich lending their money is providing a service.  They worked or their relative worked and saved — i.e., withheld their consumption — to acquire that capital.  They earned it, and that is their property by right.

Where entrepreneurs and the super rich get the credit for creation is creating the production and job opportunities that would otherwise not exist, and on top of that they do it in a fashion that is consistent with life — in a self-generating and self-sustaining fashion — i.e., at a profit.  Consumers filling the created job opportunity or consuming the resulting production is not and can never be a function of creation; it can only be the consumption of something that has been created.

It is also said that people create the value that is demanded by demanding that value — demand creates value.  True, things are of value because of demand; however, assuming that individuals want to live, then there will always be demand and a need to produce — the nature of reality and life requires this.

To give credit to people for creating demand where the nature of reality and life is responsible is worse than a contradiction; it’s an evasion of reality.  It amounts to saying that consumers created demand where it would otherwise not exist, and they alone hold power over demand and can turn their demand on or off, instead of realizing that the nature of reality and life is the true source of demand.  The former leads to the fallacy of consumerism and the primacy of consumers, and the later leads to a correct framework for analyzing economics and the primacy of reality.  

Prove me wrong consumers by stop demanding, and with your ceasing of demand goes your ceasing of consumption — do it, stop consuming if you can!  Alas!  A false principle never fails to betray itself.

With a false principle, sprouts false and destructive ideas — like the video suggests.  If consumerism is assumed to be a correct framework, then I agree with the video that it logically leads to taxing the rich and giving it to the middle class and those who consume.  They would be the true source of the value given to production after all.

What would taking from the rich and “investing” in consumers do (analyzing it through a correct framework)?  It violates our first principle that life is a process self-generating and self-sustaining action.  Taxing the rich is a forced acquiring of their profit (remember that profit is the result of their self-generating and self-sustaining action), and giving it to consumers will simply allow consumers to consume in exchange for that money.  The result is the feeding off of self-sustaining and self-generating action to support a “sink hole.”  The ratio/percentage of this siphoning has it’s limit before the entire system cannot be self-sustaining!  Why, in the name of life, would we ever want to move in that direction!

The last objection I have of consumerism is the argument that the rich getting richer will result in a lack of consumers because people will have less money to buy things.  What a tragedy that existence has in store for man when he harms himself buy producing and selling more of what other people want!  We are doomed!  We are doomed to do little for our fellow man or to harm them, and we are doomed to harm ourselves in both cases!

Fortunately existence doesn’t have it out for man and has provided a mechanism to avoid destruction.  The solution is simple — the price mechanism.  The nature of pricing dictates that if the production of goods are up and the amount of money in circulation is down, then the prices of products will necessarily drop provided that trade is left alone by the government or those who would like to initiate the use of force.

Do not get fixated on money — it is deceitful when analyzing economics because it is easy to confuse money for wealth.  Money is a medium of exchange only.  An exchange involving trading a product/service for money is incomplete until that money is in turn exchanged for a product/service.  It is products and services that are the ends and it is production and money that is the means to self-generating and self-sustaining processes — i.e., to life.