“Democracy is two wolves and a lamb voting on what to have for dinner. Liberty is a well-armed lamb contesting the vote.”
Benjamin Franklin
My revisionist version of this Benjamin Franklin quote:
"Socialism is two wolves and a lamb voting on what to have for dinner. Unfortunately the lamb can no longer contest the vote because wolves in lambs clothing went out and organized the lamb community to believe that they were the victims of a society run by rich, whiter, capitalist lambs who've been keeping them down. The wolves in lambs clothing told them they too could not only vote on what to have for dinner, but could also have the dinner of their fellow rich, whiter, capitalist lamb neighbors if they vote for the "Lambs that look like a wolf, smell like a wolf, but are really Lambs, party." These wolves in lambs clothing also convinced the lambs that guns were responsible for all the crime in the lamb communities. The lambs enthusiastically supported all the gun control laws and eventually a ban on gun ownership despite the skyrocketing crime. They believed the deception that the reason the crime increased was because they didn't have enough gun control. Eventually the wolves stopped dressing like lambs because the wolves had nothing to fear of the lambs because the lambs were unarmed. Most of the lambs were willfully ignorant of matters of politics and government and still didn't realize that they were voting for the wolves all along, and continued to vote "Lambs that look like a wolf, smell like a wolf, but are really Lambs, party...for Change". Hence now when it comes time to vote on what to have for dinner, two wolves proudly show up licking their chops, but only one lamb shows up who was elected based on their ability to "cross the aisle" in bipartisanship. Little did the moderate lamb know, lamb chops with mutton was on the menu, and the wolves now had the majority vote." - Benjamin
Lamb anyone?
Tuesday, April 14, 2009
Tuesday, April 7, 2009
Communities Printing Local currencies
http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm
Something just doesn't feel right about this printing of "scrips" for use in local businesses. Your still printing so called "money" out of thin air and exchanging an un-backed US dollar for another un-backed local "dollar" and buying something of value. Seems unsustainable.
It seems like they are compounding the problem we already have of inflation buy creating more "money" out of thin air and then convincing people to buy $100 local "dollars" with $95 US
dollars.
Let's think this out. This could get complicated so if your a lightweight you may want to bail now.
If you buy $100 local dollars with $95 US dollars from a local bank, and a business prices their goods at the same dollar value, it's the same as the business having a 5% discount for the buyer. If the business has to then exchange the $100 local dollars for $95 US dollars, they see a 5% loss in this exchange. The business could make out ok if this scheme creates enough volume and the businesses have enough profit margin. If the exchange rate is too good, it would create demand for local dollars inflating the local currency, and causing shortages of goods. Businesses would have to raise their prices but to no avail so long as the exchange rate is too good to resist and goods have the same dollar value for both currencies. This will result in business not wanting to accept the local dollars rendering them worthless. Seems simpler for businesses just to discount their goods which would attract buyers local or not.
If the business have two different prices for the two different currencies they could have a lower local dollar price (additional discount for the buyer on top of the 5% discount from exchanging currencies) to encourage local shoppers to buy. But the business' expenses are still in US dollars so they could only discount so much and still make their minimum profit margins after exchanging back to US dollars. If enough businesses did this, it would cause a rush of people to exchange $95 US dollars for $100 local dollars inflating the local currency and cause shortages of goods. Businesses would have to compensate for this by raising the local dollar price of their goods. Depending on how bad the currency inflated from the demand to exchange US dollars for it, the local dollar price may have to go more than 5% above the US dollar price for the businesses to cover their costs, thereby negating the advantage of using local dollars for the buyer. If the business would then have to exchange those local dollars back, $100 local dollars for $95 US dollars, this would work against them by costing them an additional 5%. This would render the local dollars worthless because the US dollar would end up stronger.
Both scenarios result in worthless local paper dollars. The buyers wouldn't want the local dollars and businesses would not want to accept them. The compassionate liberal would say, "It's not fair that all these poor people are stuck with these local dollars", and then pass a law mandating that businesses must accept these dollars and establish local dollar price caps. This would cause the businesses to incur heavy losses and go bankrupt. This is a perfect example of our government "fixing" the wrongs and evils of the free markets and capitalism. And when things go to hell, they blame the free markets and capitalism , run by greedy rich people, for oppressing the middle class and the poor. Government causes the problems and creates the crisis that they claim only they can fix.
This is also the fate of all paper currencies, history has proved this time and again. This shows why paper currency must be backed by something of intrinsic value, say Gold and Silver, like our dollars used to be. Even better, we should have heeded our founders advice against paper currency and a Federal Reserve.
You cannot have real wealth without production of valuable goods that people purchased with real money of intrinsic value that people have saved for by earning real money buy producing something of value. It's a simple circle and I didn't have to be Timothy Geithner to figure that one out.
Lending money in our fractional reserve system creates money out of thin air and gives people a pseudo sense of feeling wealthy. People are not really wealthy because they drive an Escalade and live in a McMansion that they don't own and is payed for by creating electronic dollars. It's a Ponzi scheme that will fail.
Getting back to the original topic, it just makes more sense to me for businesses to have sales, and issue coupons etc. and attract both local and non-local buyers. That's my quick analysis.
Am I wrong? What do you think?
Something just doesn't feel right about this printing of "scrips" for use in local businesses. Your still printing so called "money" out of thin air and exchanging an un-backed US dollar for another un-backed local "dollar" and buying something of value. Seems unsustainable.
It seems like they are compounding the problem we already have of inflation buy creating more "money" out of thin air and then convincing people to buy $100 local "dollars" with $95 US
dollars.
Let's think this out. This could get complicated so if your a lightweight you may want to bail now.
If you buy $100 local dollars with $95 US dollars from a local bank, and a business prices their goods at the same dollar value, it's the same as the business having a 5% discount for the buyer. If the business has to then exchange the $100 local dollars for $95 US dollars, they see a 5% loss in this exchange. The business could make out ok if this scheme creates enough volume and the businesses have enough profit margin. If the exchange rate is too good, it would create demand for local dollars inflating the local currency, and causing shortages of goods. Businesses would have to raise their prices but to no avail so long as the exchange rate is too good to resist and goods have the same dollar value for both currencies. This will result in business not wanting to accept the local dollars rendering them worthless. Seems simpler for businesses just to discount their goods which would attract buyers local or not.
If the business have two different prices for the two different currencies they could have a lower local dollar price (additional discount for the buyer on top of the 5% discount from exchanging currencies) to encourage local shoppers to buy. But the business' expenses are still in US dollars so they could only discount so much and still make their minimum profit margins after exchanging back to US dollars. If enough businesses did this, it would cause a rush of people to exchange $95 US dollars for $100 local dollars inflating the local currency and cause shortages of goods. Businesses would have to compensate for this by raising the local dollar price of their goods. Depending on how bad the currency inflated from the demand to exchange US dollars for it, the local dollar price may have to go more than 5% above the US dollar price for the businesses to cover their costs, thereby negating the advantage of using local dollars for the buyer. If the business would then have to exchange those local dollars back, $100 local dollars for $95 US dollars, this would work against them by costing them an additional 5%. This would render the local dollars worthless because the US dollar would end up stronger.
Both scenarios result in worthless local paper dollars. The buyers wouldn't want the local dollars and businesses would not want to accept them. The compassionate liberal would say, "It's not fair that all these poor people are stuck with these local dollars", and then pass a law mandating that businesses must accept these dollars and establish local dollar price caps. This would cause the businesses to incur heavy losses and go bankrupt. This is a perfect example of our government "fixing" the wrongs and evils of the free markets and capitalism. And when things go to hell, they blame the free markets and capitalism , run by greedy rich people, for oppressing the middle class and the poor. Government causes the problems and creates the crisis that they claim only they can fix.
This is also the fate of all paper currencies, history has proved this time and again. This shows why paper currency must be backed by something of intrinsic value, say Gold and Silver, like our dollars used to be. Even better, we should have heeded our founders advice against paper currency and a Federal Reserve.
You cannot have real wealth without production of valuable goods that people purchased with real money of intrinsic value that people have saved for by earning real money buy producing something of value. It's a simple circle and I didn't have to be Timothy Geithner to figure that one out.
Lending money in our fractional reserve system creates money out of thin air and gives people a pseudo sense of feeling wealthy. People are not really wealthy because they drive an Escalade and live in a McMansion that they don't own and is payed for by creating electronic dollars. It's a Ponzi scheme that will fail.
Getting back to the original topic, it just makes more sense to me for businesses to have sales, and issue coupons etc. and attract both local and non-local buyers. That's my quick analysis.
Am I wrong? What do you think?
Subscribe to:
Posts (Atom)