Chris Martenson's Crash Course and Collapse Theory Generally

Fun with supply and demand.
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Vanityfox451
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Vanityfox451 » Thu Sep 30, 2010 1:10 pm

Martin,

For some ungodly reason, over the past 5,000 years, man has coveted gold. The idea that humanity would spend its time digging it up out of the ground, only to put it back into the ground in vaults and call it a value of wealth is totally beyond me too.

Money, however, is shrinking in its value, as can be understood from my previous post. Not one single currency in the last 500 years has managed to survive longer than about 75 years. The US dollar was recreated in 1971 when President Nixon closed the gold window to France. In conclusion then, the present incarnation of the US dollar is only 39 years old, and the ponzi scheme that is this incarnation is already faltering as the globes pegged currency.

The idea that we can consider the American dollar as a haven to our individual lifetime's worth of amassing a value from our labour to it is close to becoming valueless in the long term. Gold, however, is still recognised as a value, while what appears to have happened over this last two years is that the American Dollar has been devalued against it by some 50%, and so, the inflation in the price of gold is double what it should be via depreciation against it.

Therefore, by turning your American Dollar (Euro, NZ$, Yuan etc) into gold, it will preserve your wealth whilst currencies around the globe begin to crash and de-value.

Complex society will again grow out of the ashes of this present collision course with the exponential function. When eventually a replacement pegged global or local currency is again created, your wealth can be carried into that replacement currency, with your value set in the gold you bought, and so preserving your wealth.

With the economic contraction in Portugal, Ireland, Spain and Greece (commonly called PIGS), there has been a massive drive by individual's in those countries in disconnecting themselves from the devaluation in their local Euro by purchasing a higher and higher price in gold in protecting their future asset.

Martin, as a footnote and [edit] to this post, I want you to appreciate that Chris hasn't solely amassed his wealth from the Crash Course series alone, but was already considerably wealthy as a neurotoxicologist and a holder of a doctorate PHD before he took to creating this tool for teaching. He has a wife and three children, and could have continued living comfortably well off, but chose to leave his career, re-educate himself over a ten year period, and use up all of his accrued previous wealth in giving away a teaching system for free. I'll leave you with his own words : -

Chris Martenson wrote:Executive summary: Father of three young children; author; obsessive financial observer; trained as a scientist; experienced in business; has made profound changes in his lifestyle because of what he sees coming.

I think it’s important that you understand who I am, how I have arrived at my conclusions and opinions, and why I’ve dedicated my life to communicating them to you.

First of all, I am not an economist. I am trained as a scientist, having completed both a PhD and a post-doctoral program at Duke University, where I specialized in neurotoxicology. I tell you this because my extensive training as a scientist informs and guides how I think. I gather data, I develop hypotheses, and I continually seek to accept or reject my hypotheses based on the evidence at hand. I let the data tell me the story.

It is also important for you to know that I entered the profession of science with the intention of teaching at the college level. I love teaching, and I especially enjoy the challenge of explaining difficult or complicated subjects to people with limited or no background in those subjects. Over the years I’ve gotten pretty good at it.

Once I figured out that most of the (so-called) better colleges place "effective teacher" pretty much near the bottom of their list of characteristics that factor into tenure review, I switched gears, obtained an MBA from Cornell (in Finance), and spent the next ten years working my way through positions in both corporate finance and strategic consulting. From these experiences I gather my comfort with numbers and finance.

So much for the credentials.

The most important thing for you to know is the impact that the information that I’ve now placed on this site had on me. Let’s do this as a Before and After.

Before: I am a 40-year-old professional who has worked his way up to Vice President of a large, international Fortune 300 company and is living in a waterfront, 5 bathroom house in Mystic, CT, which is mostly paid off. My three young children are either in or about to enter public school, and my portfolio of investments is being managed by a broker at a large institution. I do not really know any of my neighbors, and many of my local connections are superficial at best.

After: I am a 45-year-old who has willingly terminated his former high-paying, high-status position because it seemed like an unnecessary diversion from the real tasks at hand. My children are now homeschooled, and the big house in Mystic was sold in July of 2003 in preference for a 1.5 bathroom rental in rural western Massachusetts. In 2002, I discovered that my broker was unable to navigate a bear market, and I’ve been managing our investments ever since. Since that time, my portfolio has gained 166%, which works out to a compounded yearly gain of 27.8% for five years running (whereas my broker, by keeping me in the usual assortment of stocks, would have scored me a 38% return, or 8.39%/yr). I grow a garden every year; preserve food, know how to brew beer & wine, and raise chickens. I’ve carefully examined each support system (food, energy, security, etc), and for each of them I've figured out either a means of being more self-sufficient or a way to do without. But, most importantly, I now know that the most important descriptor of wealth is not my dollar holdings, but the depth and richness of my community.

I hope you find what I have to offer here useful.

All the best,

Chris Martenson


~ VF
Last edited by Vanityfox451 on Thu Sep 30, 2010 1:52 pm, edited 1 time in total.
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by fromthehills » Thu Sep 30, 2010 1:39 pm

I went to check it out, and remembered watching it, at length, a few years ago, but it may be updated. My view then was "Holy {!#%@}! It's time to panic!"

I've never lived on on credit, but I don't save money very well either. That's as far as my financial savvy goes, so I don't know anything about the quality of the information in the videos, at all. I just know that it seems like fear mongering for a dollar, and the point seems to be to get you into going to seminars.

The other interesting thing is, the guy has a PHD in pathology, not economics. That's like going to a dentist for a broken toe.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Vanityfox451 » Thu Sep 30, 2010 1:56 pm

fromthehills,

Hmmm, yes ... never trust a bold barber ... :) ...

I've just this moment edited my last post. It may shed some extra light for you ...

Best,

~ VF ~
"Play the man Master Riddley, we shall this day light such a candle by Gods grace as I trust shall never be put out".

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by fromthehills » Thu Sep 30, 2010 2:17 pm

I like the guy, as far as one can like someone by reading their self-promo. I'm not much different. My wife homeschools, I was a contractor, running crews building high-end homes, we bought land and built a highly efficient home, complete with solar power, and greenhouse. We decided to invest our time and money into, as close to, self-sufficiency as we can get, these days. Not gold, I don't trust a standard that has no real basis in today's economy. There isn't enough gold in the world to back up modern currency. There just isn't. I don't think that paying for seminars is going to help my financial situation, either. Now, I live an idyllic life, mostly hunting and gardening. I get jobs, now and then, building cabinets, small remodels, the like. We have some modest, low-risk investments. If we lost them it would suck, but it wouldn't be the end of the world. I think investing in one's self is more valuable than gold.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Vanityfox451 » Thu Sep 30, 2010 3:03 pm

fromthehills,

I totally, absolutely 100% agree with you. Your quality of life cannot have a value put on it with money. You have a 'priceless' existence, and I'm very proud of you, with a great deal of respect in what you have achieved. If others were doing much the same as you, we would be far far removed from the mess that we're in. We would have a less complex world, but a more fulfilling one.

I have never yet been to a seminar that I either paid for, or was paid for. My time, such as this thread I'm writing on, I give for free. It is the message that is important to me, and nothing at all to do with profit, other than knowing that I gave people choice in the understanding of present actions of the world's economy/energy, through a lens that is as focused as clearly as I can make it.

I have never paid a single solitary cent to the running costs of cm.com, but I have given my time freely, so in a sense if one was to be cynical, I have profited others. Yet they are in the process of doing the same as I, and I am in a position at this time to afford what I am doing; when I can't afford the time, I won't be doing, though this is very doubtful.

Gold is among a list of strongly advised metal currency that holds value against the contraction of paper currencies. However, where there isn't abundance, no amount in offering gold to a farmer come homesteader who has barely enough to feed himself and his family will reduce him to exchange food for gold.

This is what is so vitally important for others reading this to comprehend. If you have the means to be self-sufficient, do so. Though it is no mean feet to achieve, and many a man has failed at the first hurdle in trying to create it.

My Kindest Regards,

Paul
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Thu Sep 30, 2010 5:07 pm

Vanityfox451 wrote:For some ungodly reason, over the past 5,000 years, man has coveted gold. The idea that humanity would spend its time digging it up out of the ground, only to put it back into the ground in vaults and call it a value of wealth is totally beyond me too.

Right. Gold has been a monetary token and then a standard of value, leveraged to extend credit, for reasons we could discuss. Martensen discusses some of the reasons. I don't expect gold to play this role on a large scale again anytime soon, and I don't think it should play this role, for reasons we could discuss; however, if Martensen or you or anyone else wants to accumulate gold at the current price, I'm completely O.K. with that. As far as I'm concerned, the recent rise in the price of gold is a speculative bubble. Speculative bubbles make some people rich, but they don't last.

Money, however, is shrinking in its value, as can be understood from my previous post. Not one single currency in the last 500 years has managed to survive longer than about 75 years. The US dollar was recreated in 1971 when President Nixon closed the gold window to France. In conclusion then, the present incarnation of the US dollar is only 39 years old, and the ponzi scheme that is this incarnation is already faltering as the globes pegged currency.

The dollar could cease to be the primary reserve currency for international settlements in the next decade or so, like the British Pound before it. I wouldn't mind myself. The dollar might even collapse entirely in a hyperinflationary puff of smoke. I don't expect that to happen, but it seems possible. Lots of things seem possible. Worrying too much about possible catastrophes is not healthy, mentally.

The idea that we can consider the American dollar as a haven to our individual lifetime's worth of amassing a value from our labour to it is close to becoming valueless in the long term.

The dollar is not (and should not be) anyone's haven for a lifetime of amassing value from labor. The dollar is a currency. It's an accounting device. Dollars have no more intrinsic value than the paper in an accounting ledger or the bits in a bank's computer. Future value flows from future labor and other resources in the future. If you want to consume goods in the future without producing yourself in the future, you must accumulate durable goods currently, or you must accumulate entitlement to consume goods that others produce in the future. If you accumulate the latter, you might find that your entitlements aren't worth as much in the future as you expected; however, you could discover the same about durable goods like gold.

Gold, however, is still recognised as a value, while what appears to have happened over this last two years is that the American Dollar has been devalued against it by some 50%, and so, the inflation in the price of gold is double what it should be via depreciation against it.

Gold is a commodity with a price. The price has risen recently. The price of oil has also risen (and then fallen), and the price of corn has risen (and then fallen), recently. Will gold continue rising without falling? My crystal ball is always cloudy, but I doubt it.

Therefore, by turning your American Dollar (Euro, NZ$, Yuan etc) into gold, it will preserve your wealth whilst currencies around the globe begin to crash and de-value.

In the long term, gold is probably a decent hedge against inflation, but the price is also cyclical and sometimes swings wildly. Are we nearer the top of one of these swings than the bottom? I don't pretend to know, but I am old enough to remember the last big swing in the late seventies. Caveat emptor.

Complex society will again grow out of the ashes of this present collision course with the exponential function. When eventually a replacement pegged global or local currency is again created, your wealth can be carried into that replacement currency, with your value set in the gold you bought, and so preserving your wealth.

Right. Accumulating condos, the sort people might downsize into in the next decade, at depressed prices might be a better bet than accumulating gold, but I'm not your financial advisor.

With the economic contraction in Portugal, Ireland, Spain and Greece (commonly called PIGS), there has been a massive drive by individual's in those countries in disconnecting themselves from the devaluation in their local Euro by purchasing a higher and higher price in gold in protecting their future asset.

Before that, there was a mass drive of the same people into real estate and then mortgage backed securities as well as the sovereign debt of PIGS. Yes, they want to secure their future consumption, but while they accumulate gold, their future consumption depends on the price of gold (relative to the price of other goods) in the future, not the current price.

Martin, as a footnote and [edit] to this post, I want you to appreciate that Chris hasn't solely amassed his wealth from the Crash Course series alone, but was already considerably wealthy as a neurotoxicologist and a holder of a doctorate PHD before he took to creating this tool for teaching. He has a wife and three children, and could have continued living comfortably well off, but chose to leave his career, re-educate himself over a ten year period, and use up all of his accrued previous wealth in giving away a teaching system for free. I'll leave you with his own words : -

I wish Martensen only the best. I'm sure he's a very nice guy. I won't contribute any dollars to his mission. I prefer to support antiwar.com.
Last edited by Martin Brock on Fri Oct 01, 2010 12:13 am, edited 1 time in total.
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Thu Sep 30, 2010 10:50 pm

Okay, so a bunch of posts have been made since this one, but I really wanted to get into this first, so I haven't read everything that follows... Also I assume that VF has much more informed replies, but I think mine are of some value precisely because I am somewhat uninformed... and thus am representative of the bulk of humanity (Well, not quite that uninformed)

Martin Brock wrote:O.K. I looked at this course, listened to the intro and then skipped to "What is Money?". I've heard this story before, and I've largely rejected it. I'll explain why.

Martensen offers several assertions:

1. "Money", conventionally, denotes a) a store of value, b) a medium of exchange and c) a (divisible) unit of account. Martensen is particularly concerned with a.
2. Money is more nearly a claim on human labor, because everything money purchases ultimately comes down to labor. This idea is called the labor theory of value.
3. The U.S. dollar is "fiat money", because it has value only because the U.S. government declares it legal tender. He also states that the dollar is "backed by nothing".
4. In the old days, under a gold and silver standard, dollars were backed by quantities of gold and silver.
5. Inflationary monetary systems penalize savers by a) requiring that money be "invested or speculated with" to keep pace with inflation and b) requiring people to subject their "hard earned savings" to risk.

If Zapata thinks I've misconstrued this lesson, he may correct me. I've tried to summarize these points without caricature.


I believe this is a correct summary.

Martin Brock wrote:
The first point summarizes conventional understanding of "money" well enough, although I don't accept a) either as an accurate description of money in practice or as a necessary or desirable characteristic of money. I certainly accept b) and c). Money is an entitlement to consume. It's a credit. When I accept money in exchange for some good, I accept credit for other goods exchanged in the market rather than accepting a particular good. I accept money denominating the current value of other goods in the market, at the time of the exchange, for which I would exchange my goods. Money is also called "currency" for this reason.


So, on "a", I think he'll also be arguing later that it's no longer true in practice, but should be. But below in your description of 'free banking' does money not represent a store of value? What am I missing?

Martin Brock wrote:
The second point is clearly nonsense. Many things are valuable other than human labor. Human labor is the single most valuable resource, as a practical matter, if we'll call it a "single resource", but it's hardly the only valuable resource. Horse labor is also valuable, though not nearly as valuable to humans as it once was. The fertility of a parcel of land is valuable. On the other hand, money in the U.S. is "backed by labor" in a sense, i.e. it is backed by entitlement to federal tax revenue, and taxes on labor dominate federal revenue.


I can definitely see your point here. If I pay you money for fertile land it is separate from the money I will later have to spend for labor to work it. But I might disagree on horse labor, because horses don't raise, train, feed, harness and work themselves- it's a tool, so it's like saying 'hammer labor' has value.

He says:

Crash Course wrote:With a very few minor exceptions, pretty much anything you can think of that you might spend your money on will involve human labor to bring it there. I say it’s a claim rather than a store, because the human labor in question might have happened in the past, or it might not have happened yet.


So I would have to agree that paying for fertile land, or an oil field is not a "minor exception"... but then again, all these things will require human labor to exploit... Is 'nonsense' perhaps too harsh a word, and most importantly will his later arguments about debt break down if he's wrong about this?


Martin Brock wrote:
The third point is true in a sense. The U.S. dollar is "fiat money", because the U.S. government declares it legal tender and compels the payment of taxes in it; however, it's not backed by nothing. The monetary authority (the Federal Reserve) routinely redeems its money for something. It redeems the money for U.S. Treasury securities in open market operations at a rate targeting the level of particular interest rates. U.S. Treasury securities are claims on future U.S. tax revenue, essentially debts imposed on U.S. citizens, payable in the future. The dollar is "fiat money", because these debts exist by the fiat of the Federal government, not by the choice of individuals subject to U.S. taxation.


He doesn't say it's backed by nothing, but that it's backed by nothing tangible.

Crash Course wrote:You’ll note that modern dollars have no language entitling the bearer to anything, and that’s because they are no longer backed by anything tangible. Rather, the ‘value’ of the dollar comes from this language right here: The fact that it is illegal to refuse to accept dollars for payment and that they are the only acceptable form of payment for taxes.


As far as I can tell (and I've mentioned before this is all quite bewildering to me) that you are in agreement here. Your statement that ultimately fiat money is "essentially debts imposed on U.S. citizens, payable in the future" is, I think, his big point. (Later he will argue that this level of debt assumes that the economy of the future will have grown enough to cover it, and that that's going to be problematic)

Martin Brock wrote:The fourth point is also true in a sense, but it's misleading, and practically everyone who hears it misunderstands the gold standard terribly. Under a gold standard, bits of gold in bank vaults do not back each dollar in circulation. The U.S. monetary system never operated this way and was never supposed to operate this way. Dollars denominate the value of everything exchanged in the market, not only the value of gold in bank vaults.

Under a gold standard, when a bank lends dollars to mortgage a house, the dollars denominate the value of the house, relative to the value of gold, not the value of gold in a bank vault. Someone holding these dollars essentially holds a claim on the house, because the bank issuing the notes holds the title to the house. When someone demands gold for these dollars, the bank can meet the demand, in principle, not because it has so much gold in a vault but because it may call the loan, i.e. it may compel an exchange of the house for gold to meet the demand. If everyone demands gold for dollars at the same time, this demand (a run on the banks) creates a problem, but the problem is that the price of gold is fixed while demand for gold rises.


Okay, so I don't have the knowledge to argue your points above. I would say that he is operating under the KISS principle (Keep it simple, stupid).

The important part is in chapter 9, when he shows a graph of the US economy under relative stability for 300 years, until it went off the gold standard, and in doing so generated a hockey stick graph of inflation... is there anything in your above points that cast doubt on the later conclusion that going off the gold standard was the beginning of the inflationary regime in which we find ourselves now?

Martin Brock wrote:The fifth point is just factually incorrect. Certainly, inflation can be so excessive that notes lose their value as money altogether; however, more moderate inflation does not rob savers of anything, unless the savers choose to save money itself. Currency denomiates current value. If I don't want to hold money, because I want to avoid inflation, I may exchange the money for gold or any other durable commodity and save the commodity instead. [Emphasis Zapata's]The price of gold could fall in the future, relative to the price of other goods, but relative prices change all the time. Holding currency backed by gold hardly avoids this problem. If the system of redemption for gold is completely stable, the problem is exactly the same.


But isn't that what he's saying, but where you say 'may', he says 'must'? And of course today we don't actually hold the commodity itself, but shares.

Martin Brock wrote:The risk involved in saving is not simply a product of an inflationary monetary policy. Saving involves risk, because the economy is dynamic and the future is uncertain. Saving should involve risk. Various statutory schemes to eliminate risk from saving are responsible for much economic and monetary instability, but regardless of the merits of any particular monetary scheme, saving must involve risk, because saving exchanges current consumption for future consumption, and the future is necessarily uncertain.


Well, I think I understand this well enough to disagree. In a sustainable monetary system the unit should be stable, so if I put it under the mattress its value remains unchanged- no risk. Investing, by nature involves risk, I understand that. What he's saying is that in an inflationary regime if I put my money under the mattress (or in a bank where inflation outstrips interest) I am losing money (or my money is losing value)... the only way I can save is by risking my money by investing it... and that's bad... a penny saved should be a penny earned.

Now I take your point about minor fluctuations in any monetary system, like a loaf of bread is $.94 one month and $1.03 next month because of a tangible reason, like a bad harvest. But we're talking about a monetary system that is, by nature, generating inflation at an exponential rate, and therefore requires not just sound investment but wild speculation to save.

Martin Brock wrote:As the regulars here know, I'm a dyed in the wool libertarian, nearly an anarchist, so I'm certainly not defending a fiat monetary system here. I favor what economists call "free banking", which can involve a gold standard but does not involve banknotes backed, one for one, by gold. I don't favor a gold standard, and I wouldn't use a bank following a gold standard in a free banking system. I prefer a bank and money (banknotes) leveraging other commodities very unlike gold, commodities that are common, non-durable and have a highly elastic supply, but are nonetheless highly valued by humans. Agricultural commodities like grains or legumes of standard quality (corn, wheat, soy beans) fit this description.

Gold (and other precious metals) by contrast is scarce, durable and has an inelastic supply. Conventional wisdom holds that gold is an ideal monetary token, or standard of value, for this reason, but I believe this conventional wisdom is mistaken. These characteristics make gold an unstable standard of value (to be leveraged in a system of credit). A more stable standard of value has the opposite characteristics. A run on grain makes little sense, because grains spoil and more grain grows out of the ground every year. On other hand, if common agricultural commodities ever become truly scarce, a run on the bank is the least of your worries.


Interesting on a couple things- I am a libertarian socialist (anarchist)... Hardcore libertarians often make me think of the physics concept of the the curvature of space- you travel far enough to the right, I go far enough to the left, and we end up meeting on the other side of the universe.

Also, despite my inadequate education in economics, I've been thinking about it a lot and have pondered something very similar to what you describe above- not a gold standard but some standard which has real meaning to what we consume.

This post has been most enlightening, and is exactly the sort of debate I'd hoped for. Thank you.

Now I'm off to catch up on what has been written in my absence.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 12:37 am

Okay, so this goes out to Lance mostly, and VF et al regarding 17a: Peak Oil.

You guys spent a fair amount of energy discussing the viability of different 'replacements' for oil.

Taken out of context I can see how this chapter may leave one with the impression that Martenson thinks there are no answers- that he's a Doomer, so to speak- but this is not the case. His point is that there are no easy answers. He lays it on pretty thick to get his point across, that point being that there is nothing ready to take the place of oil, and fossil fuels in general.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Vanityfox451 » Fri Oct 01, 2010 12:47 am

Martin,

This article was recently submitted to http://www.financialsense.com by a regular and prolific writer in the forums of http://www.chrismartenson.com. Davos has quite a way with words, as you'll find out!!!

http://financialsensebeta.com/contribut ... -the-night

A Thief In The Night - by Davos Sherman

[snippet]

To date, the crime syndicate has struck 3,800 times. At the bottom of this article you will find a partial list of the mob hits that have been made by the organized crime syndicate many refer to as: La Cosa Nos(Cen)tra(l) Banksters. The families of the diseased are large - entire nations. They made the unfortunate and common mistake of trusting their late, and once rich Uncle Currency with safeguarding the value stored in their life savings. Those that didn’t take out a life insurance plan suffered. Many, like the little children of Argentina, actually starved to death.

The modus operandi is identical in every case. The loot is taken first, the heist ends with a rub on the mark.

Let’s look at the above crime scene. Germany lost World War I. They were saddled with war debt and forced to pay reparation. The French took over Germany's industrial base when the Germans got behind on their payments. Without the industry revenues the German government began printing ...

{Continued ...}


Best,

Paul
"Play the man Master Riddley, we shall this day light such a candle by Gods grace as I trust shall never be put out".

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 12:53 am

Oh, and whether gold is the thing to get into or not, I have no idea.

My crystal ball says: bullets.

http://www.youtube.com/watch?v=OuX-nFmL0II

[Note: my crystal ball consists of every post- apocalyptic movie I've ever seen]

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Lance Kennedy » Fri Oct 01, 2010 1:22 am

From Zapata

"that point being that there is nothing ready to take the place of oil, and fossil fuels in general."

This is technically correct, in that nothing in existence could take over 100% if some magician used powerful magic and disappeared all oil products overnight.

I think we can all see that is not terribly likely. The probability is that in 2 to 3 decades, oil will start to become horrendously expensive and other products will need to take over most of the niche oil occupied.

Right now, we have coal to liquid fuels partially available. We have natural gas to liquid fuels partially available (NZ has such a plant). We have the first phase of battery electric vehicles being manufactured. We have a pilot plant here in NZ making biodiesel from algae grown in sewage. There are increasing moves towards electricity generation from renewable sources. Here in NZ, 85% of our power comes from renewables. Wind power is over 20% in several European countries.

The point is that, given 2 to 3 decades to build up on the start that has been made, there will be no crisis. Humanity has passed numerous such crises in the past, and will weather this one also.

But I am just an incurable optimist!

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Vanityfox451 » Fri Oct 01, 2010 1:25 am

Zapata wrote:Okay, so this goes out to Lance mostly, and VF et al regarding 17a: Peak Oil.

You guys spent a fair amount of energy discussing the viability of different 'replacements' for oil.

Taken out of context I can see how this chapter may leave one with the impression that Martenson thinks there are no answers- that he's a Doomer, so to speak- but this is not the case. His point is that there are no easy answers. He lays it on pretty thick to get his point across, that point being that there is nothing ready to take the place of oil, and fossil fuels in general.


Zapata,

Exactly. The mistake is made by watching the course in snippets, like a teenager standing at a fridge, with the door wide-open, peering in, scratching his ____, and not knowing quite what to eat. Choice is choice, and starting where you like often shows signs of a mind that likes to break with convention, which is good mostly, and I do this myself. Some books though, just aren't for everyone, and if you start reading them in the middle, most times you're never going to finish them. This is the issue with some when it comes to the Crash Course. Not everyone wants to be babied through area's they already know, whilst waiting for area's they don't.

The best I can suggest is to watch through from start to finish, patiently trying your best in gritting your teeth at what you already know. Importantly, it took me to places surrounding subjects that connected areas I hadn't ever thought of beforehand. Therefore, by watching methodically, you'll arrive at chapter 17 and Peak Oil, readily acclimatized to the flavour of the recipe that has been compiled purposefully; understood as a whole, and is neither using shock treatment, nor trying to pull the wool over your eyes ...

These are difficult subjects to broach. This was why Lance ended up being drawn into the course toward its end at chapter 17, like having desert before your starter and main course. The sacrifice was that others are now curious enough in taking a better look, and much of the gamble has apparently paid off for Lance.

Speculatively ... :) ...

~ Paul ~
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Fri Oct 01, 2010 1:32 am

Zapata wrote:So, on "a", I think he'll also be arguing later that it's no longer true in practice, but should be. But below in your description of 'free banking' does money not represent a store of value? What am I missing?

"Free banking" simply means that anyone may issue negotiable banknotes to extend credit, and the market decides which "money" to use. If banknotes leverage a commodity like gold, and if the system of credit is stable (no runs on the banks), then holding banknotes is essentially equivalent to holding gold, so money is "inflation proof" in terms of gold; however, gold itself is not inflation (or deflation) proof in terms of other things. No law of economics requires people to value gold relative to corn equivalently today, tomorrow and always. The relative value of these two commodities can change.

A run on the banks occurs when everyone wants to hold gold for some reason, so everyone demands gold for their banknotes at the same time. Banks then must call their loans and thus compel the sale of assets like houses. These compulsory sales over a short period of time drives down the price of these assets. That's deflation. Deflation occurs in this scenario because the law of supply and demand essentially requires it. The demand for gold rises precipitously, but the price of gold is fixed, and the price of everything else is measured relative to the price of gold. Since the price of gold can't rise with rising demand for gold, the law of supply and demand essentially requires the price of everything else to fall, so the price of gold does rise relative to other prices, even though the nominal price is fixed.

Gold is a scarce, durable commodity with inelastic supply. By "inelastic supply", I mean that the supply of gold can't expand rapidly in response to a rapid increase in demand.
A free banking system could also issue notes redeemable in other commodities. As I said earlier, I favor a calorie banking system, so my bank would issue notes redeemable in some index of common grains and legumes. My "dollar" might be worth so many calories in corn meal, wheat flour and soy protein powder, of standard quality, for example. I could always go to my bank (which would essentially be a grocery store) and exchange a calorie-dollar for a hundred calories worth of these commodities, and the bank could extend credit in calorie-dollar notes.

I don't want to belabor the point, but I'll emphasize again what a bank is and what banknotes are, and why banks creating "money from nothing" isn't necessarily a problem.

If I own a house, I may sell it to you on a "rent to own" basis, right? I may allow you to occupy the house and pay me so much per month until you've paid me an agreeable amount and then transfer the title to you. This transaction doesn't bother you, does it? Once you and I have contracted this way, I am entitled to a stream of income from you. Suppose VF would like to be entitled to this income stream instead, because he wants to retire and wants a predictable income, for example. I may sell VF my right to receive income from you while you occupy the house.

At the beginning of our rent to own agreement, the value of this right to receive income from you is roughly the value of the house; therefore, simply by extending you credit, I've created a negotiable security as valuable as the house, and I may exchange this security for all sorts of things, including gold or U.S. dollars. By extending you credit, I've "created money". A bank is just a business allowing me to outsource my extension of credit to you, so instead of you paying me on a "rent to own" basis, you pay the bank instead, and the bank gives me banknotes equivalent to the current value of this income stream.

A calorie bank would also create banknotes "from nothing", and the notes would denominate the value of things other than agricultural commodities, things like houses, as I decribed earlier. A run on these banks would be less likely, because corn meal is non-durable. It spoils. Hoarding it is counterproductive. Also, its supply is elastic. Rising demand for it can stimulate the production of a lot more of it in a relatively short time (a growing season), so again, hoarding it is counterproductive.

Even though hoarding food is counterproductive, people always need it, so I could "save" my banknotes if I wanted. I'd at least know that I'm entitled to a fixed number of calories in the future; however, food tends to fall in price relative to other goods. It has in recent centuries anyway. A fixed number of calories could buy me less gold or real estate or other things in the future than the same number of calories buys me today, so these calorie-dollars are not strictly "inflation proof". This possibility is not a fundamental problem with calorie-dollars, because I need not save the currency. I need not save money of any sort. I may exchange money for gold at the current price and save the gold for example, or I may exchange it for shares of Google and save the shares.

Of course, we don't have a free banking system. We have a central bank and a fiat monetary system, what some economic historians call "chartal money", as described in Georg Knapp's State Theory of Money in the nineteenth century. Fiat monetary systems can be highly inflationary, because states police credit poorly, particularly their own credit. I have some sympathy with the idea that a little inflation is a good thing, but I have no sympathy with the idea that states can be trusted to create only a little inflation.

But I might disagree on horse labor, because horses don't raise, train, feed, harness and work themselves- it's a tool, so it's like saying 'hammer labor' has value.

Well, I can labor to my heart's content, but if I don't start with a foal, I won't end up with a horse. Let's give the mares a little credit for their labor.

So I would have to agree that paying for fertile land, or an oil field is not a "minor exception"... but then again, all these things will require human labor to exploit... Is 'nonsense' perhaps too harsh a word, and most importantly will his later arguments about debt break down if he's wrong about this?

Well, economists generally agree that human labor is the single most valuable resource (to other humans). Most of the cost of practically everything is the cost of labor, so the labor theory of value is not a bad approximation, but it's a misleading general principle. Martensen only overstates his point here. It's not a major flaw in his argument.

He doesn't say it's backed by nothing, but that it's backed by nothing tangible.

You're right, and when he states that fiat money derives value from the state's compulsory legal tender laws and taxation, he's right, and he's correctly stating the chartalist idea of money.

Okay, so I don't have the knowledge to argue your points above. I would say that he is operating under the KISS principle (Keep it simple, stupid).

Reality is not simple, though. Oversimplification can be misleading.

The important part is in chapter 9, when he shows a graph of the US economy under relative stability for 300 years, until it went off the gold standard, and in doing so generated a hockey stick graph of inflation...

Well, the U.S. hasn't existed for 300 years, and it had plenty of economic instability before the end of Bretton Woods, and Bretton Woods wasn't exactly a gold standard anyway, not the sort the U.S. had in the nineteenth century, and the pre-Bretton Woods gold standard, after the creation of the Fed, wasn't a free banking standard either, so blaming Nixon for all of the inflation doesn't make much sense to me, and attributing economic stability to the various gold standards we've had in the U.S. doesn't make much sense to me either. I respect some economists, like George Selgin, who argue that a free banking system with a gold standard can be stable, but I also understand the potential instabilities involved.

... is there anything in your above points that cast doubt on the later conclusion that going off the gold standard was the beginning of the inflationary regime in which we find ourselves now?

The Consumer Price Index roughly doubled over the 30 years of the Bretton Woods system, but inflation has certainly been worse since, especially in the period immediately following the end of Bretton Woods. Prices double every twenty years or so, in recent decades. Personally, I don't have a fundamental problem with that, but I do have a fundamental problem with the state power it creates as central bankers routinely finance any deficit the Congress enacts. A gradual increase in the price level is not the problem. It's not a problem at all as Martensen describes it, because "saving money" is a misnomer. The unchecked spending of politicians is the problem.

I'll add more later.
Last edited by Martin Brock on Fri Oct 01, 2010 5:01 pm, edited 13 times in total.
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by fromthehills » Fri Oct 01, 2010 1:33 am

Lance Kennedy wrote:From Zapata

"that point being that there is nothing ready to take the place of oil, and fossil fuels in general."

This is technically correct, in that nothing in existence could take over 100% if some magician used powerful magic and disappeared all oil products overnight.

I think we can all see that is not terribly likely. The probability is that in 2 to 3 decades, oil will start to become horrendously expensive and other products will need to take over most of the niche oil occupied.

Right now, we have coal to liquid fuels partially available. We have natural gas to liquid fuels partially available (NZ has such a plant). We have the first phase of battery electric vehicles being manufactured. We have a pilot plant here in NZ making biodiesel from algae grown in sewage. There are increasing moves towards electricity generation from renewable sources. Here in NZ, 85% of our power comes from renewables. Wind power is over 20% in several European countries.

The point is that, given 2 to 3 decades to build up on the start that has been made, there will be no crisis. Humanity has passed numerous such crises in the past, and will weather this one also.

But I am just an incurable optimist!


{!#%@} yea! If you guys had guns, I'd want to move there! :P

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by vanderpoel » Fri Oct 01, 2010 1:55 am

Are you kidding, they have algae growing in their sewage.
Besides they don't need guns because liquor kills quicker.
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Fri Oct 01, 2010 1:58 am

In one of these lessons, Martensen states that a monetary system, creating money to extend credit, requires an expanding money supply, because more money is always needed to pay the interest on credit extended. This idea is mistaken for reasons I'll discuss later. Monetary inflation occurs because statesmen entitle themselves and their cronies to spend too much. It's not an inevitable consequence of creating money to extend credit.
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People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

"Every man for himself" is the prescription of a state, not a free community. A state protects the poor from the rich only in fairy tales.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Vanityfox451 » Fri Oct 01, 2010 2:06 am

Lance,

The massive advancements in renewable technologies in New Zealand are the very reasons that I'm set to return within two years. It is also a country that I have great affection for. On the other hand, England is dragging its feet pensively with alternative renewable technology, and with a lack of political will, looks set to be cast back into the dark ages, while NZ rises to the challenge of a cutting edge 21st century.

Population count is another favourable factor, when accounting that there are presently under 5 million people in NZ, on a land mass somewhat equal to the UK. On an opposing slant, there are nearer 61 million people eking out an existence in the UK, where 48% of current food consumption is imported.

I do see that the apparent "Free Market" has given rise to large tracts of the UK being lefty baron to subsidy, but it will be a knife edge, if and when the financial crunch takes its toll here, and a reduced import of gas and oil reduces further the opportunity of export trade, causing a need to produce food in country, and solely for non export consumption. This is where statistic's recently published prove the UK is over populated by a factor of close to 27 million people at the present count.

Trying, and in many cases, failing to explain this to people, where the present projection's by government are not favourable, leads me to the conclusion that the government in place has no aims in saving everyone here. It can't, while the assumption remains that it is business as usual for the average mindset in their foreseeable future.

Pretty blinkered, you can be sure ...

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Paul
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Lance Kennedy » Fri Oct 01, 2010 3:41 am

I hope I am not giving a false perception of my home country. Despite my enormous fondness for NZ, I am not blind to the simple fact that we are a tiny backwater nation stuck in one of the most isolated parts of the world. Kind of interesting that people who come to live here from North America or Europe either love the place (mostly outdoor types who like backpacking etc) or hate it with a passion (those who desperately need more 'culture'.)

NZ is too small to be a leader in technology. That position is still given over to the USA, at least for now. I suspect that China will become the new leader.

One thing we will never be short of is food. We are a food exporting nation, and we produce way more than we need ourselves.

Hills.
We do have guns. You can easily earn a license to own hunting rifles and shotguns. The thing you would miss is hand guns, which I am very pleased to say, are almost totally absent.

I think you would enjoy my country. Nice mountains, forests, lakes, rivers, and sea coast. We have feral deer and chamois that need culling. No bears, though, or other dangerous animals.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 4:20 am

Martin wrote:"Free banking" simply means that anyone may issue negotiable banknotes to extend credit, and the market decides which "money" to use.


Do you see this on a decentralized, local level only, or do you imagine it could work on a global scale?
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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 4:23 am

Lance wrote:I hope I am not giving a false perception of my home country.


Yeah, too late for your backpedaling... I'm already sorting out flights... get a pint chilled for me, eh?

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Lance Kennedy » Fri Oct 01, 2010 4:30 am

Zapata

Beer and wine are not in short supply. One of life's great joys is sharing them.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 4:45 am

Lance Kennedy wrote:Zapata

Beer and wine are not in short supply. One of life's great joys is sharing them.


I'm taking that as an invite...

And seriously, I'm in Costa Rica and can easily be found, if anyone's thinking about taking a vacation before the oil is gone.

I created this site: http://www.infoflamingo.com/... hover over the frog!

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by fromthehills » Fri Oct 01, 2010 1:38 pm

Lance Kennedy wrote:Hills.
We do have guns. You can easily earn a license to own hunting rifles and shotguns. The thing you would miss is hand guns, which I am very pleased to say, are almost totally absent.

I think you would enjoy my country. Nice mountains, forests, lakes, rivers, and sea coast. We have feral deer and chamois that need culling. No bears, though, or other dangerous animals.


We have a bear on the rampage, all around my place, but doesn't come on to my property, yet. I've been watching. The term feral deer sounds funny to me. Do you have domestic deer, as well? I was mountain biking and finally saw a goat herd, that I've seen sign of for years. They're feral goats, I was surprised, as I was expecting mountain goats. Then on the way down I came about 4 feet, though it seemed inches, of hitting a deer. Bow season is over, I think it would be ironic to come up empty handed while hunting, but then hit one with the bicycle.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Fri Oct 01, 2010 2:17 pm

Zapata wrote:Do you see this on a decentralized, local level only, or do you imagine it could work on a global scale?

I don't see it anywhere at the moment, but free banking has existed historically, in 18th-19th century Scotland for example. I can imagine free banking on a global scale, but free banking is always, definitively decentralized and local, i.e. local banks identify opportunities to extend credit locally and issue banknotes locally. A merchant in a distant market might accept the banknotes in trade, but the notes ultimately return to the issuer, for redemption in the standard of value or for deposit as savings.

When I deposit banknotes as "savings" in this system, I am not saving the notes. The bank may burn the notes as soon as I deposit them, because it may always create more notes. The notes are only accounting devices. When I deposit money in a bank, I "save" a bit of entitlement to the stream of real goods and services that the bank's borrowers continually produce in order to repay credit the bank extends to them. The bank may burn its notes, but it must keep a record of my entitlement to value from this stream. Accounting for this entitlement is the bank's business.

If a bank overextends credit, so that interest and principal payments on the credit ultimately cannot keep commitments to the bank's note holders, the bank is insolvent. Its shareholders lose their equity. Its depositors may lose deposits, and note holders may also lose value. In a commodity backed system, note holders might receive less of a commodity than their notes promise. A decentralized monetary authority (a free bank) can abuse the trust of its stakeholders, but at least the abuse is limited to its stakeholders. Central banks and states also abuse this trust, and the abuse is not so limited.

An essential feature of a free banking system is that an insolvent bank's losses are localized. If you don't own shares in the bank and you don't have deposits in the bank and you don't hold the bank's notes, the bankruptcy doesn't affect you directly. Losses are not socialized. This fact may bother people who want the "security" of imposing their risks on everyone else through state "insurance" schemes, but these schemes create interdependencies that individuals don't comprehend and encourage abuses (what economists call "moral hazard") and systemic failures.

Here's an interview with George Selgin on free banking conducted by Stephen Slivinski at the Richmond Fed. Selgin is an economist at the University of Georgia. Here's another interview with Selgin on the always excellent podcast, Econtalk, conducted by Russ Roberts, an economist at George Mason University.
People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

"Every man for himself" is the prescription of a state, not a free community. A state protects the poor from the rich only in fairy tales.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Fri Oct 01, 2010 6:55 pm

Zapata wrote:But isn't that what he's saying, but where you say 'may', he says 'must'? And of course today we don't actually hold the commodity itself, but shares.

Even if he says "must", he means "may", because few people hold gold under a gold standard. They hold banknotes and deposit receipts, and their bank doesn't have gold in a vault corresponding to every promissory note it issues and every dollar in each depositor's account. Even if people lose less to inflation under a gold standard, they still lose value to the insolvency of banks. They don't avoid risk.

Under a gold standard, a banknote promising gold is not a share certificate corresponding to so much gold in a bank vault somewhere. A gold standard does not operate this way. Gold itself is not the money. It's the standard of value. Banknotes represent the value of all sorts of things relative to the value of gold. All sorts of things are collateral for the issuing bank's extensions of credit, including the labor of borrowers. A banknote represents a share of all of these other things, not a share of the bank's gold. Even under a gold standard, a bank needn't have any gold reserves at all. It must only be able to exchange its other assets (the loans on its books) for gold when necessary.

If you want to use gold as a barter currency, to exchange things for gold and hold gold until you want other things, you don't need money. Fifty dollars worth of gold weighs about a gram at the current price. A fifty dollar bill also weighs a gram. You don't really gain much by carrying warehouse receipts for gold rather than carrying gold itself. A quarter million dollars worth of gold weighs a little more than gallon of milk and is much smaller, so if you want to save gold, you can easily store all of your gold in a hole in the woods somewhere. It's probably safer from thieves there than in a bank, and if you want to diversify, you can hide it ten different places. Just don't lose your treasure map.

Well, I think I understand this well enough to disagree. In a sustainable monetary system the unit should be stable, so if I put it under the mattress its value remains unchanged- no risk.

You can put gold itself under your mattress if you want. You can do it now under the current monetary system. I don't at all agree that currency should behave this way.

Investing, by nature involves risk, I understand that. What he's saying is that in an inflationary regime if I put my money under the mattress (or in a bank where inflation outstrips interest) I am losing money (or my money is losing value)...

Yes. Money in a mattress loses value over time. I have no problem with that. Money in a mattress should lose value. At the very least, it should not gain value.

... the only way I can save is by risking my money by investing it... and that's bad... a penny saved should be a penny earned.

Expecting you to invest to accumulate value, even to retain it, is not bad. It's good. If you want to save a penny's worth of gold, buy a penny's worth of gold. The gold might buy more corn in future than a penny buys today. It also might buy less. If you save the penny itself, you also accept the risk that a penny is worth less in the future.

I don't want a state compelling people in the future to provide you their future produce for the same price that you may purchase the same produce today. This compulsion could be terribly unjust to people in the future, particularly during the coming demographic transition. I certainly don't want a state entitling you to more produce in the future for the same penny; however, if you want to invest productively, to create more produce in the future, then you may consume more, because more produce then exists for you to consume. You can't expect other people to produce for you in the future just because you choose not to consume what people are producing today. These other people are my children, and my children don't owe you {!#%@}, dude.

But we're talking about a monetary system that is, by nature, generating inflation at an exponential rate, and therefore requires not just sound investment but wild speculation to save.

Gradual inflation doesn't require wild speculation, because real investment yields (adjusted for inflation) tend to be positive. Expecting you to find these yields in order to accumulate wealth is reasonable and just.

Excessive inflation by a central monetary authority that also compels the payment of taxes in the inflating currency could require wild speculation. I'm not making light of this problem, but I don't see the problem in the U.S. at this time. Maybe it's on the horizon, but I don't see it now. If the dollar is headed for hyperinflation, then exchanging dollars for gold now seems a decent strategy, though you could also exchange dollars for any number of other things. I don't know why gold is so special as an inflation hedge. Why not invest in something that also yields a return by increasing productivity? Don't ask me what that something is. As an investor, that's what you're paid to decide.

Interesting on a couple things- I am a libertarian socialist (anarchist)... Hardcore libertarians often make me think of the physics concept of the the curvature of space- you travel far enough to the right, I go far enough to the left, and we end up meeting on the other side of the universe.

Also, despite my inadequate education in economics, I've been thinking about it a lot and have pondered something very similar to what you describe above- not a gold standard but some standard which has real meaning to what we consume.

I've never thought of myself as "right of center", but I don't think much of the one-dimensional political spectrum anyway.

You sound like a Proudhonist. I was a Proudhonist when I was younger, and my understanding of money and banking emerges from efforts to comprehend these things in Proudhonist terms. Proudhon advocated a banking system with something like an hour of labor as the standard of value. This idea seems naive to me now, because an hour of labor is the furthest thing imaginable from a commodity. Different hours of labor have radically different value in market terms, so an hour of labor can't have any sort of standard value.

On the other hand, money is a record of all sorts of things that people produce for exchange (or are expected to produce), as well as means of production. All labor is not the same, and labor is not the only valuable resource, but money is a record of labor for the most part, and it should be a record of labor primarily. As a matter of justice, I still believe that able people should labor in exchange for the labor of others, regardless of their mastery over productive means. The rich (people who own means of production) should not be exempt from this obligation, any more than the poor should be. This idea is not "right wing". It's a working class idea.
Last edited by Martin Brock on Fri Oct 01, 2010 9:29 pm, edited 1 time in total.
People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

"Every man for himself" is the prescription of a state, not a free community. A state protects the poor from the rich only in fairy tales.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 8:50 pm

Martin wrote:You sound like a Proudhonist.


My economic philosophy (such that it is) was influenced most by Chomsky, most notably his classic 1970 lecture in which he distinguishes four basic systems, state capitalism, state socialism, classic liberalism, and libertarian socialism. I'm sure he was heavily influenced by Proudhon. I also know a bit about the concept of participatory economics attributed to Michael Albert and Robin Hahnel, but I'm not sure how money works in their system.

[Off topic a bit, sorry] I'm on much firmer ground discussing the type of society I want to live in rather than its economics and monetary system, but I recognize these things are intertwined, and my ignorance of economics is just due to laziness- I studied what I found interesting. I believe that those who produce should be those who control the product and wealth it creates. There should be two basic classes- middle and lower, and a spectrum in between, dependent on productivity. I believe the relationship between owner and worker is intrinsically criminal (a type of slavery), and yes, workers should control the means of production... there should be no owners... there should be no speculation- just honest work and fair compensation. (Literally as I write this a girl is cleaning my kitchen for $3/ hour.) [Please, I just wanted to make clear where I'm coming from and don't want to argue about this here- we can disagree about such things and still have a productive conversation about the Crash Course.]

Okay, so I was mistaken- the chapter where he shows the 'American' (as opposed to US) inflation rates over 300 years is in 10, not 9.

What vexes me about your assertions is that you do not agree that 0 inflation is a good thing- it seems synonymous with economic stability... but I admit that this opinion comes from the Crash Course, mostly... I wonder if you'd be willing to watch 10 and critique that chapter as well.

Also, if you're willing, Chapter 5, where he asserts that growth does not equal prosperity. (It's only 3:30)

VF has been giving you the youtube links, but the CM pages have the text as well (although not always exactly the same), which is good for cutting and pasting his assertions.

http://www.chrismartenson.com/crashcourse/chapter-5-growth-vs-prosperity
http://www.chrismartenson.com/crashcourse/chapter-10-inflation

Obviously I'd love for you to watch the whole thing and critique it as a whole, but I'll take what I can get.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Lance Kennedy » Fri Oct 01, 2010 9:07 pm

I have a personal 'water balloon' model of economic change.

Imagine a balloon filled with water (actually, I would prefer an ultra-light fluid, but I cannot think of one). That balloon is sitting on a table but you hold the nozzle, ready to lift.

Now, the balloon sitting on the table represents a nation in a state of total poverty. All those water molecules represent people as low as they can get.

If we lift the nozzle clear of the table, we get a situation similar to rampant and unrestrained capitalism. A small number of people are clear of the table - and wealthy. The vast majority of the population is in dire poverty.

Lift a bit more, and we head into a more mature capitalism. Still plenty of poor (next to the table), but more of the population lifted into a state of relative wealth.

Eventually, if we lift enough, (meaning enough economic growth) the whole balloon lifts clear of the table, meaning everyone gains some wealth. However, the balloon will remain pear shaped - meaning more people will be relatively poor compared to the wealthy few.

The 'natural' state of any economy is for a lot of people to be poor in the relative sense, and very few to be truly wealthy. Raise the economy enough, and everyone gets wealthier, but the discrepancy will remain.

I do not believe that the economic aim of equality is viable or sensible. The aim should be to raise the entire economy, so that even the poorest will have sufficient wealth for a good life. But this will always, and inevitably, leave some people mega-rich. Envy of those few should not be encouraged. I think that is a potentially destructive emotion.

To Hills

Yeah, we got domestic deer.
That is not why we have feral deer, though.
Our settlers 100 plus years ago brought all sorts on animals into the country and released them. In almost every case, it was an unmitigated ecological disaster. Rabbits were released for sport hunting and got out of control. They bred like...er...rabbits. So the morons who never learn introduced stoats to kill them. The stoats found that native birds were much easier to catch. So now forests that once rang with bird song are silent. And the rabbits are still there in their millions.

Deer, chamois, wild pigs, wild goats etc all got deliberately released out into our wonderful native rain forests. So for the keen hunter, there is plenty of game, and you know you are actually helping the natural ecology by shooting the feral elements.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 9:23 pm

Well, I said I didn't want to argue about it, but...

The problem is you can't think of a lighter liquid, and as you wind up your winch, the balloon breaks. Or maybe it's a really elastic balloon and you keep winching the top higher and higher and the bottom stays firmly planted on the bottom.

I don't mind having people with different levels of wealth, as long as it's based on their own productivity, not the productivity of an employee.

My opinions are not based in envy,- I'm easily in the top 1% if you consider my house, which I own free and clear, and if I sold my land on the hill I'd be in the top .3%, I suspect. My vision (not just mine) is based on the ideals of equality, justice, and, most importantly, sustainability.

[Edit] The envy of the mega-wealthy will never be as destructive as the sheer existence of the mega-wealthy, using up our resources like they will just go on forever. And yes there will be resentment (you can call it envy), from which you derive crime, war, and all sorts of other nasty altercations.

With... without
And who'll deny it's what the fighting's all about?

Pink Floyd

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Fri Oct 01, 2010 10:53 pm

I listened to lesson 10. Martensen begins by quoting Milton Friedman, so he can't be all bad. "Inflation is everywhere and always a monetary phenomenon." I'll go along with that.

But I can't resist a cheap shot, because Martensen leaves himself wide open for it. He describes a lifeboat scenario in which somone on a lifeboat has an orange and someone else has dollar. Apparently, the dollar is the only money on the boat, so Martensen says the price of the orange is a dollar. Then a third person discovers a ten dollar bill in his pocket, and Martensen says the price of orange rises to ten dollars.

This logic is ridiculous. The price of the orange is neither a dollar nor ten dollars. The orange is priceless in this scenario. The guy with the orange won't part with it for all the gold in Fort Knox, and not only because this gold would sink the life boat.

More to the point, consider Martensen's earlier example. An orange and an apple both sell for a dollar today, and both sell for ten dollars tomorrow. That's inflation, he says, and he's right.

Suppose I have an apple, today. I want an orange instead, so I sell the apple for a dollar and buy an orange. Tomorrow, I change my mind and want an apple again, so I sell the orange for ten dollars and buy an apple.

I start with an apple and end with an apple. The inflation didn't cost me anything, right? Some numbers on price tags changed, but relative values didn't change. That's inflation.

If I had traded my apple for a dollar and held the dollar for a day, I'd have lost my opportunity to buy the orange, but that's just an argument against holding dollars. You shouldn't hold dollars. Holding dollars is a bad idea.

If you have a dollar, buy something with it. That's what dollars are for. You need not consume with the dollar. You may also save by buying a durable good, and you may invest by buying a means of production, but simply holding the dollar serves no purpose.

Now, extreme inflation and wildly varying inflation is a bad thing, because it confuses market signals, but gradual inflation is not necessarily a bad thing. I'll even argue that it's a good thing, precisely because it discourages the mistaken impression that currency itself is a thing of value. Currency is not a valuable asset. It's an accounting device.

Next, Martensen discuss inflation in the British colonies in America between 1665 to 1776. Then, he says, a dollar saved was a dollar saved, because he says, prices didn't rise.

This summary is misleading. Many currencies existed in the colonies at this time. The dollar was only one, and it was the Spanish dollar, a silver coin also called a "piece of eight", so Martensen is discussing barter in a standard commodity.

If you measure the price of a bushel of corn today, relative to the price of silver, you might find that the relative value hasn't change much. If so, measured in silver, the price of corn has not increased at all. More likely, you'll find that a bushel of corn costs much less by this measure, so an ounce of silver buys a lot more corn today than it did in 1665. The price of corn in dollars goes up gradually, but so what? The price of corn measured in silver goes down, and the price relative to the median wage, measured in dollars, also goes down. The "cost of living" certainly has not gone up since 1665. It has plummeted. Even since W.W. II, the cost of living has plummeted. Economists differ on the cost of living for a median wage earner in the U.S. in the last few decades. Maybe the cost of living didn't decline much in this period, but it certainly didn't go up a lot.

That said, I completely agree that states inflate, particularly in wartime, and I'm not defending this inflation at all. It is costly, but it's not costly because it destroys your savings. This characterization of the problem is misleading. War and other acts of central authority are costly for many reasons, mostly because the state organizes resources poorly, i.e. it organizes resources to consume without producing. It even organizes means of production to destroy other produce. This malinvestment creates scarcity relative to the money supply and thus rising prices, but the scarcity is the primary problem, not the rising prices.

So I largely agree with the last half of lesson 10. I just think the emphasis is misplaced. Numbers on price tags are not the issue. Organizing resources to build stuff only to blow it up is the issue. I don't agree with some of the tired cliches. "Two spouses must work where only one once worked." That's nonsense. My mother didn't work for most of my childhood, but we did not have the same living standard that a typical two earner couple has now. I'm divorced from my kids' mom, so we maintain two households, and our living standard is still considerably higher than my household as a child, and my dad was an attorney. We have two homes and five cars and half a dozen computers between us. When I was a kid, only state agencies and Fortune 500 companies had computers.
People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

"Every man for himself" is the prescription of a state, not a free community. A state protects the poor from the rich only in fairy tales.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Fri Oct 01, 2010 11:41 pm

Martin wrote:Numbers on price tags are not the issue.


Unless the numbers on your paycheck aren't keeping pace... then it's an issue. This is fine for a small minority who know how to work the system and stay ahead of the game, but most people just work and find that their paychecks are worth less and less.

But I digress to my socialist roots, which is not productive to this conversation...

The orange in the lifeboat- I know it's silly in real life, but it does make some sense (for a neophyte) in understanding inflation- the orange is worth $1 because that's how much money is in the system, or $10 because that's how much money is in the system.

But the real meat is here:

Crash Course wrote:At any rate, back to our main story. Here’s inflation between 1665 and 1975. Knowing what you now know about Nixon’s actions on August 15th 1971, what do you suppose the rest of the graph looks like between 1975 and today?

This is your world. You’ve been living on the steeply rising portion of the graph for so long that that you think it’s level ground.

Because inflation is now a permanent feature, and because it advances at a percentage rate, your money is declining in value exponentially.

That’s what this “hockey stick” graph is telling you.

What does it mean to live in a world where your money loses value exponentially? You know what it means, because you live there. It means always having to work harder and harder just to stay in place, and it means perplexing and astoundingly risky investment decisions have to be made in an attempt to grow ones savings fast enough to avoid the ravages of inflation.


So you basically agree with that? And that a graph like that should be troubling... maybe even a portent of disaster?

And then:

Crash Course wrote:And it doesn’t have to be this way. And indeed, for the majority of our country’s history it wasn’t. And I’m hard pressed to say that inflation is a necessity and serves some essential and greater good[Emphasis Zapata's], because a lot of progress and advancement happened between 1665 and 1940 without the “benefit” of perpetual inflation.


This is where I get confused... are you at odds with this statement, and if so can you explain why in as simple a statement as that above? (And I realize that the answer to the latter may be 'no' and that will not necessarily prove him right... it's just that I understand what he's saying and it makes sense.)

Thanks again, you're doing me a great service. I'm trying to keep to the meat so as to make efficient use of your time and patience.

Zapata

[Edit: off to drink, now]

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Lance Kennedy » Sat Oct 02, 2010 12:26 am

The solution to inflation, on the personal level, is not to hang on to $$$. Instead, invest them in something that appreciates and makes money.

I have been in the position several times of owning commercial property. Once it was an apartment with attached office and warehouse. Once it was a small office suite. I rented them out. Got about 7% per annum of the market value as rent. But at the same time, the property appreciated almost as quickly as inflation. My rents were raised every few years to 7% of the new property value. Inflation proofing!

Re the mega wealthy.
Believe it or not, these guys play a vital role in the economy. The thing is that a poor person who managed to grab an extra few thousand dollars will spend it on personal goods.

A rich person, though, already has enough funding for all his/her personal stuff. So if extra money goes his/her way, that extra gets invested. Giving money to the wealthy grows the economy faster than giving the same money to the poor.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Sat Oct 02, 2010 12:32 am

Zapata wrote:Unless the numbers on your paycheck aren't keeping pace... then it's an issue. This is fine for a small minority who know how to work the system and stay ahead of the game, but most people just work and find that their paychecks are worth less and less.

Right. But that's not really happening. At least, it didn't happen for most of the 20th century. Again, I hear conflicting stories about the last couple of decades. Some say that wages stagnated or rose much more slowly than earlier in the century, despite continuing productivity growth, and I can believe that; however, I've had this debate a lot, and I've never seen compelling evidence that real wages actually fell in recent decades. If you have this evidence, I'll look at it.

Crash Course wrote:Because inflation is now a permanent feature, and because it advances at a percentage rate, your money is declining in value exponentially.

I don't dispute the fact that inflation is a permanent, even an intentional, feature of monetary policy; however, "your money is declining in value" is misleading. Again, I don't hold money, so inflation doesn't cause my holdings to decline in value. Things I hold rise in price with inflation, though the real value doesn't necessarily change.

What does it mean to live in a world where your money loses value exponentially? You know what it means, because you live there. It means always having to work harder and harder just to stay in place ...

No. That doesn't follow. Again, inflation is a rise in the general price level, i.e. all prices rise roughly in concert, including the price of labor. If all prices rise in concert, you aren't working harder to stay in place. I was around in the seventies, and I know very well that living standards are not lower now. I'm not only speaking for myself or for "the rich". How many people in the seventies had cable TV with a hundred channels? Roughly zero. How many had personal computers? Zero. How many had internet access? Zero. How many had cell phones? Zero. How many had cars, air conditioning, microwave ovens, washers and dryers and many other things? A much smaller proportion of the population had these things in the seventies. I've seen these figures from very credible sources.

... and it means perplexing and astoundingly risky investment decisions have to be made in an attempt to grow ones savings fast enough to avoid the ravages of inflation.

Martensen recommends buying gold. How perplexing and astoundingly risky is that? Investment is riskier these days, but inflation is not the principal issue. Demographics is the issue. The demographic transition would result in riskier investment even if we had a gold standard and very low inflation.

So you basically agree with that? And that a graph like that should be troubling... maybe even a portent of disaster?

The particular graph illustrated, with prices doubling every twenty years or so? No. This level of inflation is not a portent of disaster. If disaster awaits us, this inflation is not the cause of it. Peak Oil does worry me, but Peak Oil is not a product of inflation.

This is where I get confused... are you at odds with this statement, and if so can you explain why in as simple a statement as that above? (And I realize that the answer to the latter may be 'no' and that will not necessarily prove him right... it's just that I understand what he's saying and it makes sense.)

I'm not suggesting that economic progress requires inflation, but I am saying that moderate, reasonably predictable inflation is no impediment to economic progress. The period following W.W. II, through the present, was characterized by steady inflation, as Martenson says, but it's also the greatest period of economic growth in human history. How do you square this fact with the idea that inflation destroys savings and prosperity? Martenson says it's all about abundant, cheap oil. Suppose he's right. How would a lower rate of inflation over this period change anything? Oil would still have been abundant, and we'd still be approaching a production peak now.

Again, I'm not suggesting that any level of inflation is desirable or even tolerable, and I'm not suggesting that any cause of inflation is desirable. I'm only saying that inflation itself, at a steady rate of a few percent per year, is not necessarily destructive. Focusing on this inflation is misleading. I agree with a lot that Martenson has to say, but I don't agree that monetary inflation is the principal problem. I definitely agree that statecraft, empire, unsustainable entitlements, selling entitlement to tax revenue and the rest are huge problems, compounded by the demographic transition and peak oil, but all of these problems would exist without steadily rising prices.
People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

"Every man for himself" is the prescription of a state, not a free community. A state protects the poor from the rich only in fairy tales.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Sat Oct 02, 2010 9:02 pm

Martin Brock wrote:
Zapata wrote:Unless the numbers on your paycheck aren't keeping pace... then it's an issue. This is fine for a small minority who know how to work the system and stay ahead of the game, but most people just work and find that their paychecks are worth less and less.

Right. But that's not really happening. At least, it didn't happen for most of the 20th century. Again, I hear conflicting stories about the last couple of decades. Some say that wages stagnated or rose much more slowly than earlier in the century, despite continuing productivity growth, and I can believe that; however, I've had this debate a lot, and I've never seen compelling evidence that real wages actually fell in recent decades. If you have this evidence, I'll look at it.


Okay, well here are a couple things that came up on Google- I don't attest to their validity:
http://money.cnn.com/2006/08/28/news/economy/real_wages/
http://www.forbes.com/2008/02/29/pce-interest-update-markets-econ-cx_md_0229markets26.html

But what I do know is here, in Costa Rica, over the past eight years food prices have more than doubled, almost tripled, while wages have risen only about 50%... I haven't really lived in the US for 10 years, so I don't really know- I just assumed the same was true considering all the complaining I hear from up North.

But on a different subject, it may be of some importance to differentiate between the gadgets we play with, which no one will deny are getting cheaper, and the things we really need to live, like food, shelter, health care, etc.
Last edited by Zapata on Sat Oct 02, 2010 9:12 pm, edited 1 time in total.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Sat Oct 02, 2010 9:08 pm

Martin wrote:The period following W.W. II, through the present, was characterized by steady inflation, as Martenson says, but it's also the greatest period of economic growth in human history. How do you square this fact with the idea that inflation destroys savings and prosperity?


Well, now you're going to have to put in the 3 minutes to watch Chapter 5, because Martenson wouldn't miss a beat in explaining it as the product of a magic fuel supply that seemed like it would last forever.

[Edit] I mean that's the whole point, right? We've built an economy that requires growth to be prosperous, but it's all based on oil, and when oil peaks this shortsighted economy will be an albatross around our necks... or maybe a noose.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Zapata » Sat Oct 02, 2010 9:34 pm

Martin wrote:I'm only saying that inflation itself, at a steady rate of a few percent per year, is not necessarily destructive.


Okay, I understand what you're saying and certainly don't have the knowledge or need to disagree, but again, that's not what the 300 year chart in chapter 10 shows, correct? It shows inflation increasing exponentially over the past few decades.

So I want to know your opinions on this current trend: Is this chart more or less accurate, is it because of our abandonment of the gold standard, and is it in danger of collapse without radical changes? (Keeping in mind that our 100/1 returns on energy are over, and future returns will be more in the area of 3/1)

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Sat Oct 02, 2010 10:38 pm

I saw episode five earlier and just watched it again. I don't see any argument that the economy requires growth to be prosperous. I see a common sense argument that certain kinds of growth involve tradeoffs with certain kinds of prosperity.

If current demographic trends continue, population will continue to rise for another half century, at a steadily declining rate, before peaking mid-century, so I expect continued GDP growth with population growth, because I expect the new people to find ways to feed, clothe and house themselves. I also expect growth beyond population growth, per capita growth, because I expect people to find ways to become more productive, particularly people now in less developed parts of the world. I expect this growing productivity to deliver more goods and services to each person, and I call that "increasing prosperity".

I don't expect peak oil to terminate this process for two reasons. First, I agree with Martenson that people consuming a lot of energy now can consume substantially less in the future without sacrificing prosperity. "Growth" doesn't always mean more stuff. It means more value. Consumers get a lot more value out of each barrel of oil today than they did a century ago, and this process can continue even if production peaks and declines. Second, I don't accept Martenson's assumption that alternatives to oil must be far more costly. Many alternatives to oil exist, and with time and economies of scale, these alternatives will become less costly. The transition from oil to other sources will be costly, but energy is incredibly cheap now, so people can continue to prosper even at two or three times the cost. At a hundred times the cost, peak oil might be very painful for a century, but I expect less costly alternatives.

Martenson is a neo-Malthusian. His argument is not new. I heard it all in the late seventies. I was a competitive debater in high school, and energy independence was the National Forensic League debate resolution in 1979, so I heard these predictions a lot, thirty years ago. The next twenty years will be different. Demographics are very different, and we might be experiencing peak oil in fact, but humanity avoided catastrophe in the eighties. The eighties and nineties turned out to be very prosperous in fact, and I don't expect the next twenty years to be that different.

Will the next couple of decades be good enough to keep all the promises that baby boomers made to themselves, in the form of pension and other benefits? No. Should we therefore expect a terrible apocalypse? No. I expect to live longer and healthier than most people did a century ago, and I also expect to work longer. That's not a curse. It's a blessing.

Because the population ages rapidly in coming decades, labor force growth is slower than population growth, and that's a real problem. Labor force growth has declined for the last couple of decades, and the labor force grows much more slowly in coming decades in the U.S. China is not far behind. Martenson alludes to this problem, but he underemphasizes it in my opinion.

Here's a chart to make you think. If you want to know why people around the world, including the Chinese, continue investing in the U.S., despite the imperial excess and financial malfeasance, this chart explains it. The chart apparently assumes high rates of immigration.

http://www.newgeography.com/content/001 ... -like-2050
People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Sun Oct 03, 2010 4:10 pm

Zapata wrote:Okay, well here are a couple things that came up on Google- I don't attest to their validity:
http://money.cnn.com/2006/08/28/news/economy/real_wages/
http://www.forbes.com/2008/02/29/pce-interest-update-markets-econ-cx_md_0229markets26.html[

Your first link from 2006 discusses a three year period in which the inflation adjusted, median wage fell two percent. The second link refers to a single month, January '08, during a recession.

Here's another story from the New York Times reporting the statistic from 2006. It adds,

"Until the last year, stagnating wages were somewhat offset by the rising value of benefits, especially health insurance, which caused overall compensation for most Americans to continue increasing. Since last summer, however, the value of workers’ benefits has also failed to keep pace with inflation, according to government data."

So according the Times, the real median earnings, including benefits, didn't fall during this three year period. It only fell for one year.

This source, a left leaning think tank, reports the real median wage increasing between '73 and '07, despite the dip in '06, and the dip in '06 is not the worst dip in recent decades. A dip in the early nineties was worse but preceded a sharp increase in the late nineties.

All of these sources report much greater wage increases above the median and greater increases in productivity. That's a separate issue. I'm not a Pollyanna, saying that everything is bright and beautiful, but Cassandra's case isn't so strong either, and I don't think we can blame every ill on rising prices and monetary expansion.

But what I do know is here, in Costa Rica, over the past eight years food prices have more than doubled, almost tripled, while wages have risen only about 50%... I haven't really lived in the US for 10 years, so I don't really know- I just assumed the same was true considering all the complaining I hear from up North.

If it bleeds, it leads. You can't judge the world from what you read in the newspaper, especially the headlines. The bias toward bad news is extreme. I'm not telling you to view the world through rose colored glasses, but you do need tinted shades when reading newspapers, to filter out the incredible bias toward emotionally provocative "news", especially scary "news".

But on a different subject, it may be of some importance to differentiate between the gadgets we play with, which no one will deny are getting cheaper, and the things we really need to live, like food, shelter, health care, etc.

Well, I like gadgets. I like my computer and my internet access. I like this forum; otherwise, I wouldn't squander so much of my life here. I want internet devices to improve, to become smaller and more mobile. I want a Dell Streak or a Samsung Galaxy Tab in the near future, and I expect to pay much less for it than I paid for my first, far less powerful, far larger and heavier, far more energy hungry computer decades ago. I also want network bandwidth to increase, particularly wireless bandwidth.

I don't worry much about the price of food in the long run, because we'll subsidize food as much as necessary to avoid mass starvation. Starving people shoot politicians and the armed men politicians rule, and there's not a damned thing the politicians or the police can do about that. The price of health care is a real problem, but it's a growing problem largely because politicians continually try to do something about it. I don't want Chris Martenson centrally planning any solution to the problem. The price of housing shot up in the last decade because of reckless monetary policy, among other reasons, but we actually have a glut of housing in the U.S. now, so I don't worry about housing costs in the long term either.

The other reasons for the real estate bubble need more consideration here. What happens when an unprecedented number of older people, relative to the number of younger people following them, wants to spend a couple of decades consuming without producing (in retirement)? What do these older people do? They bid up the price of entitlements to consume without producing, right? What else can they do? They can try to increase the productivity of younger people by investing, but no law of economics guarantees that any number of older people can increase the productivity of any number of younger people enough to provide all of the older people with twenty years of retirement.

If everyone decides to have no children, so they can all "save more" for retirement, what happens when these people get old? They're all rich? No. They all starve. I'm not suggesting that the demographic transition will starve everyone, or that it will starve anyone, but I am saying that "saving money" doesn't feed anyone. Money has no hands.
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More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Lance Kennedy » Sun Oct 03, 2010 6:56 pm

To Martin

Re the high cost of health care in the USA.

It is well known that health care in the USA is the most expensive in the world. Here in New Zealand, we have a variation on what you do. The government provides legal immunity to doctors against malpractise law suits, but has its own medical disciplinary board. Doctors who are careless, incompetent, or crooked can run afoul of this board. Patients who become victims of such doctors can pass their complaints to the board.

The NZ governent runs its own insurance scheme which compensates patients for problems from medical mismanagement, but to a much more restrained degree than the incredibly overdone malpractise compensation payouts in the US.

Since the cost of American healthcare has to compensate doctors for massive insurance premiums against malpractise suits, would not this system in the USA reduce the cost of health care? Perhaps drastically?

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Martin Brock » Sun Oct 03, 2010 11:33 pm

I read that malpractice cases account for about two percent of medical costs. Some people claim that defensive medicine, tests and treatment of dubious value, account for another ten percent. It's a problem, but I don't believe the cost of health care is ten percent higher than necessary. I believe it's fifty percent higher than necessary or more.

Even if some state agency replaces the tort system, I don't expect the agency to lower the cost of health care much, but I do expect this agency ultimately to become very friendly with the health care/industrial complex and drive up costs more than it lowers them. So it goes. Maybe I'm just a cynic, but I prefer a lot less central authority over health care, not more.
People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

"Every man for himself" is the prescription of a state, not a free community. A state protects the poor from the rich only in fairy tales.

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Re: Chris Martenson's Crash Course and Collapse Theory Gener

Post by Lance Kennedy » Sun Oct 03, 2010 11:41 pm

To which I reply, Martin, that the US health care system is massively more expensive than here in NZ. We have a lot more government control than you do. If government control raises prices, then perhaps you could explain the discrepancy?