Posts Tagged ‘Money’

Bill Gates Doesn’t Need Money

January 20, 2013

According to this interview published in the Telegraph, Bill Gates doesn’t need his money. If that is the case he is welcome to send some of it to me.

William Henry “Bill” Gates is a rich man. His estimated wealth, some 65  billion measured in US dollars, equals the annual GDP of Ecuador, and maybe a bit more than that of Croatia. By this rather crude criterion, the founder of Microsoft is worth two Kenyas, three Trinidads and a dozen or so Montenegros. Not bad for a university dropout.

Gates is also mortal, although some of his admirers may find that hard to believe, and as they say, there are no pockets in shrouds. So he is now engaged in the process of ridding himself of all that money in the hope of extending the lives of others less fortunate than himself.

“I’m certainly well taken care of in terms of food and clothes,” he says, redundantly. “Money has no utility to me beyond a certain point. Its utility is entirely in building an organisation and getting the resources out to the poorest in the world.”

That “certain point” is set a little higher than for the rest of us – Gates owns a lakeside estate in Washington State worth about $150 million (£94  million) and boasting a swimming pool equipped with an underwater music system – but one gets the point. Being rich, even on the cosmic scale attained by Bill Gates, is no guarantee of an enduring place in history. The projection of the personal computer into daily life should do the trick for him, but even at the age of 57 he is a restless man and wants something more. The “more” is the eradication of a disease that has blighted untold numbers of lives: polio.

He emphasises that the foundation’s effort is part of a global campaign in which governments must play the lead role.

“The scale of the (foundation’s) wealth compared to government budgets is actually not that large, and compared to the scale of some of these problems. But I do feel lucky that substantial resources are going back to make the world a more habitable place.”

In 1990 some 12 million children under the age of five died. The figure today is about seven million, or 19,000 per day. According to the United Nations, the leading causes of death are pneumonia (18 per cent), pre-birth complications (14 per cent), diarrhoea (11 per cent), complications during birth (nine per cent) and malaria (seven per cent). For Gates, though, polio is a totem. The abolition of the disease will be a headline-grabber, spurring countries on to greater efforts. The Bill and Melinda Gates Foundation will spend $1.8 billion in the next six years to accomplish that goal, almost a third of the global effort.

“All you need is over 90 per cent of children to have the vaccine drop three times and the disease stops spreading. The number of cases eventually goes to zero. When we started, we had over 400,000 children a year being paralysed and we are now down to under 1,000 cases a year. The great thing about finishing polio is that we’ll have resources to get going on malaria and measles.”

The children of Bill and Melinda Gates will never know poverty. They may not become multibillionaires but even the loss to charity of the vast bulk of their parents’ fortune should leave them with a billion or so each.

Gates explains: “The vast majority of the wealth, over 95 per cent, goes to the foundation, which will spend all that money within 20 years after neither of us are around any more.

Bill Gates is not the first tycoon to attempt to give away all, or really just most, of his money. In this he seems to be following the example of Andrew Carnegie, who said,

The day is not far distant when the man who dies leaving behind him millions of available wealth, which was free for him to administer during life, will pass away unwept, unhonored, and unsung, no matter to what uses he leave the dross which he cannot take with him. Of such as these the public verdict will then be: The man who dies thus rich dies disgraced. Such, in my opinion, is the true gospel concerning wealth, obedience to which is destined some day to solve the problem of the rich and the poor.

I hope that Gates is successful. I do hope that he is careful about how the money he gives away is being spent. It does no good if the money ends up in some dictator’s bank account. For this reason I hope that he does not let governments play a lead role in the effort to eradicate polio.

Create Your Own Money

November 16, 2012

There was a post in the Democratic Underground which generated quite a lot of amusement in Conservative circles a couple of weeks ago. Put simply, the poster believed that since the government can print money, it can never really go broke. Here is the post.

Let’s say that you have the ability to print your currency using your computer printer, and every merchant accepted your printouts as a valid exchange for goods and services. You need to pick up your dry cleaning? You printout a $20 bill and your cleaners hand over your garments without question. Same would be true for your mortgage, groceries, car note, etc. Your creditors even accept your printouts as payment on your debts.

Given this, how can you ever be broke? Answer, you cannot be broke. The U.S. government is not in debt simply because it can create currency to pay off the debt, and our creditors gladly accept our currency as payment on our debts. You see, the world needs our dollars because the world needs oil, and in order to buy oil, you need dollars, which means that the world needs to stockpile dollars, and that means that the U.S. can print all of the money that it wants without incurring massive hikes in interest rates to attract lenders.

So, why the hue and cry about America being broke? Simple. The elites in this country need to create a defcit and scarcity crisis in order to dissuade the public from voting for increased social spending on things like a universal health care program, better education, better benefits for SS recipients better infrastructure, etc. You cannot argue against the logic nor the need for these programs, but you can argue that you cannot pay for them. Additionally, more social spending means that the public is not as dependent on corporate America for their economic survival. For example, if you have universal healthcare, you don’t have to take a job just for the health benefits. If you have a generous Social Security program, you don’t have to invest in the market.

To be fair, the majority of responses to this display of economic illiteracy correctly pointed out that the large scale printing to money to pay the country’s debts would lead to hyper-inflation, with many using Weimar Germany as an example. That is all true, but I think it is worth exploring why this is the case. In doing so, perhaps we can clear up some misperceptions about money and the national debt.

To begin, those pieces of green paper you have in your wallet are not actually worth anything. I am not some crank urging you to go put and buy gold and silver. Gold and silver are not worth anything by themselves either. What you actually do when you buy something at a store is exchange some good or service you possess for a good or service at the store. When you go to work and get your paycheck, your employer is trading its goods and services for the labor and skills you give it. Bartering is rather cumbersome for all but the simplest of economic activities so in order to facilitate all of this trading, people have invented money. All money is therefore, is simply a method of keeping score, or a medium of exchange.

There are two others uses for money which are a little beyond the scope of this post, but which I have to mention in passing. One is money as a unit of account, that is a way of expressing how much a good or service is worth compared to other goods and services. It makes more sense to refer to prices in dollars or euros than terms of varying goods. The third use of money is as a store of value. This means that money can be used to store wealth. You know that the dollars in your pocket will still be worth something next week and can be easily traded.

It doesn’t actually matter what is used as the medium of exchange. It could be gold or silver, or candy bars, cigarettes, leaves, sea shells, or anything. It is better, however, to use something that is not consumed, and does not go bad. Bananas would not be very useful as money because you might get hungry and eat your savings. Also, bananas go bad after a couple of days. The medium used should not be too common or too scarce. Leaves from trees would also not be very useful. Anyone could go out into the woods and get a windfall. Gold and silver have generally been the most common substances used for money since they do not corrode easily and are scarce enough to be considered money. Most countries in the world today use fiat money. That is the government says a dollar is worth a certain amount.
If you pay for something with counterfeit money, you are cheating the other person. You are trading their goods or services with something worthless. Governments cannot actually counterfeit money, since they are the ones creating it, but they can devalue the currency which has almost the same effect. If a government prints large amounts of money without any addition to the total goods and services produced by the nation, then each individual unit of currency, a dollar bill, for example, represents less and less actual value. The total amount of wealth in the system, so to speak, is divided among more dollar bills. When this happens, each dollar bill is worth less and less, leading to inflation. If the US government printed $16 trillion dollar bills and used them to pay off the national debt, it would, in effect, be cheating its creditors.

Now, you might be thinking, “So what? Who cares if we rip off the lousy Chicoms.” Well, the fact of the matter is that despite all of concern about China owning the US, the truth is that the Chinese government only holds about 8%  of the national debt. Most of the debt is owed the the citizens of the United States, through treasury bonds held in retirement accounts, mutual funds, banks and state and local governments. The Social Security Administration holds about 19% of the debt in the Social Security Trust Fund. If the federal government tried to pay off its debts in hyper-inflated dollars, most of the small investors, who were counting on a return on their investment would be ruined. Larger creditors, including foreign governments could well refuse payment in worthless dollars and insist on being paid in euros, or gold. The rest of us would experience the joys of triple or quadruple digit inflation.

The point I have been trying to make in this long post is that money is not the same as wealth. Money represents wealth and wealth cannot be created from nothing.  If you or the government just prints a dollar bill, you are not creating wealth, you are only spreading existing wealth among more money. Sorry, but we can’t print our way out of our debts.

 

 

No Money

May 5, 2012

Is it possible to live completely without money in this day and age. Most people would say no, but Daniel Suelo would disagree. He has gone completely without money since 2000. I read about him in Yahoo News.

Daniel Suelo is 51 years old and broke. Happily broke. Consciously, deliberately, blessedly broke.

Not only does he not have debt, a mortgage or rent, he does not earn a salary. Nor does he buy food or clothes, or own any product with a lower case “i” before it. Home is a cave on public land outside Moab, Utah. He scavenges for food from the garbage or off the land (fried grasshoppers, anyone?). He has been known to carve up and boil fresh road kill. He bathes, without soap, in the creek.

In the fall of 2000, Suelo (who changed his name from Shellabarger), decided to stop using money altogether. That meant no “conscious barter,” food stamps or other government handouts. His mission was to “use only what is freely given or discarded and what is already present and already running,” he wrote on his web site, Zero Currency.

At first I thought he might be mentally ill, but he does not seem to be. I am just a little envious of him. It must be nice to live without all of the worries and trouble that having money and possessions bring with them. If you don’t have or need any money, you don’t have to work. Maybe Mr. Suelo is on to something. I can’t do it though.  I have responsibilities that I cannot walk away from, and anyway I like my comforts.

Some people do not appreciate his life style.

While the book reviews have been generally positive, Suelo has come under fire by some who say he’s a derelict, sponging off society without contributing. They are valid criticisms: This is a guy, after all, who has gotten a citation for train hopping (what would Jesus say about that?). And he’s not opposed to house sitting in winter–not exactly living off the land.

And besides: How is he actually helping others by going without? It’s not like he’s solving world hunger, or curing cancer.

Sundeen disputes these arguments. “He doesn’t accept any government programs—welfare, food stamps, Medicare,” he said. “The only ways in which he actually uses taxpayer funded derivatives is walking on roads and using the public library. So in that regard he’s a mooch–he’s using the roads and not paying taxes. But if you try to quantify the amount of money he’s taking from the system—it’s a couple of dollars a year, less than anyone’s ever used.”

Instead, he is actively promoting “his idea that money is an illusion,” Sundeen said. “The Fed just prints it up, it doesn’t mean anything and it’s going to lead us down the road to serfdom.” Suelo simply doesn’t want to contribute to that, and so he lives life on his own terms.

I don’t think it is fair to call Suelo a mooch, either. He is not living off anyone, especially the taxpayers. His friend Sundeen is right about money being an illusion. Those green pieces of paper the government prints are not really worth anything, except what people think they are.

Anyway, if Obama is reelected, we might all be living without money, in caves.

No Money

May 5, 2012

Is it possible to live completely without money in this day and age. Most people would say no, but Daniel Suelo would disagree. He has gone completely without money since 2000. I read about him in Yahoo News.

Daniel Suelo is 51 years old and broke. Happily broke. Consciously, deliberately, blessedly broke.

Not only does he not have debt, a mortgage or rent, he does not earn a salary. Nor does he buy food or clothes, or own any product with a lower case “i” before it. Home is a cave on public land outside Moab, Utah. He scavenges for food from the garbage or off the land (fried grasshoppers, anyone?). He has been known to carve up and boil fresh road kill. He bathes, without soap, in the creek.

In the fall of 2000, Suelo (who changed his name from Shellabarger), decided to stop using money altogether. That meant no “conscious barter,” food stamps or other government handouts. His mission was to “use only what is freely given or discarded and what is already present and already running,” he wrote on his web site, Zero Currency.

At first I thought he might be mentally ill, but he does not seem to be. I am just a little envious of him. It must be nice to live without all of the worries and trouble that having money and possessions bring with them. If you don’t have or need any money, you don’t have to work. Maybe Mr. Suelo is on to something. I can’t do it though. I have responsibilities that I cannot walk away from, and anyway I like my comforts.

Some people do not appreciate his life style.

While the book reviews have been generally positive, Suelo has come under fire by some who say he’s a derelict, sponging off society without contributing. They are valid criticisms: This is a guy, after all, who has gotten a citation for train hopping (what would Jesus say about that?). And he’s not opposed to house sitting in winter–not exactly living off the land.

And besides: How is he actually helping others by going without? It’s not like he’s solving world hunger, or curing cancer.

Sundeen disputes these arguments. “He doesn’t accept any government programs—welfare, food stamps, Medicare,” he said. “The only ways in which he actually uses taxpayer funded derivatives is walking on roads and using the public library. So in that regard he’s a mooch–he’s using the roads and not paying taxes. But if you try to quantify the amount of money he’s taking from the system—it’s a couple of dollars a year, less than anyone’s ever used.”

Instead, he is actively promoting “his idea that money is an illusion,” Sundeen said. “The Fed just prints it up, it doesn’t mean anything and it’s going to lead us down the road to serfdom.” Suelo simply doesn’t want to contribute to that, and so he lives life on his own terms.

I don’t think it is fair to call Suelo a mooch, either. He is not living off anyone, especially the taxpayers. His friend Sundeen is right about money being an illusion. Those green pieces of paper the government prints are not really worth anything, except what people think they are.

Anyway, if Obama is reelected, we might all be living without money, in caves.


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