Create Your Own Money

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.



The Adult Baby

When I first heard about this, I had assumed that the person referred to, one Stanley Thornton Jr. was either so profoundly retarded that he could only function at an infantile level, or some pretending to be retarded to get disability payments. The truth is stranger and a little disturbing. Actually there seems to be a whole subculture of people who pretend to be babies. According to our crack staff of researchers at Wikipedia;

Paraphilic infantilism is a paraphilia, and includes a certain form of psychological regression.[1] In the majority of cases, it does not interfere greatly with a person’s work or casual social life. It is characterized by the seemingly uncontrollable desire to wear diapers, due to reasons other than medical necessity, and/or be treated as an infant[2] or toddler. Within the community of such diaper wearers, one who engages only in the erotic or sexual aspect of diaper wearing without experiencing any accompanying regression fantasies is known as a diaper lover (or DL). An adult who only engages in the infantilistic play aspect is known as an adult baby (or AB).[3] An adult who may experience both of these things is referred to as an AB/DL.[4][5] In 2004, an informal online survey of 80 adult diaper wearers showed that approximately 40% considered themselves strictly DL’s, approximately 40% were mixed, and 20% considered themselves strictly AB’s. The survey also indicated that there is a significant number of teenagers who engage in this practice.[1] The American Psychiatric Association‘s Diagnostic and Statistical Manual of Mental Disorders, indicates that a majority of infantilists are heterosexual males.[6] DLs and ABs differ in self-image and the focus of attention.[2][7] Neither includes a sexual preference for children.[2][7] There is no singular, typical behavior for paraphilic infantilism, but a wide range of thought patterns and behaviors. Some fantasize about being free of guilt, responsibility, or control, whereas others might not. Some act indistinguishably from a baby at times, while others practice in a way that would probably not be noticed by passers by on the street. The desires and tastes of paraphilic infantilists vary around common themes of diapers and babyhood.[2]

Paraphilia is the nice, PC way of saying perversion. In other words, these are people who gain some sort of satisfaction, possibly sexual, from pretending to be babies.

I don’t get it. I don’t have any memories of my own infancy, but I have had four children and I have observed each of them as they grew up. Babyhood doesn’t seem that enviable a lifestyle to me. All babies do is eat, poop, and cry. It doesn’t seem to be very exciting and I can’t imagine why these people would want to wear diapers, sit in high chairs and playpens, and be bottle fed.

I am not the most ambitious man in the world. I have never desired great wealth or power, but I would like to do something with my life. I just can’t imagine living on disability unless I absolutely couldn’t work. Childhood was fun while it lasted, but to be truly happy and fulfilled, you have to grow up.

I hope they do cut off Sydney Thornton’s benefits. Unless he carries out his threat to kill himself, I think it would do him a lot of good to force him to grow up. He might even end up being happier.