User talk:Karmaisking

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Hello, Karmaisking, and welcome to the Mises Wiki! Thanks for signing up – we're glad to have you, and look forward to seeing your contributions.

Please sign your messages on discussion pages using four tildes (~~~~); this will automatically insert your username and the date. If you need help, just let me know. --Forgottenman (talk) 20:02, 16 November 2010 (CST)

Could you please provide the source of what you copied to Libertarianism so that we can document it for copyright purposes? Thanks! --Forgottenman (talk) 20:02, 16 November 2010 (CST)
Hey. It's taken from a very old version (2008) of the Wiki article. The first para is basically me. The rest is a collection of Wiki stuff and me. Hopefully it will evolve quickly to have its own indept presence and the left-wing domination over at Wiki will mean Wiki will evolve the other way. Let's see how it plays out, but I doubt Wiki will have a problem on the copyright issue - certainly not after a few months. Some pictures would be good, but I didn't have the time to import them so will leave that for others to address.
You may not know, but there's been a shocking multi-year fight over at Wiki over Libertarianism, Austrian School, and lots of other artices. Often the best versions are around 2007-2008 before "The Change" - which is a period where the admins took a turn to the left and academics started infecting the running of Wiki and killing off accurate but controversial versions of various topics. If you mined Wiki around 2008 for lots of Austrian topics it's likely (1) you would get excellent material and (2) you wouldn't be at major risk of any copyright issues in the sense that they've been deleted and vary substantially from the current versions. Moreover as these versions evolve, they will become more independent and on each iteration the risk of copyright problems gets less and less with the contribution of more original material from us. So it's a marginal issue.
By the way, we need lots of articles that are not necessarily "Austrian" in nature to fill out the contemporary Austrian perspective. Ponzi scheme is one good example. John Law is another. French Revolution is another. Because Austrian arguments for gold build on history, the history needs filling out. I can't do it, but if you have the time, getting a good article on the dynamics of Ponzi and Pyramid schemes would be 90% of the expalanation of the current monetary system worldwide. Karmaisking 21:52, 16 November 2010 (CST)
I can only agree with the historical focus! We already have John Law and Inflation during the French Revolution, so it's going in the right direction. :) Pestergaines 04:01, 17 November 2010 (CST)
Okay. In general it'd be good to be cautious before copying because WP's license is more restrictive than ours, but it's not a huge difference, and especially not a big deal if you are the author of much of it anyway. When you do copy, though, please put {{Wikipedia text}} at the top of the page (or where the text not written by you starts) so we're aware that that's where it came from.
Regarding history, I totally agree – a major goal of this project is to build articles on background subjects, because Austrian Economics is a worldview, not just a set of economic principles. You're right about Ponzi; I'll research it a bit and see if I can come up with something. --Forgottenman (talk) 07:29, 17 November 2010 (CST)


Hallo Karmaisking, very nice job on the Malinvestment article! Cheers, Pestergaines 11:09, 27 November 2010 (CST)

Thx.Karmaisking 05:52, 28 November 2010 (CST)

Bugs in the references

Hi Karmaisking, I saw your note regarding references on Austrian School of Economics. I've looked into that problem and haven't been able to figure out what is causing that. I'll work up some more energy to investigate it again soon, but in the mean time it may be better to simply not use the template, or only use the template for part of the citation. --Forgottenman (talk) 09:20, 5 January 2011 (CST)

Thanks. I won't use that format if I can avoid it. Karmaisking 22:32, 6 January 2011 (CST)

Criticism of fractional reserve banking - German policy

Hallo Karmaisking, I came across the following in the 'Criticism' article:

" cannot seriously be disputed that the economics of fascism provided a degree of prosperity to the populace, and that the economic policies that were implemented during this period by these fascist governments succeeded in their stated objective of restoring economic and social order during the pre-World War II era."

I strongly toned down the statement, but it still needs revising and the resource is under heavy attack by some authors. (Not surprising given sentences like these!) See a rather intense response from Gary North (he has much more on the many misconceptions in the whole book). I suggest to carefully review the quotes from this author and remove them as necessary. Pestergaines 06:33, 16 February 2011 (CST)

Totally understand. It's such a complex issue, I agree the comment needs toning down, but North's (and other's) arguments are a little circular and in any case the whole Brown/North debate is referenced in the article so it's not as though readers can't do further research and make up their minds. The article is probably the most comprehensive summary of the various criticisms - and remedies - for FRB on the internet today. WP censored this stuff so the lefties have got control of that space and have had control since 2008. I'm trying to pack a lot in as densely as I can and present as many angles on the arguments as possible, as objectively as possible. Clearly fascism is a very loaded term and we need to be cautious but the historical facts cannot (and should not) be ignored, even though it's mixed in with a lot of ugly "Nazi" history. Back to the argument: Fascist (Nazi) Germany did stage a remakable and unprecedented economic recovery (prior to invading Poland and France), as Brown and others have pointed out (whether it's a reliable source or not is another question - I admit I'm using her as the source but I don't think the historical facts are in dispute). It could be argued that Germany recovered because of war preparations and military spending (Keynesian stimulus) and North says government spending inevitably ended up killing millions in war because that's what big government spending does. But he doesn't argue about the drop in unemployment and the growth figures out of Germany after the change to the German monetary system implemented by the new regime after Weimar. He just says the "growth" pushed Germany headlong into war. So I would still respectfully maintain that the setence is technically accurate, but could mislead young players to the game into thinking this means the politics and ethics of fascism "works". It didn't then (and probably never will) but that doesn't mean the economics of facsism didn't work either, which is a separate question. The point is that state controls on banking (and state-owned banks) combined with a fiat system where money was issued directly from Treasury did not blow up the German economy and in fact did "work" for a period. It produced a remarkable and very positive turnaround. And both Italy and Germany experienced extraordinary political and economic chaos and instability post-WWI under a central bank dominated financial system. If Ireland recovers from their economic crisis in two years I'll be amazed. It is remarkable that Germany was able to recover at all from Weimar hyperinflation. That achievement simply cannot be taken away from the fascist regimes of either Italy or Germany. They both staged remarkable recoveries for a few years. I think Italy had something like 15 governments between WWI and Mussolini and Italy was on the very brink of economic disaster. It was complete chaos over there post WWI, with the regime of dominant central banking combined with a break away from the gold clearing house resulting in economic crisis and crazy unemployment rates. So I suppose I was trying to provoke some revisionist thought on the economics (not the politics or morality) of Italian and German fascism, but I'm happy to go with whatever wording you think is appropriate to capture the points Brown was making - regardless of the quality of her arguments, they are arguments that need to be documented as they are pertinent to this topic. And fashions come and go with politics (I've seen many in my time) and it may be that the fascist monetary system in Germany post-Weimar will be looked on as a model after the next financial crisis. Who knows? And as a personal issue, I try to be as objective as humanly possible on these issues and we're all navigating a minefield here. Occasionally I'll blow my leg off, but I think it's important to start walking into the minefield because at the moment we're all walking into the minefield completely blind, with Fed monetary dictator Ben Bernanke leading the way to a global food crisis. I estimate that Bernanke's policies will literally kill millions next year (and tens of millions over the next decade), so it's line ball as to whether Mussolini or Bernanke will be seen by historians as the more reckless public serpent. Karmaisking 17:12, 16 February 2011 (CST)
I'm all for revisionist history, but I probably misunderstand here something, so let me try to focus on the important points. The politics and ethics of the Nazi regime are beyond question here, and their strong connection to economic policies cannot be denied. But for the sake of the argument, let's take on the economic policy separately.
From what little I've read about the subject, it seems that the economic recovery was based on plain and simple inflation. It may have been disguised in some ways, but it's the same old story all over again. And of course it "works" - for a time. Inflating the money supply is pretending that there are resources, which don't really exist, a boom ensues. (It doesn't matter which institution makes the stuff - central bank, Treasury, or private banks.) This fake economic prosperity inevitably produces a real crisis. The form may differ - in Germany, the price inflation may seemed to have been successfully suppressed, but the lack of goods was still very much felt. (Other authors point out, that Germany made the occupied nations pay for a lot of its economic woes, so if it didn't have this option the situation would be even worse.) From this I can only conclude that this episode of fascism didn't "work" - or that it "worked" only for a time, until it folded. (Although, of course, it worked for those guys on the top.) Same as any other expansion of credit.
Now, Gary North claims, that the recovery from the Great Depression was already underway, when Hitler took over. For this I have no data, but it seems at least reasonable. You also make a good point about Italy's constantly changing government, and it equally applies to the political instability in Germany, revolutions and all. One could argue, that replacing a wildly unstable political (and economical) environment for a stable regime, other things being equal, would alone bring about a certain economic recovery. Also, a large country, that has a population with renewed optimism for the future (however misguided the reasons may be), could also recover more swiftly. So there's space to doubt Brown's argument even from this angle. Some recovery may have been genuine, then there's a bubble as we know it.
Barring the inflation itself, it is a key recognition of the Austrian School that socialism doesn't work, even if only its economic policies are considered - and that includes its derived forms, like fascism. Central planning doesn't work, as even Hermann Goering had to recognize. I hope there is no disagreement between us on this. :)
Back to the article though! It is an excellent overview of all the discussions raging about FRB. On the low end, I'd suggest to completely remove all references and quotes of this resource, as it seems rather dubious. However, you have shown that you can handle the often tricky argumentation between various sides of a debate; and the author seems to be recognized to a degree. I suggest to carefully comb through the references and alter the text appropriately. If the author says fascism works on a certain level, that's perfectly okay to state - as long as we get across our point. ;) Pestergaines 06:13, 17 February 2011 (CST)
Excellent comments and I wholeheartedly agree with most of what you say. The only qualifier I would add is that I think you're a little too casual on the issue of where and how money is made. Not all inflation is the same and not all inflation has the same effect. Bank credit expansion has very different effects compared to debt-free Treasury note issuance. Some guy spending $1000 from his credit card on a flat screen TV is different from the govt spending $1000 feeding a homeless person or $1000 which contributes to building a new subway network in LA. A lot of spending by the Nazi govt initially went into R&D and infrastructure. Those high speed autobahns in Germany are courtesy of Nazi "inflation". So is the VW Beetle and the Porsche. So is the jet engine. Brown's point is that govt spending debt-free money on capital projects is not necessarily "inflationary" (in terms of price inflation) and if combined with full reserve banking or state owned (boring) high reserve banks - or even just combined with Glass Steagall type legislation - this could "work" and arguably has worked. Whether she's right or not is a completely different question. It's at least arguable and therefore deserves to be noted on the page. People can then make up their own minds. On whether her book should be expunged from the record - my respectful comment would be "no". It's sufficiently notable now to be discussed, even with the multiple issues North has with the historical accuracy of the book. Most of North's comments are fairly trivial and don't really damage her arguments, although I acknowledge some - especially the misquoting of Rothbard - are very serious and suggest either poor research or a pro-State bias. I respect North's comments and analysis but don't like his ad hominem attacks on her. If he likes ad homs he should reflect on whether his dire predictions about Y2K (setting up a survivalist-type refuge expecting civilization to collapse in Y2K) brings into question his economic analysis or his own criticisms of Brown. They don't, but then that should teach him some humility and openness to "other" ideas on monetary reform, surely.
Finally, I don't swallow the argument that order after chaos will automatically - even with bad "inflationary" govt policies - bring about economic growth. Mao came in after nearly a century of disaster in China only to add to the misery. Stalin - arguably the same. A simple visit to these countries would have revealed they were going backwards (starving children are hard to hide). Communism was ordered madness that led to catastrophe. So let's not be too critical of the economics of fascism. It didn't immediately cause economic chaos. The historical record reveals the economic results of fascism were mixed and the whole issue was clouded by invasion and war. The question I suppose is whether the fascist economic model required conquest for it to continue. At least in the early stage it didn't. I'm a libertarian (anarcho-capitalist of the Rothbardian Hoppean Hulsmann School) and as hard-core as they come. But for me the dysfunction of the current quasi-fascist, insane, cannibalistic "trickle-up" consumption-fuelled debt-based central bank dominated economic system is actually worse - probably much worse - than Italian or German fascism post WWI. I know that's a very big statement to make, but looking back at the many economic disasters since August 1971, and the inflation-fuelled food crisis we're being forced to live through today, I really believe it. Central planning does not work - most of all in money production and pricing. Control the banking monster and I'm prepared to live with a little genuine fascism if I have to. After all, I'm living in an inherently unjust dysfunctional corporatist quasi-fascist system right now anyway. It has all the worst elements of fascism without the unifying ideas of genuine fascism. In my wildest dreams I can't think of a more inherently unstable or corrupt monetary system. - Karmaisking 20:02, 17 February 2011 (CST)
I'm glad we are coming closer to an understanding! Let's see where the differences lie. I admit I have no idea what "debt-free" Treasury note issuance is. But if we are looking at the effects of government spending, the key question is, where does the money come from? As long as it is from taxes and borrowing, it is running afoul of the Broken window fallacy, crowding out of private investment, creating corruption and all the goodies that come along. So the Germans would get the Autobahn, but lose something in exchange, something that may be never clearly seen. (I assume this is not Brown's scenario, please correct me if it is.)
Now, if the money is created out of nowhere in some way (which I assume, is Brown's scenario), it is good ole inflation with all its accompanying effects. The specifics of the inflation may be different if it's channeled into capital investment or consumer spending, but that doesn't change its destructive effects - you'll get the bubbles, malinvestment and eventual collapse in either case. Again, the Germans would get the Autobahn, but lose something in exchange. Depending on many conditions, the inflation may or may not manifest as a price inflation, that doesn't change its effects either. To me it is safe to conclude, that it "doesn't work". I fully agree with you now, this resource and the author deserve to be on the page as a criticism and 'solution' of the FRB problem, with the explanation why Austrians disagree with it. It's a tricky argument.
To the historical part - it is good that you disagree that order after chaos will automatically bring about economic growth, that's why I used the other things being equal. The policies of Mao and Stalin, as you rightly stated, are two particularly destructive examples of how not to bring about stability. Fascism didn't immediately cause economic chaos and at least outwardly seemed to be stable, so that much could contribute to some semblance of a economic recovery - but that wasn't any redeeming feature of the regime itself. Predictably, it caused economic chaos afterwards; this would come to pass with or without the war.
Ultimately, my knowledge of Austrian Economics, history and human nature is too limited to say, whether a hypothetical fascist regime would be in the short-term more 'stable' than the current institutional setup - although it very well may be. In the long term it is certainly not stable. But if there would be a choice, it seems to me like a deal with the devil. Give up more of your freedom first (since that's the nature of the beast we are talking about, more control over everything), and hope you'll get it back when the situation improves... if it ever does. You never get just "a little fascism." I understand if you would make a different choice, but I can't help but try to persuade you, that it would be tragically wrong. However sad and unstable our world may be, it can be still worse. Ultimately, I also think the fascists would solve the discussion for us, since in their more unified world they don't need disruptive elements like us. :) Pestergaines 09:52, 19 February 2011 (CST)
Wow. Balanced, considerate of all sides of the argument and brilliantly, clearly stated. I couldn't have summed up the arguments better myself. A few minor (very minor) points. I'm disappointed that you don't know what debt free fiat issuance entails as that's quite crucial to the article and you really can't understand Brown's arguments if you don't understand how the combination of full reserve banking and fiat debt-free money issuance would work. This has been around well before tally sticks were invented and is unlikely to be inflationary if combined with the requirement to pay taxes in fiat (and, of course, combined with high reserve ratios for the banks). If you have a problem with the concept, then everyone will. Please read Brown and Rowbotham and if you still have problems come back here and we can work on the article. There's a huge gap in the article if people don't understand that virtually all spending - including govt spending - is debt-sourced and that's a very recent phenomenon. Back to your other points: I agree all fiat note issuance (or fractional reserve credit issuance) is distorting. Yes, the autobahns sucked capital out of, say, farming technology. However, the implicit point Brown is making is that the "bad" distorting effects from the current system are worse - much worse - than the marginally "bad" (and possibly even good) "distorting" effects govt spending has when it is at least attempting to invest in "good" capital-intensive long-term projects that will boost productivity (and reduce price inflation) in the future. This tracks back to the Austrian question regarding whether there are any genuine "public goods". If there are, then the govt "investing" (spending) in these very narrow areas may be economically productive in the long-run - or at the very least could be much less damaging than other forms of govt stimulus spending - such as spending trillions to save insolvent banks, allowing them to continue to finance Ponzi schemes. I tend to agree with the Austrian position that the range of genuinely public goods is very small (possibly vanishingly small, as per Rothbard), and Japanese industrial policy (and US spending on space shuttles) shows lots of govt spending on capital projects is terribly wasteful, but I strongly believe some goods have more "public good" features than others. Water supply, building dams and levees, standing armies...these all have more genuine "public good" features than, say, the sale of a hamburger to a customer who can eat the burger immediately in the store to the total exclusion of other customers. If the Queensland govt in Australia had invested more in dams and water catchments than useless bureaucrats and policy advisors then Brisbane may have been saved from the recent terrible floods that devastated the city. All public spending is probably bad, but some govt spending is "badder" than others, depending on whether they are just uselessly duplicating or crowding out private services (education, healthcare) or whether they are investing in activities with more "public good" type features that save on damaging externalities that are not easily dealt with in the current system and that private companies would find genuinely difficult to fund (dams, levees, defense, satellites, clean renewable energy supplies etc).
I totally agree there is no such thing as a "little fascism". Since August 1971, we've seen it grow and grow. I also agree we wouldn't be tolerated in a return to Nazism - I'd be the first to be knifed at night in my bed. But I suppose I'm saying that we're barely tolerated in the current quasi-fascist regime and when push comes to shove I think you'll see the true colors of the current "democratic" regime come to life. We're living in a non-democratic kleptocratic fascist system right now, with Lloyd Blankfein at the levers and Bernanke carrying out his orders (and Blankfein probably reporting back to Geneva and Zurich and other places of power on a regular basis). To be brutally honest, even though I'm an avid Ron Paul supporter, if Ron Paul is a genuine contender for power in the US, I don't think he'll live to take the reins of power. South America is littered with principled leaders who were taken out by powerful forces (ref: Confessions of an Economic Hitman). Ironically, true nationalism and fascism would result in a slight decentralization of the current Basel-based power structures, even though domestically things would probably be even more autocratic than they are now. There's a huge dichotomy between the increasing decentralization of decision-making power via the internet (look at us doing what we're both doing right now on Mises Wiki!) as against the decaying, old, existing centralized economic and financial order built after WWII. It reminds me of an old Soviet car factory - badly made, patched together, decaying, run by blind bureaucrats who are little more than commie zealot-zombies sucking as much cash from the system as possible. Corrupt, decaying governments and fiat spewing banks facing bank runs on real money (the COMEX is currently facing a massive run on both gold and silver) will ultimately have to decide whether to cede power quietly and slink away or fight to shut down the COMEX and the internet. I don't know what they'll do. Hopefully they are too slow and stupid to understand the tsunami that's coming and they'll only try to shut it down when the silver and gold inventories have already been exhausted by the general public. We'll soon see. - Karmaisking 18:34, 19 February 2011 (CST)
I've heard of debt-free money before, but never seen a good summary of what it entails. The 'Criticizm' page summarizes it quite nicely, so thanks for that! Should have read it more carefully I guess. :) I've created a separate section to discuss it, since we seem to be going too deep into nested paragraphs. Let's see if I understood it correctly. Pestergaines 09:34, 20 February 2011 (CST)

Debt-free money

A) Let's make first a neutral background of a sort. An economy has, say, 1 million credits in circulation, no Fractional Reserve Banking involved. The government's income at the end of the year (from taxes and debt) is say 100.000 credits. It can use this money for all of its expenses. It might borrow more next year, or tax more, but if it uses only this money, it won't issue anymore new notes. And so it goes year after year, as long as the government spends exactly what it gets, there is no inflation involved. This may be validly called debt-free money.

B) Now, let's say the government also issues 10.000 credits more and spends the money. Happy are those accepting it, but it has just inflated money supply by 1% percent. Is this the scenario Brown is focusing on? Because if yes, it is inflationary by definition.

The public goods argument is a non sequitur - instead of discussing the features of the system of money production it's shifting to basically saying that the new money might be used for something good. Of course, the same can be said for government debt and taxes and we could discuss our heads off about their necessity and whether the concept of public goods is even meaningful. Even if it is accepted, it's no argument for "debt-free money", its desirability as compared to other sources of government income, or whether the government is able or willing to use it for 'good'. But let's return to the debate.

Does the author want to create money out of nowhere or not? If that is the case, making it "debt-free" and issued by one institution or another won't change the fact that it is inflation. It might be "better" than the current monetary system, yes... but then, the very same 'Criticism' article points out the danger of hyperinflation.

My conclusion: it seems that Ellen Brown wants to replace one inflationary regime with another, which might be better, about as bad, or worse. Her argument only shows that there might be some good, under certain debatable conditions, ours shows that there will be definitively some bad.


Now, what do we do about the article itself? The debt-free paradigm seems to have some quite visible contenders and is an interesting speculation. Also it's quite easy to become confused by the 'debt-free' notion. I suggest to put it all into a separate section along with the definition, contenders and criticisms, we need to make clear that it is not the Austrian point of view.

On the side, I think the separation may need to be clearer in the article in general - the 'Basic debate' and 'Basic nature of system' sections start with Austrian views but then mix them with others (the unpayable debt 100 credit example is similarly wrong).

Whew! Hope this is clear now! Pestergaines 09:34, 20 February 2011 (CST)

OK, I can see we're getting there slowly. Time for a terrible analogy/metaphor. Imagine we've all been pushed onto the Titanic, the doomed fiat money ship. Austrians scream "If we were meant to float, God would have given us flippers made of paper money!" We're pushed on anyway, courtesy of coercive legal tender laws and compulsory confiscation of gold and silver. Even after being robbed and being beaten and being forced to work in the engineroom, unbowed the Austrians keep screaming "We're doomed, we're doomed! This thing is built to sink! Paper doesn't float!" Everyone else thinks we're crazy and the boat does float. Amazing. As long as most people believe it floats, it does. But the captain and crew eventually get cocky, complacent, lazy. They were (secretly) worried that the Austrians were right and were scared themselves this thing wouldn't float but because of the stupidity and gullibility and naivety of the general public believing it does, it does. All the staff start partying with the pretty girls, thinking they're Masters of the Universe for pulling off this brilliant scam/coup. They've replaced gold and silver with a paper boat and it floats. They forget they're even on a paper boat. They don't even sense the boat is moving - they are that stupid. We're left in steerage, seething over the madness of being stuck on the boat. The Austrians are the only ones who sense the boat moving from side to side, from one business cycle to the next. All the Austrians are getting violently seasick. We feel very keenly the inherent instability of the fiat money boat. It's going down eventually. We're so pessimistic, no Austrian bothers to go on to the top deck, to look out for icebergs, to warn the captain. Then it hits. It doesn't sink - it crashes! Surely some of us should at least have been on the top deck, looking out for icebergs, not screaming to be back on dry land, when we had to give up dry land long ago.
Yes, it's all counterfeiting, it's all fiat, it's all inflation. (That's why there's a section in the article entitled "Reform within fiat money systems") But Austrians tend to stop there. They don't generally look into different fiat systems because to us it's all bad. But there are degrees of bad depending on the source. If (and it's a big "if") govts do have a function in spending money on public infrastructure and public goods, then why can't they source that money cheaply, rather than go to a central bank to borrow the money that the central bank itself makes out of thin air? As Ben Franklin [correction: Thomas Edison] said, "If our nation can issue a dollar bond, it can issue a dollar bill." There is a big difference between debt-free money and bank created credit. Debt-free labour certificates are obviously very close to counterfeiting so everyone treats that seriously. Which is good, because that caution would make hyperinflation under this system unlikely. Why not the same - or worse - for bank created credit? Most people are relaxed about credit issuance when they should treat that as "counterfeiting with a trailing commission". It's going on all the time, everyday, in the billions. Banks are way too efficient at counterfeiting, compared to govt. Look at M3 growth since 1971, with crazy rates of FRB (no reserves at all) and a central bank playing mommy every single time a bank run has occurred. It's been a disaster. We all know governments are useless, slow, zombified institutions. If we imposed full reserve banking on the private banking system and allowed debt-free fiat money issuance from the Treasury (tally stick-, Ben Franklin-, Nazi Germany labour certificates-, Abe Lincoln greenback- style) I am sure M3 growth would slow. Why? Because govts are hopeless at everything - including counterfeiting! The rule should be: As long as we have governments, give them "bad" tasks to do and they will do them less efficiently than the private sector. Give them tobacco factories and brothels and casinos and drug dens to operate. Give them banks to own. Give them the right to counterfeit. They'll do it all badly. Isn't that what we want? As long as we're in fiat money Hell and have these zombified bureaucracies, let's turn the fiat temperature down a little bit, surely. That's all Brown and Rowbotham and Zarlenga want to do. They are on our side. Not because their ideas are right. But because they are giving the task of counterfeiting to the best entity to do it - incompetent governments.
My order of preference for monetary systems is this: (1) gold and silver and free banking (2) full reserve banking (or nationalized banks) and debt free fiat issuance at the margins, for long-term capital projects (Zarlenga, Brown) (3) the current system. Most Austrians scream for (1) but don't consider the differences between (2) and (3) and actually don't even understand (2) and (3). I'm encouraging, in this article, further discussion of (2) and (3). If that's provoking some thought in some readers, great - that's the purpose of the article! Whilst we're on the Titanic, let's at least avoid the most obvious icebergs. - Karmaisking 19:10, 20 February 2011 (CST)
"But there are degrees of bad depending on the source." I agree, there may certainly be degrees of bad. And yes, we can see that (2) is different from (3) - but no proof was offered that (2) is better than (3). I've rechecked North's resource. Vitriolic as it is, it also contains economic arguments, not only historical ones. Especially interesting are these two points:
  • It is not possible to trust a government to limit its spending.
  • Inflation is a tax. It is an invisible tax, that is much harder to resist than regular taxes. If a government can wield it directly it will use it.
If I may add something, and be a Devil's advocate, there is an 'advantage' to financing a state via central banking - it attracts more investors to lend their money to the state. While this means on the one hand, that the debt will be more expensive for the state, it draws a larger share of real resources towards the state. That and the displacement effects would happen anyway, but at least the inflation rate is reduced. Also, states that print their own money are notoriously untrustworthy and their currency and debt will suffer in the markets accordingly.
So there, while I have no real preference for either system, the "debt-free money creation" has definite disadvantages even when compared to the current system and the advantages are at best dubious. Pestergaines 04:08, 21 February 2011 (CST)
Agree with everything you said. Only point I would add: It hasn't been tried with full reserve banking or state-owned banks except in very rare instances. And it doesn't work in the long-run but has worked in the very short run. And in democracies govt grinds slowly and I doubt you'd see hyperinflation - the Obama govt can't get any capital projects started, despite the central bank giving them billions. Some commentators have observed how difficult it is to inject money into the system when the private borrowers clam up. M3 growth slows even if govt spends. And don't speak too soon about the "advantages" of the current system. I don't think you'll be singing their praises for long. In any case, we're talking about third-best solutions when the first best solution (free banking and a deregulation of legal tender laws) should be the option we should be fighting for. Get me off this doomed boat of sinking fiat paper and back on dry land! - Karmaisking 04:53, 21 February 2011 (CST)
I'm happy we agree after all! Singing their praises isn't quite what we did here - but we both know that. :) I just don't want to remove one bankrupt system with another without at least a good chance that it will improve something.
Aside, while the government may not be starting capital projects, it is certainly helping to finance them - the housing bubble was partly financed by it. Then there are uncounted grants and subsidies that result in new projects by private companies; the politicians would probably engage in more if they could.
But that's all just side notes. What do we do about the article itself? The criticisms seem to be sufficiently extensive, maybe need a little reorganization, if at all. It's extremely useful to have an overview of the alternatives and suggested reforms. What seems to be the crux is the organization of the content (and I know that's the hardest part). We want to show what the Austrians and other economists suggest, 'within' and 'without' the system, and show the criticism of each suggested reform, wherever available. We want the first, second and third-best options all laid out - and the bad ideas, too! I think this could become one of the most important reference articles yet to understand all the views related to FRB, something to recommend a serious student to check first. Plenty of work is to be done, of course, but you made an excellent base.
In any case, thank you for the great discussion! I hope you don't mind me shooting down the idea you seemed partial to. It helped me to clarify my position and I learned about this paradigm. I'm sorry that I can't help more with the page itself, being mostly busy with other topics, but I'll try at least a little. Is there anything particular you could use assistance with? Pestergaines 07:12, 21 February 2011 (CST)
Focusing on the article, I agree it needs a "cleaner" presentation, but the issues are very complex and over-simplification can result in problems. If you can further divide up and clarify the "debt-free money" idea (Zarlenga) that would be great. Given you're not partial to it, you would be best placed to describe it neutrally. You have a very clear understanding of the issues, and I suggest you dive in and clean up as much as you can (before the whole system collapses and makes the article redundant once more). - Karmaisking 16:19, 21 February 2011 (CST)

Reorganizing the page

I've taken a first shot at the reorganization. The 'Proposals for monetary reform' was moved one level higher, so there are now major sections for criticisms and reform proposals. I've taken out the debt-free money material and put it into a section devoted to it. The 'Basic debate' was extended by what was left over from the 'Basic nature of system' section.

  • 'Status under current systems' needs to be moved up a level or under some other section - and it definitely needs to be broken up, as it is a single sentence. :)
  • The whole paragraph starting with "It is to be expected that these policies would be violently opposed..." needs to be rewritten. The used references don't seem to confirm any of the statements in the paragraph.
  • The references in general should be carefully reviewed. More information is always good (title, author, date) and sometimes the resources don't correspond to the text. :/
  • Reference '32' - Stephen A. Zarlenga, The Lost Science of Money AMI (2002) - links to an advertising/summary page about the book, but it doesn't really contain what the quote claims. It's perfectly fine to quote from books, one just needs to make that obvious (ideally with noting the page, etc). The link can stay when marked as a summary or something like that.

I touched up a little bit the definition of debt-free money, more could be useful. However, of the resources quoted - 32, 52 (America's Forgotten War Against the Central Banks, Mike Hewitt) - I don't have the first and the second doesn't seem to contain anything on the topic. Do you happen to have at hand a good definition?

There's still much to do, the text needs to flow better. I'd like to organize the section in the following way: 1. definition of debt-free money 2. features of the reform and properties of the intended system 3. any other suggestions of the proponents (it seems some, but not all call for nationalization of banks, Brown's remarks on historical precedents, etc.) 4. criticisms (parts of 3. and 4. could be combined)

Lastly, weren't there some suggestions for reform 'within fiat systems' among Austrians? I think I faintly remember somebody doing this (Rothbard?), but can't remember who it was at the moment. Pestergaines 06:51, 22 February 2011 (CST)

Okay, another attempt, divided it into sections and moved much of the text around. Questions:

  • Is it fair to say that the concept of debt-free money is most notably represented by Stephen Zarlenga and Ellen Hodgson Brown? (Michael Rowbotham perhaps?)
  • Is the definition correct?
  • What is the full extent of the suggested reform (at least in general, differences among authors can be listed further below)?
  • It seemed to me, that the abolishing of FRB or its curtailing in some crucial way was part of the suggested reform, but can't seem to find it there explicitly. Please confirm.
  • I moved the 'It is to be expected that these policies ...' paragraph, but suggest to rewrite it or remove it.

By now is the section arguably large enough to be turned into a separate page, but all references have to be checked before such a move. The size of the page - 99kB - is also pretty big.

Please let me know what you think the changes so far. Pestergaines 05:49, 24 February 2011 (CST)

  • My order of priority in referencing would be: (1) Rowbotham, who (to the best of my knowledge) was first to use this term and the term "debt money" (I believe he has the best book on the subject, The Grip of Death, which is very well written and predicted the current food crisis better than anyone else) then (2) Zarlenga (reasonable if dense book on the argument that money is a legal and government creation. It's a bogus argument in my view but worth putting in the article because he hits fractional reserve banking very hard) then (3) Brown, who frankly is a child when it comes to monetary theory but is a fairly well-read, literate child who can summarize arguments reasonably well, and does mention debt-free money in her book, but also focuses on public banks. She references Zarlenga and Rowbotham so clearly got her ideas off these writers. I find her arguments on public banks supplementing private banks ridiculous, but her discussion of fiat money issuance is similar to Zarlenga (and Rowbotham) and therefore useful in this section. Note: Her book is self-published and is a marginal reference. I'd use Rowbotham and recommend you get his book off Amazon (it's not that expensive) and confirm these assertions yourself.
  • Yes. It's "pure" fiat.
  • Rowbotham: issuance of debt-free money by govt + essentially the same banking system with less leverage (ridiculous in my view, but that is essentially his argument). You could argue that he states unambiguously FRB is "bad" and should be shut down completely, but to be absolutely precise he's a "pure" fiat inflationist and is a compromiser. Brown: issuance of debt-free money and public banks. Zarlenga: issuance of debt-free money and full reserve banking. They're all gold haters.
  • Zarlenga's pretty clear about FRB in his book and in his proposed monetary reform act. Particularly given the recent discussions at the last AMI Conference with Steve Keen (see here). By the way, I haven't gotten around to adding Steve Keen's ideas contained in the video of the AMI Conference because (a) he hasn't published them (b) they don't make sense to me. However they form yet another branch of reforms within the fiat system - basically he wants all rent-producing assets to have a life span and expiry date (all stock dividends and property rents will expire on a future date) so that no incentives are created to inflate the prices of assets through debt-issuance. It's an "exotic" argument from a good-hearted but misguided closet socialist tinkering at the edges of reform. It's one that's not politically feasible, questionable from an economic point of view, and difficult to explain (and understand). Why he doesn't just argue for Soviet-style restrictions on large property ownership is beyond me. He's a "Back to the Future" kind of guy. Back to Zarlenga: Kucinich "borrowed" Zarlenga's ideas for his recent monetary reform bill which is described here by MISH, albeit very critically. Again, it cracks down on FRB and allows debt-free fiat issuance. If I cared more, I'd add it to the "Reform within fiat systems" section but frankly can't be bothered. The system will hit a wall before these ideas are seriously considered so they really don't matter. If you have the energy you could click on the links contained in this article and get great references for the proposal for full reserve banking and pure fiat issuance - just copy a summary of the proposed bill into the article.
  • Agreed. Delete. You could use MISH's criticisms instead to support the paragraph and keep it, if you have the energy and the time. I'm too busy screaming at the Perth Mint to re-open supplies of 100 ounce silver bars to care at this point. They've temporarily paused supply. Worrying. - Karmaisking 06:24, 24 February 2011 (CST)
Okay, moved them around and deleted the paragraph. I admit I don't care enough about the topic to order a book on it (too many other topics to care about more). If you happen to have the book and can add the ref for the definition, that would be cool. The rest is of rather low priority to me. I fear the current monetary system will be in place for quite some time, but there is at least a basic critique of this concept in place, that seems sufficient for now.
Thanks for the news about the Perth Mint! Most interesting. Pestergaines 07:18, 24 February 2011 (CST)
Nice additions! Pestergaines 07:24, 24 February 2011 (CST)
Thx. The great thing about your comments is that they have highlighted the gaps in the stairway that people can fall through as they are forced to walk up to the Ledge Above the Ninth Circle of Hell. I'm skipping around, knowing we'll all end up in Fire or Ice, but others need more carefully crafted steps to make it up to the Ledge. It's an ugly view when you get up here, but at least you can see the whole terrifying picture. Once people get serious over full reserve banking, when the existing power structures are really threatened (as they will, as they must), then you'll see just how ugly "They" really are. Krugman has already prepared the way to accuse sound money advocates of being racists. His reasoning is tendentious, twisted and insane, but fiat spewing zealots will do anything - and I mean anything - to keep the scam alive for as long as possible before moving on to the next gullible host country. - Karmaisking 21:01, 24 February 2011 (CST)

On references

Hallo Karmaisking, just a minor note on references - something I noticed with Peter Schiff's video used as source in several places. Feel free to use the 'name' attribute of the 'ref' tag - so you can reuse the same reference without actually writing the same content over and over. (You've surely done it before in the article, just mentioning.)

As another point, the ref was sometimes used several times where it would be easiest to keep it after the content - see for example:

[[gold]],<ref>[ Inflation is There], Peter Schiff</ref> [[silver]]<ref>[ Inflation is There], Peter Schiff</ref>

Great work on the article, though! Keep at it! Pestergaines 04:20, 2 March 2011 (CST)

Thx. I am involved in a brutal piece of litigation (as an advisor - still it's shockingly draining) and I do this for light relief. No, I'm not joking. Please, please, please help by cleaning up the references! I know exactly what you mean about excessive repetition of references and it's terribly annoying to me too. All the refs are so juicy and so great I can't cull them. I'm now trying not to add a single word, but every day another ref arrives that can be plugged in to a sentence that's already there to buttress the whole article. Inside Job is a great example. I made the comment months ago about a corrupt economics "profession" and now it's fully cited. It's like filling in gaps in a jigsaw puzzle. Fun! If you can tidy the refs up in your spare time by reusing the same ref (like I've done for Rowbotham) we can get the refs back down to 200 - 250. Now, back to the grindstone...Karmaisking 04:43, 2 March 2011 (CST)
I totally get the part about relief. Will try to help you out as time allows. Pestergaines 05:35, 2 March 2011 (CST)
Did a little, still quite a few doubles around. More would be of course better, perhaps later. Pestergaines 18:15, 16 March 2011 (CDT)
Thx again my friend. It's basically all there in the article, so I'm over editing it now. If anything, it could be cut down. I welcome you to do so, especially where you think it gets repetitious for no good reason. I've been researching this for over 10 years and sometimes I can't see where it gets too detailed or too repetitious or too messy. At some stage you know too much, and political action has to follow before events "catch up" and justify further detailed writing on various reform proposals. Ron Paul's recent hearings into the monetary system were enlightening and Jim Grant's comments in particular brilliant, but who was listening? Anyone? The answers are clearly there, but not enough Joe Sixpacks are listening, and we need the majority of Joe's to get angry before the next wave of research should begin. I'll clean up the refs around the edges when I have more energy but at this point I've had my guts kicked in and don't want to look at this right now. As Jim Sinclair has stated 'There is NO PRACTICAL SOLUTION to these problems.' So why am I writing at all? Destructive behaviors thrive in such despair. - Karmaisking 08:06, 19 March 2011 (CDT)
We all need to rest now and then, kick back and relax. Personally, I go for the 'educated minority' approach - try to approach those, who are approachable, and sufficiently open-minded, then persuade them to our way of thinking. I don't see a way to persuade the majority (besides, it's probably useless anyway); but one can at least make a minority larger. Learn, hone your arguments, try to give something of what you've learned to others - that's one of the reasons why this wiki exists. Or choose whatever you think is best. But: don't lose hope. Pestergaines 12:34, 20 March 2011 (CDT)
Too late for that. At least I can occasionally laugh over how hilariously stupid the whole thing appears to me. Max Keiser, the Mogambo Guru and even Bill Bonner have the right attitude. Laugh. And when you're not laughing, buy gold and silver. - Karmaisking 02:20, 21 March 2011 (CDT)

What is there to say?

I don't know whether to remove the term "meltdown" from the article at this point, but I'll leave it there as it was written years before the current crisis and by using the term there is no intention whatsoever to use the current crisis in the article - and I will not. Although I note that, in trying to "maximize" resource use, GDP and therefore tax revenues and bank profits, govts and bankers are slowly bringing us to the edge of catastrophe worldwide. From flammable gas coming out of faucets in the US and Australia because of drilling over water tables, to oil spills, to destruction of arable land from super-intensive monoculture and "roundup ready" corporate farming, to the collapse of bee populations (possibly caused by GM seeds) there is no question the current lunacy of our banking and government zombies will result in the present trajectory being maintained and these kinds of crises will - must - become more and more frequent and more disastrous each year. It's embedded in the math, in the mechanics of fractional reserve banking. It's inherent in the machine.

"Both those in work and out must watch, as the world they know and understand changes almost in front of their eyes like some nightmarish Kafka-esque novel. This is the era of accelerating economic change. The benefits are highly dubious, and no-one even pretends that the economy is responding to what people actually want. The only justification offered for the changes is that this is 'the age of progress', and 'you can't stop progress', even if you are human and the progress you are discussing is supposed to be about people and the lives they might lead in the future. The world of economics has got mankind by the throat and everyone knows it, and no-one has a clue where we are going or why we are going there."

How many people understand that the made-man exacerbation of environmental "shocks" has been made dramatically worse due to the destruction of the gold standard and rise of central banking? Very few. Rowbotham is one. Jim Sinclair is another. Max Keiser is another. Three in 6 billion. There is no way we can turn this ship around through education. Just no way. I despair at my efforts. They will come to nothing.Karmaisking 07:06, 16 March 2011 (CDT)

From the tragic to the ridiculous - CAUTION: Bankers at work!

Jim Sinclair literally calls bankers 'rapists'. And then DSK goes and does this. Could this get any more laughable? - Karmaisking 14:49, 16 May 2011 (MSD)

Argumentation: FRB

Hallo Karmaisking,

I was wondering if you would be interested in working on the page Argumentation:Fractional Reserve Banking? I already started the Argumentation:ABCT, and continue to slowly add to it.

And that would be all there is - make a page, simply written, collecting and polishing arguments about the phenomenon. (Of course, I know simple is very hard to do - that's why it will need many small edits and expand slowly. But seeing you editing that 'Criticisms' page, you may have the stomach for that sort of thing. :) )

Starting with just a few very basic arguments is totally okay, one can always add more later (or somebody else can - you know the drill). I'd like to make more of these argumentation chains, extend them and link them together, so that folks can use them in arguments and as an introduction for key topics. But as usual, time is short.

Just in case you happen to be interested. Regards, Pestergaines 12:13, 29 June 2011 (MSD)

I'm always interested in explaining FRB. Done and thx for the notice. - Karmaisking 05:18, 30 June 2011 (MSD)


Hallo there,

just wanted to say that you really can join the contest for altruistic (or other :) ) reasons. Even if it was for the purpose of demonstration, we can use the help and you can use the exercise. And with the current level of participation, you can win rather easily! There's no downside to $50 worth of books. :)

(And if you have any suggestions on how to improve the rules or instructions, please let me know!) Pestergaines 01:44, 6 September 2011 (MSD)

My humble suggestion on ways of encouraging contributions - let's face it, no one does this for a $50 gift card. I do it to de-stress, as a way of working this stuff out of my system and organizing my own thoughts on these issues. With the relatively limited number of contributors, I suggest that the judges simply trawl through the main pages, look at the contributions and pick a dedicated contributor they like and give them a barnstar/little prize whenever they feel it appropriate. WP's senior editors are empowered to randomly give out barnstars at will. Asking a contributor to nominate themselves is difficult because: (1) most (all?) won't (2) the instructions are not easy to understand (3) you have to describe your work (how do I do that?) and (4) you have to click to another page whilst you're editing. It's hard enough for me to click on pages I like, let alone "admin"-type pages. If I don't feel like it, no one will.
And, more to the point, I've learned the hard way (like Gaddafi should have) that being in the spotlight and talking about a return to the gold standard is liable to get you "disrespected" in monied Establishment circles (if not actually physically injured). Talking about the current monetary system forcing (necessarily, simply by the math) a global food crisis is not exactly going to make me or anyone here Mr Popular on CNBC. It's true, but so what? I don't want to promote this stuff. I prefer to make a quiet record of the reality for the few future readers of this Wiki to be able to say: "At least some of these idiots forced to walk off a cliff like lemmings knew what was going on..." To sum up: Please don't nominate me this month. I will think about nominating myself when the Mises silver coins come back on line. That will be significant motivation. Karmaisking 04:43, 6 September 2011 (MSD)
I understand, and don't worry - we won't nominate anyone against their will. :)
I've updated the example and hope that it is clearer. (Darn, why is it so hard to make things easy to understand?) The contestants don't have to explain anything at length, simply state what they did. They can also add their changes after editing. Will try some more, let me know how it works out.
Anyway, the contest is an attempt to attract new contributors and new submissions, or re-energize existing contributors, let's see how it works out. Oh, and - the barnstars and other rewards can be given by anybody to anybody, anytime. Pestergaines 18:03, 6 September 2011 (MSD)
I think it was George Bernard Shaw who apologized to a friend in a letter by saying, "If I had more time this letter would have been much shorter." It's always harder to use fewer words to convey complex information. Without in any way being egotistical about it, that's why I tend to re-read my own Wiki article on our debt-based monetary system rather than re-read de Soto's book, or even Hulsmann's, because it's a simpler read. At least it is for me :-). And that's why there's a touch of genius to Lew and With LRC the presentation is so simple you can read it on your iPhone without the need for an app. And is very clean - showing that real thought has gone into the presentation. Zero Hedge, Market Oracle and even Max Keiser all have that similar "clean" presentation. Contrast these "clean" sites with something like the hodge-podge National Review website (or, even worse, The New Republic) and you suddenly realize why we're in the mess we're in. The idiot-blind Establishment can't even get their own websites to read well, let alone their own monetary policies to work. Karmaisking 05:22, 7 September 2011 (MSD)

Reorganizing the page really needed

Hallo Karmaisking,

did you see this notice, what do you think about it? Pestergaines 11:38, 8 October 2011 (MSD)

Go for it. The 'full' edition is sitting there. I've already encouraged a cut-down. It should be a simple task to edit down. It's not as though 15 million people are reading it. Probably less than 2000 individuals have read it, so I really couldn't care less what happens to it. It is topical and really the banking question is the single most important live issue in economics, given ongoing Occupy Wall Street protests, the EU disaster, the ongoing US recession, the coming - and current - financial crises... so I suspect people want more information about it than less. But, as I say, I couldn't care less. One minor point - we're trying to encourage contributions, so I would have thought getting content on to pages would be more important at this point than cutting down content. Libertarianism for example hasn't been touched for a long while which is pretty amazing given its centrality to Austrian thought. And if you haven't read the whole thing, may I suggest you do so before editing. The whole financial system going to blow up anyway and there really is no practical solution anymore - it's way too late to avert disaster - so writing about it is, in itself, a somewhat pointless exercise despite its importance to the next generation and to the sustainability of human civilization more broadly. - Karmaisking 08:06, 9 October 2011 (MSD)
To explain, I'm also all for encouraging more contributions, but at some point can be the sheer amount - and the styling - too hard to read. Afterwards, more content doesn't really help it. Will try to improve it when/if I can get around to it, was just hoping you could do something since you know that monster of a page. Pestergaines 16:11, 10 October 2011 (MSD)
Very reasonable. I was being somewhat flippant. It's ridiculously long, I agree. I just want to leave it to others to cut down because for me (somewhat self-evidently) it's all important and I can't bear to have a sentence cut down, as it's all good juicy stuff on what's gonna happen. Which is Japan x 100. Or Ireland x 10,000. Or Detroit x 100,000.
Generally editors exist for a reason. They are more objective than the writer and can cut down the writing to the level that the average, slightly curious, reader would want. In my experience over many years I have at times intensely disliked many editors of my work for cutting stuff out that I thought was crucial to the argument, but I've always respected them and their necessary role in the process. - Karmaisking 04:49, 11 October 2011 (MSD)
Interesting point. What sorts of material have you had edited? How did it work?
You may be confused. I have written and published. Others have edited my work. The page I've been working on is a classic example of writing without the benefit of a strict editor (you can see which one I'm talking about by looking at my history of contributions). I will keep going and going until someone shoots me. That's just the way I am. I have also edited other people's writing for my "job" but that's another story. I just rip into other people's work and make it work. Life's too short to leave rubbish in articles. Someone else can cut rubbish from my writing for me. That's what editors are for! If you have something you want me to read or review you can email me at Karmaisking (talk) 15:32, 5 February 2013 (MSK)
Hallo. Sorry I wasn't more clear, I said what have you "had" edited, meaning what work of yours have you had others edit, i.e. what are your areas of research or venues of publication. Thanks.
I don't promote myself. I've published in international law. My real interest was always economics but I knew I could never make a living in academia as long as Keynesians ruled the Ivory Towers. So I haven't published in economics although I completed an honours degree in the subject years ago. I have published in the legal sphere. For example, you can buy a copy of an article I wrote here if you're interested. Few have, so I'm not encouraging it. That article was originally 3 times the length and I hated the editor for a few weeks, but it's more readable because it was cut down. The juicy stuff was removed however. It was prescient in that it predicted the ICC, which I opposed. But I was holding my hand up against the tide. The tide drowned me anyway.- Karmaisking (talk) 04:39, 7 February 2013 (MSK)

Banking Article

Hello maybe you could do the fix with the quotes you suggested because I am not sure how to fix references? Thank you. NeverSayDie (talk) 17:45, 11 April 2013 (MSD)


Barnstar of Diligence.png The Barnstar of Diligence
This is for sticking around here for so long, constantly adding and improving. Your work is not unnoticed, and I personally appreciate all your contribution, as I'm sure is the case for everyone who is lucky enough to come across one of your articles. Thank you. --John James (talk) 17:54, 1 June 2014 (EDT)