Re: [A-List] The Peso is a "Derivative" of the Dollar

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Anne,

One can attack government intervention of the economy on many grounds, but
fantasy is not one of them.  All economic regimes, including so-called "free
markets" are constructs of fantasy.  When suficient data are accumulated through
the longtime operation of fantastic constructs, what Gramsci called cultural
hegemony, it takes on the appearance of reality, when in fact it is merely
entrenched fantasy.  Government sets the rules of the market which affect the
level of gainful employment in the economy.  NAIRU sets non-inflationary
unemployment, the so called natural rate, at 4-6%.  Market participants create
nothing, they merely particiapte in a game set up by government.  Free
marketeers tirelessly argue for self-governance and market discipline.  What
they are really arguing for is ganster capitalism.  The Mafia operates within
straight rules of its criminal culture and view law enforcement as tyranny.

Money cannot be a storer of value and at the same time has intrinsic value,
unless its market value is in excess of its intrinsic value, otherwise it stores
nothing. It is basic logic.  Thus when money operates as a storer of value it
must be fiat money.  The difference between gold and paper is only a difference
of degree.

As for government being tyrannical, you have a point.  But that is a separate
issue from monetary policy or market fundamentalism.  Governments that promote
"free" market can also be tyrannical. Corruption is the twin of freedom.
Just by claiming to be democratic does not make it so.

Henry

Annewilliamson wrote:

> It is not the purpose of government to "create" employment, or
> money.  Any employment organized by government is government
> employment and has to be supported by tax revenues.  The market,
> human activity creates beneficial employment  - and that is reality.
> Austrian theory is not a theory meant to prevent revolution,
> but rather to prevent government tyranny, generally speaking.
>
> And money must be a store of value; otherwise commerce and industry can not
> flourish,
> and the common man is endlessly cheated through currency confiscation
> in the fiat system.  What Henry outlined is, in fact, fantastically
> idealistic
> because no government is not made up of well-meaning robots working for
> the common good, but of flesh and blood human beings who seek their
> own self-interest (in democracies they seek re-election through the
> buying of votes with money confiscated from other people, for example)
> and succumb to parasitism.  This is why every paper money system ever
> devised has collapsed to its intrinsic value (zero) or is collapsing.
>
> I am travelling and am constrained from responding more fully, but could
> not allow such misrepresentations of the Austrian school and the purpose
> of money without making some noise.
>
> Anne
>
> PS  I notice Mugabe is never discussed on this list.  Anything for
> the "revolution," eh?
>
> ----- Original Message -----
> From: "Mark Jones" <markjones011@xxxxxxxxxxxxx>
> To: <a-list@xxxxxxxxxxxxxxxxxxx>
> Sent: Tuesday, August 20, 2002 4:43 AM
> Subject: Re: [A-List] The Peso is a "Derivative" of the Dollar
>
> > Henry, thanks for the invaluable discussion of value! I have a few points
> > to raise about that, but it is wonderful stuff. But here first is my 2
> > cents about Chinese use of energy:
> > Henry wrote:
> >
> > >As for Mark's concern about a properous China consuming energy, I have
> two
> > >comments.  I have calculated that at the rate of the past two decades, it
> > >will take
> > >China two centuries to catch up with the US in per capita consumption.
> > >Secondly,
> > >China's romance with market captalism will be very short lived as reality
> > >will fail
> > >to deliver the fancy promises of market fundamentalism.  My view is that
> > >pretro
> > >energy will be replaced within the next century.  There was a time when
> it was
> > >thought that if the world kept building fireplaces, there won't be any
> > >trees left
> > >to fuel them. Then the world found coal, and oil and gas and nuclear
> > >power.   We
> > >have not even began to tap geo-thermal enegery.  The energy problem is a
> sunk
> > >investment problem, totally solvable but not without some serious
> > >Schumpeterean
> > >creative destruction.
> >
> > The best official source I know of is the US government's Energy
> > Information Administration. The EIA webpage on China is at
> > http://www.eia.doe.gov/cabs/china.html
> >
> > The EIA says:
> >
> > >China currently is the world's third largest oil consumer, behind the
> > >United States and Japan. Consumption of petroleum products totalled 4.78
> > >million barrels per day (bbl/d) in 2000, up from 4.36 million bbl/d in
> > >1999. China is expected to surpass Japan as the second largest world oil
> > >consumer within the next decade and reach a consumption level of 10.5
> > >million bbl/d by 2020, making it a major factor in the world oil market.
> >
> > Current global oil consumption is of the order of  77 million bbl/d.
> > Various estimates of future demand show consumption of 110 million bbl/d
> > (some more, some less) by 2020. But this flies in the face of the view
> > strongly argued by petrogeologists such as Colin Campbell that world oil
> > production is peaking and may already have peaked. Therefore, if this view
> > is correct (I believe it is) the world oil industry will be incapable of
> > meeting increased demand. At the End of the Oil Age, the crunch will be a
> > contest fought primarily between the world's two largest consumers: the
> USA
> > and China. Given the centrality to modern economies of oil and natural gas
> > as energy (80 of all transport) and as raw material feedstock, the danger
> > is obvious that the world energy supply position is precarious in the
> > extreme and that growth in consumption by China (but not only China,
> > obviously; all industrial states continue to increase consumption) is
> > unsustainable.
> >
> > The official US government view is that there is no problem because oil
> > supply will rise to meet demand. The unofficial view is--well, what ARE
> > they doing in Iraq?
> >
> > Henry argues that as or if oil runs out, substitutes will be found, and
> the
> > main problem he sees is that it will be necessary to write off the world's
> > huge capital investment in the existing energy-supply base: pipelines,
> > refineries, tankers, the billion-plus global vehicle park etc. I take his
> > point. At the End of Big Oil there sure is going to be a lot of rusting
> > scrap metal out there. But finding substitutes will not be easy and the
> > past is no guide.
> > Shell's energy scenarios to 2050 -
> > www.shell.com/downloads/publications/51852.pdf
> > is interesting and upbeat about renewables, geothermal etc. But the scale
> > of the problem is this. Renewable energy from all sources  includes
> > hydropower, solar, wind, tide, geothermal, solid biomass and animal
> > products, biomass gas and liquids, industrial and municipal wastes and
> > amounts to less than 10% of total global energy consumption. I think there
> > are many reasons why oil is irreplaceable, in time or at all, without
> there
> > first being a general crisis of capitalism.
> >
> >
> > Mark
> >
> >
> >