08:11 – Oh, great. Not only is North Carolina among the nine “swing states” for the presidential election. An article in the paper this morning says there are about 100 “swing counties” nationwide, of which a dozen are in North Carolina. And we’re one of them. So I guess the flood of spam political phone calls we’ve been getting is likely to get even heavier over the next couple of weeks.
And the IMF is proposing a plan that would wipe out a large amount of the world’s sovereign indebtedness, proposing something I’ve favored since the 1960’s: eliminating fractional-reserve banking. For those of you who don’t follow banking esoterica, fractional-reserve banking is both simple and fundamentally dishonest. It amounts to private, legalized counterfeiting.
When you deposit money in your bank, you deposit it in one of two types of account: a demand-deposit account, AKA a checking account, or a time-deposit account, AKA a savings account. So let’s say you deposit $1,000 in your checking account and $100 in your savings account. With the demand-deposit account, you are not lending that $1,000 to the bank. They are holding your money for you, in a fiduciary role, and you are entitled to reclaim that $1,000 at any time. You pay a fee to the bank for holding your money safely. With a time-deposit account, you are actually lending that $100 to the bank for a specified term, typically six months (check the fine print). The bank is then entitled to lend that $100 to someone else.
Fractional-reserve banking corrupts that system, which had worked very well for hundreds of years. In fractional-reserve banking, the bank lends out not only the $100 you placed in your time-deposit account, but most of the $1,000 (typically $900 or more, depending on the reserve requirements in effect at the time) you placed in your demand-deposit account. In other words, they’re misappropriating money that isn’t theirs to lend. The effect is that the bank just creates $900 out of thin air. The result is difficult to distinguish logically from the bank simply counterfeiting $900.
Now, Ambrose Evans-Pritchard gets a lot of the details wrong. Adam Smith, for example, propagated no myths about this. He nailed it completely. AEP is also confused about how money worked in Sparta and Rome. There’s no evidence that Sparta used iron coins, for example. They probably did use iron ingots as a value store, but AEP ignores the relative value of iron then and now. At the time he speaks of, Europe was just transitioning from the bronze age to the iron age, and an iron ingot had significant inherent value. It could, for example, be turned into a sword. But Evans-Pritchard gets the broad-brush issue right. It’s long past time that we eliminate fractional-reserve banking, which is simply institutionalized theft on a gigantic scale.
13:07 – There must be some way to sue political parties for harassment. So far today, I’ve received eight–that’s EIGHT–political calls. It seems to me that despite their free pass from the DNC regulations, political parties should establish a DNC list of their own. That list should be propagated downward to every candidate running under the auspices of that party, from the president to local candidates, and severe penalties should result if anyone violates it.
13:51 – I don’t know why inflation continues to surprise me. Perhaps I’m more aware of it than most people, who aren’t likely to remember exactly what price they last paid for a specific item. But just now I cut a PO for sticky labels and other stuff from iBuyOfficeSupply. To do that, I copied the spreadsheet for the last PO to them, which I issued on 1 May. I ordered two of the same items this time as last time: sticky labels for chemical bottles by the box of 7,500 and sticky labels for running postage labels, by the box of 100. In 5.5 months, the price of the small labels had increased by just over 12.5%, and that of the larger labels by about 13.1%. It’d be interesting some time to go back and compare our Costco receipts from months ago to the most recent one. I’d guess food prices are increasing at the same rate, give or take. This really can’t go on. Of course, the official government inflation figures are grossly understated, much like the official government unemployment figures. Do they really think that no one notices that prices are going up much faster than they admit or that a boatload more people are without jobs than they admit?