Jan

23

Capital, from George Parkanyi

January 23, 2009 |

Many people misunderstand capital. Even if all our dollars are rendered worthless, that does not change the fact that land, buildings, roads, the tools of our trades and above all, human ingenuity is still all there. (True capital) Dollars have no tangible value. (Zimbabwe dollars have even less). The Emperor never HAD any clothes — we just all mutually agree to see clothes where there actually are none. Money is just a scoring system to determine how much of my efforts and the fruits of my efforts I will trade for your efforts and the fruits of your efforts. People who think they have value in cash, CDs or bonds, or to a large extent stocks, and park all their lifetime accumulated efforts there would be big losers if that particular scoring system fails. (Unfortunately, as traders in electronic blips, it would also probably suck to be us in this scenario.) People who retain control of physical assets through simple possession or specialized knowledge would end up the winners. (Look at who’s rich today in the pieces of the old Soviet Union and its satellites. Typically, yesterday’s communists are today’s big capitalists.)

If our currencies became worthless we would simply have to invent other media of exchange and new ways for re-mobilizing all the physical and intellectual capital that would still be there and at our disposal.

The concept of the potlatch is actually quite interesting. Purposeful wealth destruction had the social preventative/regenerative effect similar to say, fires deliberately set to prevent larger fires and/or regenerate land. The end of money, or the current form of it, is not necessarily the end of us.


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7 Comments so far

  1. Steve Leslie on January 23, 2009 3:27 pm

    I may not know much about capital, and I am confused why a guy like Madoff can avoid detection for years but I am incredulous as to how a guy like Thain can pay out 15 Billion in bonuses while asking the federal government to give them 15 billion to run the company. That takes some kind of character.

    I guess the old saying holds true, there is no honor among thieves whether it is Madoff, Thain, Purcell, Kozlowski, Lay, Ebbers, Aig, Lehman, Bear Stearns and many many more.

    See:
    http://finance.yahoo.com/tech-ticker/article/163151/Billions-of-Taxpayer-Dollars-Flushed-Down-John-Thain%27s-35K-Commode?tickers=BAC,GS,JPM,XLF,MS,^GSPC,^DJI

  2. Anatoly Veltman on January 23, 2009 4:26 pm

    This year, taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format:

    “Q. What is an Economic Stimulus Payment?
    “A. It is money that the federal government will send to taxpayers.

    “Q. Where will the government get this money?
    “A. From taxpayers.

    “Q. So the government is giving me back my own money?
    “A. No, they are borrowing it from China . You children are expected to repay the Chinese.

    “Q. What is the purpose of this payment?
    “A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

    “Q. But isn’t that stimulating the economy of China ?
    “A. Shut up.”

    ! Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely:

    If you spend that money at Wal-Mart, all the money will go to China .

    If you spend it on gasoline it will go to Hugo Chavez, the Arabs and Al Queda

    If you purchase a computer it will go to Taiwan .

    If you purchase fruit and vegetables it will go to Mexico, Honduras , and Guatemala (organic?).
    If you buy a car it will go to Japan and Korea .

    If you purchase prescription drugs it will go to India
    If you purchase heroin it will go to the Taliban in Afghanistan
    If you give it to a charitable cause, it will go to Nigeria .

    And none of it will help the American economy.

    We need to keep that money here in America . You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer (domestic ONLY), or tattoos - since those are the only businesses still in the US

  3. ld on January 23, 2009 4:43 pm

    George - I think it was 1991-1992 when Rouble went to ZERO. We had no money and our neighbor had even less. He was the happiest man around!

  4. Jeff Watson on January 23, 2009 6:20 pm

    My wife’s family always viewed agricultural land as capital and they accumulated as much land as they could afford over the generations. Land can earn a return either by either actively farming it, or leasing it out. My wife always leased her land out, and earned a very modest risk free return. The land was never a sexy investment, yet it has paid steady dividends over the years.
    Jeff

  5. Don Chu on January 23, 2009 6:31 pm

    4 But in the seventh year the land is to have a sabbath of rest, a sabbath to the LORD. Do not sow your fields or prune your vineyards. 5 Do not reap what grows of itself or harvest the grapes of your untended vines. The land is to have a year of rest.

    10 Consecrate the fiftieth year and proclaim liberty throughout the land to all its inhabitants. It shall be a jubilee for you; each one of you is to return to his family property and each to his own clan. 11 The fiftieth year shall be a jubilee for you; do not sow and do not reap what grows of itself or harvest the untended vines.

    17 Do not take advantage of each other, but fear your God.

    23 The land must not be sold permanently, because the land is mine and you are but aliens and my tenants. 24 Throughout the country that you hold as a possession, you must provide for the redemption of the land.

    Leviticus 25

  6. George Parkanyi on January 23, 2009 10:09 pm

    Anatoly,

    Don’t worry about China, we’ll get back the stimulus money in debt devaluation alone. Meanwhile American retailers will get a break and the McJobs will be safe. :)

    We still need China to become prosperous as a future market for us. Your own stuff is never cool, so the more affluent Chinese will be looking abroad for the “cool” stuff, which we will then sell to them.

    It’s all very circular. :)

    Cheers,
    George

  7. George Parkanyi on January 23, 2009 10:42 pm

    Speaking of land, Jeff, last night I watched a documentary with the kids called “Fly Me to the Moon” about current plans man’s return to the moon. In it was the story of Dennis Hope, an almost broke, actor wanna-be who was driving home from Los Angeles in 1980 thinking about how to get some land, and happened to look up at the full moon. Then the light-bulb went on. He checked into the international space treaty, found out that countries cannot lay claim to the moon and that it says nothing about individuals, and claimed it for himself. He notified the U.N. and the U.S. and Russian governments (who ignored him), and next thing you know the “Lunar Embassy”/land-registry http://www.lunarlandowner.com/ starts selling off acres of the moon for $19.95 an acre (plus 1.5% Lunar tax). And is still doing it today.

    Amazingly, thousands of people have actually bought these plots - including movie stars and other high-profile people. What I love about it is the sheer audacity (and the willingness of so many people to actually pay the money). Ironically, since so much money HAS been exchanged, all these purchases may actually have legitimized his claim. Someone tries to mess with the moon now and you can bet the class action lawyers will be all over it in a heartbeat. Only in America. :)

    Cheers,
    George

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