Posts Tagged ‘debt’

The Tyranny of Debt

May 7, 2015

“(T)he United States waged a long war upon the ground, that governments are instituted to secure, and not to bestow, the freedom of property.” John Taylor, Construction Construed and Constitutions Vindicated, (1820), Sec. 1.

“To live securely happily and independently is the end and effect of liberty… All men are animated by the passion of acquiring and defending property, because property is the best support of that independency, so passionately desired by all men… as happiness is the effect of independency, and independency the effect of property; so certain property is the effect of liberty alone, and can only be secured by the laws of liberty; laws which are made by consent, and cannot be repealed without it.” Thomas Gordon, Cato’s Letters, No 68, (1721).

 

Against Exploitation

“Private property is the bulwark protecting the individual against exploitation by others,” Herman E. Daly wrote in Beyond Growth. “A property owner has an independent livelihood and need not accept whatever conditions of employment are offered.”

Indeed, Daly taps into the very essence of private property with these sentiments. If there is one single element of Marxism that presses the hardest against the individual’s freedoms, it is the question of property. While it is true that in a perfect world – wherein everyone’s sincerity of altruism would be above question – a society based on communal property may indeed be a workable framework.

But this is not a perfect world, and as sure as the sun rises in the east, there will always be those individuals who would eye the control of communal property as a means to power. In fact, we find in history that state control of property defines every major establishment of communism in the world. And while contemporary Marxists will contend the communism of the USSR and China does not represent “real” Marxism, it is fair to level these criticisms against Marxism until such time its followers show us a society in possession of a complete sincerity of altruism.

It is for this reason, and others, that the tenant of private property continues to hold in free societies, at least for the foreseeable future. But there is another insidious threat to private property, one that Daly did not recognize in his statement above (but does so elsewhere in his works), and that threat is indebtedness.

The Big Lie

Today, “free” societies everywhere are populated with a large number of home and property owners, but only a small percentage outright own this property lien free. Almost all of it has been purchased with the help of a mortgage. And within this reality rests The Big Lie, that is, we live on the illusion that we are “homeowners.” Yet, unless we hold title to our property lien free, it is very difficult to align this illusion with reality. And so, to tap Daly’s passage again, encumbered homeowners are forced to “accept whatever conditions of employment are offered.” (more…)

Post-Consumer Society? Monetary Discipline Needed.

November 16, 2012

This morning, Bloomberg News reported the strengthening of the U.S. dollar. Citigroup sees this as the foreign-currency exchanges anticipating the end of the Federal Reserve’s monetary stimulus. Bloomberg News’ slant was this: Since the U.S. economy is strengthening, the Federal Reserve will pull back on its quantitative easing efforts.

I’m taking a contrarian view: The gain in the dollar isn’t based on some new-found confidence in the U.S. economy, but rather currency investors are simply seeking a safe haven in the coming deluge of economic weakness, taking advantage of the U.S. dollar’s global reserve currency status. Consider the recent headlines:

  • New York region’s manufacturing shrank for the fourth month
  • Jobless claims jumped in November of 2012
  • Euro area slumps into a recession for second time in four years
  • Consumer prices rose at a slower pace in October of 2012
  • U.S. industrial production drops 0.4%
  • Economist anticipate the United kingdom’s GDP shrinking in 4Q 2012
  • A recession looms in Japan

The upshot of all this is that as the dollar strengthens in a counter-intuitive cycle – after all, the Fed’s quantitative easing efforts should be weakening, not strengthening the dollar – this only encourages the modern monetary theorist’s thinking that the U.S. dollar has found some new reality, and monetary and fiscal stimulus can continue unabated.

This reminds me of the economists who, in the late ’90s, proclaimed the U.S. economy had become recession proof. (more…)


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