Don Boudreaux quoting his St. James Buchanan

Re: 2017/07/31: http://cafehayek.com/2017/07/bonus-quotation-day-41.html

Don Boudreaux seems to be a Mises Monk. He, and the other acolytes, have gone apoplectic over comments by a Nancy MacLean that evidently wrote a book that took some shots at one of their saints … a James Buchanan.

This quote is typical of the type presentations you get from these people. Saint James Buchanan is said to have written:

The abiding genius of Karl Marx lies precisely here, in his acute understanding of the possible reaction of the ignorant intellectual to the workings of the capitalist or market order.

Now there is nothing mystical about a capitalist. A capitalist is easily defined as “two years”. That’s what it takes for a person with elite connections, and thus privileged under banking laws granting them 10x leverage, to double the “capital” they put into a bank … assuming they make a conservative 4% spread (which x10 is 40%/year on “their” money) on the so-called “loans” they make.

After that, they can take “their” money off the table, and leave the other half to ride forever. In a 30 year career, their con of compound interest turns their money into over 24,000 times what they “put in” for just that “two years”. It’s infinite when you consider they had zero capital at risk over the other 28 years.

Pretty slick deal isn’t it. What’s not to like about capitalism. And of course, anyone who takes a shot at capitalism must be a “communist”. That’s the only other alternative, right? That’s what they would have you believe, yet they repeatedly qualify their “capitalism” with the adjective “crony” when they don’t think it’s pure … i.e. when it is mostly communism and corruption and what they like to call “corporatism” (they never seem to run out of “isms”) as it is in the USA … and everywhere else capitalism is claimed to be found.

Here at Money Delusions, we talk about “traderism”. We know and we prove that “money” is created only by traders ( … oh, and of course counterfeiters … these being easily and quickly mitigated in a proper process). Money is “not” created by banks. It is “not” created by the governments banks institute to protect their con.

So, putting so-called capitalism aside for now (i.e. ignoring everything we read about it herein), let’s keep our eye on their other subject … that being “market order” … something we here know at MD is not “order-able” … it is free to do what it pleases … and if not, it is “rigged” and is not a market at all. Of course all markets are rigged because money is rigged.

Just keep that in mind as you read these annotated excerpts of some of Don Boudreaux’s nonsense:
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From Bourreaux’s Essay/

… is from page 167 of Vol. 19 (Ideas, Persons, and Events [2001]) of The Collected Works of James M. Buchanan; specifically, it’s from Jim’s 1986 paper “Liberty, Market and the State”:

The abiding genius of Karl Marx lies precisely here, in his acute understanding of the possible reaction of the ignorant intellectual to the workings of the capitalist or market order.

DBx: Fancying themselves to be unusually insightful, thoughtful, and knowledgeable, a great many intellectuals are, in fact, mindless pack animals.

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MD: When challenged to disprove the definition and proof of what money is as given by this MD site (see side panel), Boudreaux responded like a “mindless pack animal”. He said he doesn’t feel compelled to address my “unorthadox” treatment of the subject. I reminded him that Columbus and Copernicus also presented unorthodox views on subjects we take today as being obvious.

And here’s some more of the Boudreaux pot calling the kettle black:

They mistake their slogans – which sound fine to the ears of intelligent second-graders – for insight and knowledge.  Never bothering to learn economics, and also never bothering to think realistically about politics or to study history with care, they criticize without careful reflection, condemn without sound judgment, and propose without information, insight, or wisdom.

MD: Now, I have not found a single economist that knows what money is. How in the world can you teach a subject like economics without knowing what money is? So anyone who has “never bothered to learn economics” really has a leg up on those who have. They don’t have to unlearn any of that nonsense.

It all begins with knowing what money is. At this site we will repeatedly bring up their confusion and shine light on it. Remember … Boudreaux says the obvious truths explained here are “unorthodox” … what a properly religious term he uses to explain his own behavior.

What is money?

WHAT IS MONEY?

Definition: Money is an “in-process promise to complete a trade over time and space”

Proof:

Examine trade: (1) Negotiation; (2) Promise to deliver; (3) Delivery.

In simple barter exchange in the “here-and-now”, (2) and (3) happen simultaneously, on the spot. Any exchange of “value for value” (e.g.corn for piglets;  gold or gold backed exchange for other stuff; etc.) is in this category and does not involve money.

Money enables simple barter exchange over time and space. Thus, money is obviously “a promise to deliver”. It can be nothing else. It doesn’t exist before the promise is made nor after delivery is made”.

Money is only created by traders (like you and me buying things over time). It is not created by banks nor the governments they institute. In fact, “all” governments are just traders. But unlike you and me, they never deliver on their trading promises which create money. They just roll them over. And that is DEFAULT. And purposeful DEFAULT is COUNTERFEITING.

Banks sustain themselves on tribute collections (and all your tax payments go to the banks as tribute collections). Governments sustain themselves on counterfeiting. You give them sustenance through the INFLATION their counterfeiting generates.

We have never had a proper Medium of Exchange (MOE) process. But it is trivial to institute one. And anyone, or any group of traders, can create a “proper” MOE process. And multiple processes can co-exist and compete (by minimizing costs).

DESCRIPTION OF A PROPER Medium of Exchange (MOE) PROCESS:

The trader sees clear to make a trade over time and space and chooses to create “money” to effect the trade. For example, you or I choose to trade 360 monthly payments for a house, which we can take possession of and live in now and over the whole term of the promise and beyond.

The trader gets his promise “certified” (now bankers make you come hat-in-hand begging for what they fictitiously call a loan “of their capital” … that’s the scam). “Certification” means the trader’s identity and the terms of his promise are recorded and performance on the promise are transparently displayed to all lookers.

The certificates … first in the form of a simple ledger entry that creates the money and then transfers it to the seller … then circulate as the most common object in “virtually” every simple barter exchange. We know it as money (it may be a ledger entry; coin; or currency … but only one at a time).

The dollars we use everyday come from a “nearly proper” MOE process run by the banks and their “association”, the Federal Reserve. It has a leakage goal (i.e. INFLATION) of 2% and delivers 4% INFLATION on average. It gives it’s members privilege to create 10x as much money as they have … earning 4%x10 or 40% annual return … doubling “their” money in less than two years. Thus “a capitalist is simply two years”.

“A proper” process monitors performance on the promise (e.g.: did the trader make his monthly payment). If he did, all is well in paradise. If he didn’t, the process “immediately” makes an INTEREST collection of an amount equal to his DEFAULT … reclaiming the money as if he paid it back.  This guarantees perpetual perfect balance of the supply and demand for the money … it guarantees perpetual zero INFLATION.

The operative relation is: INFLATION = DEFAULT – INTEREST = zero.

Who pays the interest? Non-responsible traders do.  An existing well known model is the Mutual Casualty Insurance Company. Here INCOME = PREMIUMS – CLAIMS = zero. The money is made on the investment income and works to reduce premiums actuarially. Another distinction with the money process is that “all” members of the insurance group pay PREMIUMS. With a proper MOE process, responsible traders  (i.e. traders like you and me who never DEFAULT) experience zero INTEREST load over the duration of their promise.

Note: For any given money creating trade, no money exists “before” the trading promise is certified, nor “after” final delivery (delivery returning the money which is then destroyed). And since “all” money is created in this way, “all” money in circulation is an “in-process promise to complete a trade over time and space”.

With a “proper” MOE process, banks are “competed” out of existence. A “proper” MOE process could be instituted right now (unless the governments they institute outlaw it) and banks would have to change or go out of business. And since INFLATION is perpetually zero, the governments “must” sustain themselves only on tax and fee collections. They cannot counterfeit. Irresponsible traders are drummed out of the marketplace.

What could be simpler and more obvious?

What hoax could be larger than that leveled on virtually all of us by the banks and the governments they institute?

Why did WTC7 fall down?