5 Relationships Of Raw Materials To Money
If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
Everything we use from this planet to live …
… comes in the form of Raw Materials.
Those who harvest nature’s bounty to provide Raw Materials for human society need to be able to do so without acquiring debt . Otherwise, if providing Raw Materials cost more than it paid, it would not be sustainable and providing Raw Materials becomes impossible.
Those who provide Raw Materials must be able to afford all the finished goods and services they require from the sale of the Raw Materials they produce. Otherwise, they could not continue to provide Raw Materials and survive.
(I know I repeated myself in the above 2 paragraphs. It is an essential point and I did not want it to be missed.)
The Price Level of Raw Materials determines
the amount of Free Currency in circulation.
Free Currency is Debt Free Money.
We’ve had Debt Free Money in the past, Free Currency, once upon a time in the United States of America.
Those who provide the finished goods and services to Raw Materials producers must be able to do so without acquiring debt. Otherwise, providing finished goods and services to Raw Materials producers would not be sustainable and it becomes impossible to provide finished goods and services to Raw Materials producers for very long.
Those who provide the finished goods and services to Raw Materials producers must be able to afford all the Raw Materials, finished goods and services they require from the sale of their finished goods and services. Otherwise, they could not continue to provide finished goods and services to Raw Materials producers and survive.
Those who provide finished goods and services to anyone are paid,
either directly or indirectly,
by the Raw Materials producers.
Having enough debt free currency to allow for the total debt free exchange of all finished goods and services depends upon the price level of Raw Materials.
It is not enough that farmers, fishermen, foresters, miners and recyclers make enough so that they may start a new production cycle, live long and prosper. All those who add their labor to animal, vegetable and mineral Raw Materials to produce finished goods need to make enough so that they, too, may start a new production cycle, live long and prosper.
(I’ll get to the service providers a little later because I feel they require more clarification and differentiation.)
The bottom line is that the price paid to Raw Material producers determine the amount of debt free money available to human society. The amount of debt free money available for personal savings and business investment is determined by the price of Raw Materials.
Here is a five part description of how Raw Materials relate to Money.
- Debt Free Currency
- A society’s annual production of raw materials must be represented in the economy by a sufficient amount of debt free currency (a price level) to optimize the debt free exchange between the raw materials producers and the finished goods and services raw materials producers purchase.
- Those who produce the basic raw materials for society must be paid enough to afford the manufactured goods and services required for raw materials production.
- This amount of debt free currency in free circulation must also be enough to optimize the debt free exchange of all manufactured goods and services at all subsequent stages of the economic cycle.
- Debt Free Exchange
- The amount of wealth in flow within the economic cycle must be represented in the economy by a sufficient level of debt free currency to permit the debt free exchange of all finished goods and services.
- Without enough debt free currency to meet the need of debt free exchange an economy stagnates and dies.
- Finished Consumable Goods
once produced and warehoused, must be monetarily represented somewhere in the economy by more than their minimum domestic labor value equivalent in free currency, so consumption of finished goods can occur without supplemental debt or abstinence from consumption. (a surplus of production in the midst of poverty) - The Volume of Debt Free Currency
available to distribute current production and facilitate the subsequent expansion of commerce is governed by the value placed on raw materials at the first point of sale. - The value of raw materials becomes the primary source of personal savings and business investment.
Human society cannot sell under-priced Raw Materials into a high priced retail market without replacing the underpayment with:
- capital debt
- interest driven inflation
- abstinence from consumption and
- a high rate of unemployment.
Governments and the FIRE (financial, insurance, real estate) industries know this and have known this for a very long time. Yet, these service providers have a verifiably long history of repeatedly screwing things up.
Some services I understand, such as education, entertainment and medical services. These seem reasonable and easily affordable if government and the FIRE industries did not cost so much and actually make things worse by repeatedly screwing things up.
I cannot believe that the world’s wealthiest and most powerful individuals with access to the best education repeatedly screw things up by accident. This whole thing concerning Raw Materials and money must go much deeper than the current financial meltdown and scandal.
The reason just about everyone else, including economists of all sorts, are giving more complicated explanations seems to be their need to retain all the rank, honors and privileges bestowed upon them by governments and FIRE industries.
Somehow, their rank, honors and privileges must be justified and maintained while explaining why things are screwed up. It is then no surprise that explanations become complicated.
To make things even more confusing, libertarian economists say things like:
“The governments of almost all countries are engaged in a campaign against the capitalists. They are intent upon expropriating them by means of taxation and monetary measures.”
-Ludwig von Mises
Now, Capitalism emerged as the dominant means to separate products from their producers subsequent to the general collapse of manorial feudalism during the Great Plague. Manorial feudalism gave us serfdom, bondage to the land, land owned by some big mucky-muck.
(I say general collapse of manorial feudalism because land bondage continues in the Southern United States with tenant farming, the foundation of Southern agriculture since the Emancipation Proclamation.)
In Europe, during and after the Great Plague, big mucky-mucks could not get enough serfs to do all the work, so they invented Capitalism to pay people to work. The plan was to pay people less money than what their products could be sold for.
The difference between the cost of Labor and the value of the products determined the amount of profit because Raw Materials costs had already been fixed.
The big mucky-mucks, AKA Capital, already owned everything, all they needed was a system to get people to work for less than their labor was worth.
(Well, they, Capital also needed a system to keep everyone in line. I get to that part a little later.)
In business, Capital is everything that is not Labor or Raw Materials. Capitalism just privileges Capital relative to Labor and Raw Materials, that is why they call it that.
This development meant that the big mucky-mucks, Capital, needed to find a way to have Labor pay for its own management. The old days of just getting a big guy with a whip to oversee the serfs were over.
Managers from the ranks of the workers themselves seek superior privileges over the other workers they manage. They are allowed rank, honors and privileges to the extent they are successful in profitably separating producers (workers) from their products (the job).
Successful managers are allowed to call themselves Capitalists to signify their usefulness to the system named for them, the Capitalist System.
Capitalists often internalize the system point-of-view through close identification with the owners, the big mucky-mucks, Capital. This mental construct then conflicts with their actual (negative survival potential) position.
Capitalists seem easily confused when the Capitalist System acts to collect the fruits of other people’s production. After all, that is the very reason it was invented.
Capitalists forget they are workers themselves, workers used to more profitably separate products from their producers. Capitalists are central to a system that must pay for its own management because the owners, Capital, does not produce anything of value to sell.
Capital, another name for the power behind the system’s infrastructure, claims its rank through national governments’ sanctioned cartels and monopoly control over Raw Materials. Capital is control over Raw Materials cloaked in status derived from military strength and the proven willingness to use it.
Capitalism is simply a system that privileges Capital over Labor (including management) and Raw Materials. Capitalists are simply specialists in separating products from their producers, Labor, for the benefit of Capital.
It is not that Capitalists are on the wrong side,
Capitalist are the wrong side.
The big guy with the whip who used to oversee the serfs now needed to be paid, just like everyone else in the Capitalist System. Capital invented the rank, honors and privileges of Sheriff just for him.
Sheriffs were employed to evict people from the Commons (common lands) where they paid no rents. With the Commons closed, people were forced into the cities for factory work so to afford rent.
The Security State Apparatus, a necessary part of Capitalism, descended from this role of the Sheriff as compliment to the Capitalist. The workers are assessed for the cost of being kept in line, policed, for the safety and security of Capital, Capitalism, Capitalists and the Capitalist System.
The cost to workers for their own management by Capitalists and the Security State Apparatus, that is, the cost of both separating them from their production and keeping them in line, is paid for by the workers themselves by means of taxation and monetary measures.
This is monitored by a Union enforced Labor hierarchy entrenched in government bureaucracies. The government itself legitimizes and defends the Union, giving it great political power, in an obvious case of conflict of interest and self-dealing.
Debt Free Money,
Free Currency,
comes directly from the sale of Raw Materials.
When Raw Material producers, those who produce finished goods from Raw Materials and those who provide desired educational, entertainment and health services can afford to live on Free Currency, Debt Free Money, then everyone in human society lives long and prospers.
The big mucky-mucks, Capital, using Capitalists and a Security State Apparatus monitored by government bureaucracies loyal only to their in-house Union, makes huge profits on debt. These huge profits come at the expense of Raw Materials producers, those who produce finished goods from Raw Materials and those who provide desired educational, entertainment and health services.
Debt is a fabrication of governments and the FIRE industries.
- Debt enslaves individuals and entire populations,
- enslaved as certainly as a chattel slave during Roman times
- enslaved as certainly as a serf under manorial serfdom
- enslaved as certainly as anyone coerced into doing something they truly do not want to do.
That is the relationship of Raw Materials to money.
No More Pretending
Delusional hope produces nothing of value. Throughout my life I have sought to see things as they are. The past few months have provided me the opportunity to ponder current events against the tapestry of history.
“We have destroyed the Holocene biosphere, and it can never be rebuilt. We have inadvertently terraformed Earth into a different planet. This act cannot be undone; it is thermodynamically irreversible.” Desdemona
I leave it to climate change deniers to explain the recent wholesale collapse of fisheries with the increase in both reef and oceanic dead zones, the desertification of the world’s most productive land and the rapid transition from forest to desert by mega-fires.
The once frozen “methane bomb” has already gone off. The Arctic permafrost is already melting.
Large areas of Earth are becoming uninhabitable to mammals and their food plants. Most charismatic megafauna, such as elephants, rhinos and whales, will become extinct in a few decades. It is entirely likely that humans will follow them into oblivion.
For sure, this will be a bumpy road to total collapse and a few will manage to arrive in luxury SUVs. The rest of us, the vast majority, will see family and friends fall as we circle the drain together.
There are still resources that could be directed towards easing the necessary scaling back of empire and civilization as we know it. Scaling back in and of itself would help a great deal, perhaps forestalling human extinction as we adapt to an Earth that every day becomes more like Mars.
While President Obama takes on the ‘fat cat’ bankers the underlying collapse of the United State financial industry has yet to be addressed. The root problem is an excessive level of debt in the system at all levels, a level of debt that exceeds capacity to pay.
The problem in a nutshell – the banks are still hiding losses – big losses. Very little of the debt securitized by the housing bubble has been written off or yet foreclosed upon.
Loans are not being made to small business people because they have no collateral to pledge. Being asked to pledge personal assets as collateral for a small business loan is standard operating procedure.
With most homes underwater, most small businesspeople have no assets to pledge as collateral. Debt problems go beyond the largest banks.
China bought zero U.S. Treasury debt in October. Now foreigners have become net sellers of U.S. Treasury debt instruments.
The problems began when raw materials producers stopped receiving parity pricing and needed to borrow in able to start a new round of production. A principle method of under-paying, paying less than parity, appears in the form of paying in debased money.
Meanwhile, here we are, nearly a year under a new administration. For feds, more get 6-figure salaries, in an attempt to keep up with debasement of U.S. money.
Seduced And Abandoned
Both Democrats and Republicans demonstrate a history of saying whatever seems required to become elected, seduce the electorate, and upon election conveniently explaining away or otherwise abandoning their earlier promises.
Everyone seems to condemn this behavior between individuals. The victims often appear unable to disengage on their own initiative. If fortunate, their family and/or friends provide counseling and intervention to help end these cycles of abuse.
Yet society as a whole suffers serial victimizations by these two mainstream political parties. Ever since the Reagan Administration identified government as the problem the resulting orgy of deregulation and bureaucratic bloating continues unabated from one election to the next.
Some wish to call them incompetent idiots. Others wish to call them lying frauds. I suggest we make peace and call them incompetent lying idiot frauds.
The system they destroy also provides all the wealth and power expended in the destruction. Literally self-destruction. It seems an entire spectrum of pathologies plague our financialized government.
Narcissism
Borderline Personality Disorder
Characteropathy
Sociopathy
Psychopathy
Witness the unnecessary pain, suffering and death. Unnecessary because it results from a financial services industry that compounds debt exponentially inevitably demands more wealth than the total sum of raw materials entering the economy.
Unnecessary because the government fails to enforce the Prompt Corrective Action Law and administers regulation in the interest of the financial services industry contrary to the interests of citizens.
This occurs simultaneously with a prison industry growing faster than it can expand, militarization of local police forces, the historic first ever active deployment of U.S. Armed Forces within the United States of America, de facto nullification of the Bill of Rights and an overall heightening of domestic security.
I hope you are debt free and likewise free from any form of wage slavery. At least that can give you a running start.
Marijuana Parity Pricing
Agricultural producers, under economic attack for generations in the United States, need to receive parity pricing for their produce in order to begin another round of the economic cycle without debt. Forcing agricultural producers into debt at the beginning of the economic cycle impoverishes everyone except the financial services industry parasites who profit at everyone else’s expense.
Marijuana, cannabis, hemp or whatever you call it may well be the last agricultural crop grown in the United States that is capable of providing enough income to be worthwhile growing. Profitable agriculture only appears possible outside of a legal system created to benefit a pathological elite, by definition an activity pursued only by outlaws.
This fact alone proves the lie to the political theater misrepresenting open markets and free trade. The only open markets and free trade possible today operates outside of the licensing, regulation and taxation of our pathocracy.
The free and independent culture surrounding marijuana agriculture, even as harassed and persecuted as it is, may be one of the last widespread autonomous agricultural activities available to Americans. Today parity pricing only exists outside of the law.
While many now seek to end the illogical criminalization of this most useful of all plants it seems few wish to look with open eyes at the likely outcome of their success. The price all will pay to end the justified fear of taking a few tokes will be the end of all profitable agriculture.
The growing plea for outrageous taxation levels on every step of bringing marijuana to a legalized market will end the financial incentive to grow it. We are witnessing widespread voluntary servitude for the illusionary benefit of reduced persecution.
Notice I said “reduced persecution” and not the end of persecution. Perhaps people have grown so used to their enslavement within the panopticon that they have grown numb to how modern society has become penal and coercive in nature.
Few seem to realize that licensing, regulation and taxation requires the increased intrusion of an increasingly militant and corrupt government in personal private affairs. The idea that the decriminalization of marijuana will somehow stop the police from “crawling up your ass” is far from realistic.
As it stands, only the complete collapse of our pathocracy will allow the fair pricing of agricultural products. Perhaps then people will learn to manage money as a common resource and public utility rather than the private monopoly money is today.
With decriminalization, marijuana cultivation will eventually come under the control of government subsidized agribusiness as all other commercial crops already have. The one commercial crop still supporting many rural communities will cease to be profitable.
This all comes from confusing the symptoms of unjust persecution with the cause of unjust persecution. The entire population of marijuana decriminalization activists have been tricked into petitioning their oppressors for more oppression.
The oppressors desired this outcome and manipulated events so that people will come to them of their own free will begging for more laws, more regulations, more licensing requirements and more taxes. The people they have tricked now look only to the small areas their attention has been directed to and are not aware of the greater game at play.
By terrorizing marijuana enthusiasts with militarized domestic law enforcement, those who created, empowered and armed marijuana eradication teams in the first place now weigh the various options for profit and control the marijuana enthusiasts themselves propose. Once a common cause among most who opposed our pathocracy, marijuana decriminalization has become a niche issue apart from greater issues of social injustice.
Why not advocate the return to parity for all agriculture products? This would only return our entire economy to profitability and limit the power of the central banks.
Why accept any measure of government control over what we choose to put in our bodies at all? This would only free communities of people from the onerous violent intrusion of domestic armed forces.
How can anyone believe that with decriminalization of marijuana under the hand of oppression nothing else will change? Transferring the wealth of original production from an underground economy to our pathocracy will only strengthen those who have oppressed and terrorized us while weakening those who resisted them.
We will not have more freedom. We will have less freedom.
The rich will become richer and the poor will become poorer as the door closes upon the last opportunity to sell an agricultural product at parity. After all of this I can only hope that at least you will still be able to get high from smoking it.
But do not count on it.
What do you think?
Resilience Economics
Useful Resilience Economics needs more than theoretical responses to scenario sketches. Thought experiments will not be enough to get you moving towards a more secure economic status today.
The current economic collapse appears unique within the history of economic collapses because we have lost our inherent safety net that traditionally cushioned downturns. The very same so-called “Masters of The Universe” who drove the current economy into the wall have already cannibalized our ability to weather failure gracefully especially in the United States and Europe.
The decades of economic attacks upon family farms leave us vulnerable to a very hard landing in which millions will suffer death through the deprivation of essential food and shelter. During the Great Depression of the 1930s many of the urban homeless and unemployed factory workers found sanctuary on the family farm.
We may now only look back with fond nostalgia at how we lived a couple of generations ago. In hindsight the wisdom of Raw Material Economics proves itself.
As long as we have adequate food and shelter the micro-production of goods and intellectual content can provide for the rest of us. Gone are the days of relying upon those “too big to fail” for our well-being.
The current crop of academically educated economists only argue about how to best preserve the current financial system with all of its structural inequities and invitations for fraud. They are not prepared to consider an egalitarian diverse decentralized distributed economics that possesses intrinsic resilience.
Unfortunately, current administration policies continue the practice of punishing family farmers for the benefit of the financial services industry. Unless you have income from off the farm, you will have to wait until the current economic collapse deepens before re-establishing family farms becomes feasible.
Until then, it promises to be a very bumpy ride and expect to see a great deal of volatility in all markets. Still you have options over the short term and while they exist now would be a good time to explore them.
First, if you now depend upon those “too big to fail” for your income, including all branches of government, the dominant banks and the multinational corporations, now is the time to act on an exit plan. While some employers may be able to restructure their businesses to offer a measure of economic security to employees, these smaller companies will be targeted by government taxmen eager to take away profits and hostile takeovers by predatory corporations.
Second, traditional passive income from investments will become increasingly unreliable and ultimately insufficient as the current economic collapse deepens. You must find a way to become productive while maintaining control over your pricing to be able to respond to deflation, inflation, stagflation and whatever other curve balls the banksters throw.
Of course, a total collapse or even near total collapse will have us all scrambling for food and shelter while those who have stockpiled and continue to hoard will be faced with increasing physical security demands. Police and the armed forces will be the last elements of the status quo to collapse and they will be looking for stockpiled food themselves.
The issue remains of determining what to do between now and a very possible then. Without a doubt having an independent income based upon your own productive capacity will likely become necessary.
While climate change, resource depletion and unsupportable population levels will certainly complicate the issue, realistically there seems very little you or I can do about that. At least if you maintain the capability to produce at parity, that is the sale of your production not only supports your existence but also allows you enough profit to begin another round of production without debt while saving enough to survive unexpected events, then you may have a future.
Maintaining mobility ability is a bonus that could literally become lifesaving. For example, areas of the Oregon coast that once appeared desirable because of the local abundance of seafood are now adjacent to growing oceanic dead zones devoid of any sea life at all.
Expect volatility in all aspects of life. With all of this in mind, an online business seems to be a good bet to me.
If running an online business seems to be beyond your capacity then you owe it to yourself to honestly investigate it because all sorts of people have learned how to run an online business. Now would be a good time to start.
Wealth Facts
The Source Of All Potential Wealth
All new potential wealth, the foundation of all prosperity, comes from the earth. You can either harvest something or mine something to create new potential wealth.
Human labor produces raw materials to create jobs and incomes which consolidate into the basic industries of agriculture, forestry, fishing, mining, and recycling. This consolidation of human labor producing raw materials enables the economic cycle that manifests new wealth.
The economic cycle emerges through the structure of trade that manifests sufficient new wealth to afford all finished goods and services. This structure of trade must manifest a sufficient level of wealth to afford all finished goods and services or it becomes unsustainable due to growing debt.
If it is correct, as argued by Milton Friedman and Paul Samuelson, that money is a factor of production in the same sense as labor and raw materials are, that money has the same standing as labor and raw materials with respect to production or wealth creation, then money obviously has a claim to a share in output or wealth created. But, alas, it is not so.
The End of Mainstream Economics: An Interview with Gunnar Tómasson
The Economic Cycle
The economic cycle begins when raw materials producers manifest new wealth by trading for the finished goods and services necessary to live and produce raw materials. All the finished goods and services of the economic cycle come from the processing of raw materials.
Providing services creates a drain upon manifested new wealth.
Producing raw materials and processing them into finished goods by manufacturing creates service jobs in transportation, utilities, finance, and trade. Manufacturing and service jobs depend upon receiving a portion of the manifested new wealth.
It is fundamental nonsense to view money as a factor of production. Money plays many roles, but we live on what we produce. We do not live on paper money that we create as a superstructure on the foundation of our production.
Gunnar Tómasson, financial consultant and former senior staff member (1966–1989) of the International Monetary Fund
Producers Permit All Manifest Wealth
When raw materials producers by their labor extract potential wealth from the earth their manifested wealth must allow them to participate in the economic cycle without borrowing against future production.
Interest paid by the production sector does not reward any contribution of money to wealth creation. It must derive from money newly created in the banking system, which means that it must be loan-financed.
Gunnar Tómasson
Trade based on underpaying producers so they must borrow to begin the next round of the economic cycle and “structure debt” to hide their lack of manifested wealth is unsustainable. Producers must manifest wealth beyond their needs and the demands of manufactoring and service jobs.
Prosperity originates with raw materials being added to the economic cycle. Financial systems based upon ever growing debt are doomed to eventually collapse.
Impoverishing raw materials producers with unpayable debt impoverishes us all.
The proper word to use is: Parity.
Parity means that farmers are guaranteed to receive a price for their production that covers their cost. This protection from the predatory practices of the financial services industry becomes required with the political power exercised by the banksters.
Loading ...