5 Relationships Of Raw Materials To Money
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.
HR 2749 Punishes Small Family Farms
Without Theory No Revolution
Glenn Maresca felt compelled to speak up and I am honored to make his views publicly available. He has a song that relates to this, The Quiet Revolution.
Glenn Maresca writes:
Here we have yet another phony food safety bill, which does NOTHING but grant the FDA massive new police powers without actual policy oversight. And it would do NOTHING to solve the actual problem, the stinking cesspools which call themselves “modern” factory farms, the SOLE source of whatever filth there is in our food supply. We don’t need burdensome new tracing regimes to drive small farmers out of business, we already know exactly where the problem is.
H.R. 2749 would give some FDA administrator (read self-serving corporate lobbyist) the power to dictate what farming practices must and must not be used nationwide (read enforced GMOs, growth hormones, and weird chemicals in our food). How can Congress make sane policy without identifying the specific problem and its source before empowering 10 year criminal sentences and $100,000 fines? It can’t. But only if we stop them from doing it, by speaking out now.
This hideously ill-conceived bill (unless you are a chemical food conglomerate) is so terminally vague about what its PURPOSE is, it can only do massive harm and no good whatsoever. Aren’t bills in Congress supposed to start with some kind of preamble, something like, “This is the problem we have identified, and this is what has to be done to fix it and WHY.” No such forethought in HR 2749, just unlimited and unaccountable new police state powers, while President Obama continues to appoint the WORST possible nominees for just about every administrative position.
It’s time to wake up folks. It’s just one corporate power grab hand over fist out there. Not ONE major bill has Congress passed yet since the last election that did ANYTHING to confront the actual real problem. Credit card so-called reform was some kind of sick joke on the American people, rejecting the only provision that actually mattered, constraining usurous interest rates. Has anybody seen any BIG savings on their credit card bills yet? Did we have to ask?
And they TRYING to do the same thing with health care reform, to do nothing to disturb the existing corporate medical industry gravy train. It is ONLY because of the alerts we have done on this already that single payer is actually getting a hearing. What kind of lunacy is it when the plan supported by a majority of the American people is not even allowed in the room? It’s the lunacy that happens when more of us do not speak out more often. And we’ll have another alert on that later in the week.
But for today, please speak out against HR 2749. Tell Congress to directly regulate factory farms and them ONLY. That’s all that has to be done. And anything else they do that does NOT do that by definition will only make the problem worse, by punishing those who are NOT huge, filthy, factory farms.
Understanding Our Economic Crisis
Nick Gillespie narrates this video sponsored by Americans for Prosperity, the Heritage Foundation, and Reason.tv that clearly shows our current economic situation.
While it seems most available information focuses attention upon the segments of the economy that appear to be responsible for this mess few possess the willingness to look upon the economy as a whole.
Here I wish to look upon the economy as a whole.
Money used to be things, commodities, that could be traded for anything else because everyone recognized and accepted their value. Precious metals eventually became the commodity of choice to use as money but throughout history almost any other thing you can imagine became used as money someplace sometime.
The concept of money, commodities with universally recognized value, is really straight forward and simple. If people harvest or produce something lacking a widespread market then trading it for something else of equal value with a widespread market opens up new trade opportunities for them.
Trade became so dependent upon money that local bullies, Priest-Kings with armies, reserved the right to issue money for themselves and with this monoply in hand controlled trade. You would think that this control over money allows Priest-King with armies to do or have anything but it was not enough.
To get more out of money, Priest-Kings came up with the idea of debasement. Since the local bullies controlled the money they changed the precious metal content of money whenever they wished.
For example, the Roman denarius originally contained about 4.5 grams of nearly pure silver. Under the Claudio-Julian Emperors the denarius contained about 4 grams of silver.
Nero reduced the silver content of the denarius to 3.8 grams. By the second half of the third century the denarius contained only about 2% silver and was replaced.
Under Diocletian (c. December 22, 244 – December 3, 311) taxes increased and extra coins were minted to pay for the military expansion intended to secure the empire. The resulting inflation debased the money and the empire’s mercenaries ended up sacking Rome for payment.
More recently, the U.S. dime was 90% silver until 1964. Starting in 1965 it no longer has any silver in it.
The Invention of Paper Money
The Chinese, inventors of the printing press, also invented paper money. During the reign of Kublai Khan, grandson of Genghis Khan and heir to the Mongol Empire, paper money became their predominant medium of trade.
The unbacked currency of Toghan Temur (r. 1333-70) produced a hyperinflationary spiral and the Han-Chinese people revolted due to the dynasty’s oppressive security state. The Mongols lost most of China to the Ming rebels in 1368 and fled to their homeland Mongolia.
The Great Debasement
In 1544, Henry VIII of England , King and head of the Church of England, reduced the silver in minted coins by about 50% and repeated this to a lesser extent the following year. The resulting long term inflation crisis threatened landowners’ wealth which pushed them to institute enclosure.
The enclosure movement essentially completed the destruction of the medieval peasant community and manorial serfdom in England. Capitalism and wage labor developed to replace manorial serfdom.
Eventually English colonies in North America rebelled against new laws prohibiting them from issuing their own money and requiring them to borrow money at interest from the Bank of England. The rebellious colonies also rejected the possibility of rule by Priest-Kings and attempted to preserve these gains for future generations with the Bill of Rights.
The following 8 minute segment from the movie Zeitgeist:Addendum provides an excellent overview of what happened next.
The financial services industry, like all powerful industries before them, demanded increasingly “handout-minded” Presidents and Representatives who inevitably mortgaged the country’s future in order to win reelection. Elections today are won with money provided directly by the financial services industry, indirectly through their lobbies and spent by their political action committees.
William K. Black most recently brought this issue to national attention.
The United States of America, founded by slave owners on stolen land, securing its empire with professionalized armed forces and mercenaries, now practices money debasement through quantitative easing.
This, along with the loss of rights to the encroaching security state, seems no different than the end phase experienced by other empires. If this were all there is, then we could all expect to go on to establishing new societies in the future.
The things that are different this time involve the global exhaustion of nonrenewable resources and world wide climate change in the face of unprecedented population levels. Without a doubt these issues complicate matters a great deal.
If you have ever thought about becoming independent from reliance upon an employer, now would be a good time to act. If you have never thought about it, now would be a good time to start thinking about it.
Personally, nothing within the boundaries of the law seems as feasible as establishing an online business. How long that remains feasible is anybody’s guess but by the time that becomes unfeasible we will be experiencing the total collapse of industrialized civilization.
And that will be the subject of another atticle.
It is no measure of health to be well adjusted to a profoundly sick society.
Jiddu Krishnamurti
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.
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