adrock3215

This market got taken to the woodshed today. I've never seen anything like it. Volume was huge and large selling pressure. The 2, 10, and 30 year bonds moved insanely. Oil sold like crazy, it's below $50 now. I see a big increase in fear today. I think there is more downside to go, but not before another shoe drops. Maybe Citi is the next to drop. C below $5 today is bad news, mutual funds typically don't hold under $5 stocks. The selling was huge when it broke that number. The Fed is getting very close to a liquidity trap. Bernanke is going to lower the interest rates to 0%, and markets won't get any better. The Fed is nearly powerless.

I thought I saw a subtle reference to Atlas Shrugged in the Boston Museum video. Thanks for posting these!

I think you read too much into what I said... This was exactly what I pointed out. Cuban does not agree with this statement though. He thinks that government should violate individual rights by taxing stock transactions. The Op-ed says specifically, "The Mark Cubans of the world deserve to be left free to make investment decisions", but Cuban himself does not agree with this, at least in principle. That's the irony of ARI's defense of Cuban.

The problem with Hobbes is that his state of nature is a totally inaccurate description of how things were according to empirical data contained in anthropological study. If I can locate the specific paper I will post it. Hobbes saw the state of nature as a place that was forever in a state of war, because people would always renege on contractual obligations. Moreover, Hobbes thought that morality, and therefore justice, could not exist in a a state of nature. These convictions are entirely untenable. In contrast, Locke thought that morality and justice did exist in the SON, and that humans need government to enforce justice and protect rights. Rand did agree with Locke, you're right about that. But that's simply because Locke was right, and Hobbes was wrong.

I sent a short message to the following politicians that represent me: Representative Hoyer Senator Cardin Senator Mikulski President Bush Who knows if they even read it, but it took me a minute to write, and it's really similar to the one I sent about the TARP bill:

There is no reason to defend this clown. Here's a quote from the editorial: "The Mark Cubans of the world deserve to be left free to make investment decisions under a government with clear laws against force, fraud, and breach of contract" Ironically, Cuban himself is against this, as is evident from his tax proposal. Or maybe he's all for it, until he's on the wrong side of the market...

By "idiot", I mean to say that his entire persona is a gimmick, just like the Dairy Queen stunt he did. What happened is Mr. Cuban probably got caught on the wrong side of the market this year, and he wants Uncle Sam to step in and save the day. He was probably long financials. He thinks that because he made a bit of money in a particular business, that he is an authority on financial markets.

HAAH, Cuban is being convicted of insider trading. This guy is a total idiot. God knows how he made it. He's a total clown.

Ok, given that...your claim was that a bank printing more banknotes than gold reserves causes gold to lose purchasing power. What I said was that this position is entirely unjustifiable, that only banknotes would lose purchasing power, not gold itself. That's why we began to define money, because people were muddying the distinction between money and substitutes for money. There is no reason to include banknotes in the supply of money, but not include mortgage notes, auto notes, Treasury notes, or corporate notes. We have to get away from seeing notes as money, which isn't easy given the fact that we have always been subject to fiat currency, which is counted as money because of legal declaration.

Rand was a secular humanist, so this is not an inaccurate characterization, albeit somewhat imprecise.

In your view, is there a difference between an ounce of actual gold, and a note printed by a bank that says "Redeemable for 1 ounce of gold"? If both of the above consitute "money", then you have muddied the definition of money to include everything under the sun by defining it as 'means of exchange'. J.P Morgan said: "Only gold is money; all the rest is paper." A paper note redeemable for gold is, by definition, a paper note redeemable for gold, and is therefore NOT "as good as gold", because it is subject to default risk by the issuing bank. Therefore, it is NOT the same thing as the underlying value, or money. The banknote is worth a certain amount of money, in the same way a mortgage note is worth $300,000 and a car note is worth $25,000. Notes are, by definition, convertible into money, but they are NOT money. When I take my gold note to the butcher and buy meat, I give him my Bank A banknote. He takes that to Bank B, where he deposits it. Bank B contacts Bank A, and the corresponding amount of gold reserves are transferred from the vaults of Bank A to the vaults of Bank B. The underlying value that made possible the transaction is gold, it was not the banknote. The banknote helped in so much as it substituted for gold. Certainly the butcher wouldn't take a piece of paper that I scribbled "Redeemable for 1 ounce of gold" on with a crayon just before I walked in the door. The butcher would prefer to be paid in gold, because there is less risk involved, but he is happy to sell his meat in exchange for a reputable banknote backed by gold. It would be an increase in loanable funds of gold. It would lower the interest rate of gold. It would decrease the utility of gold qua medium of exchange and increase the utility of gold qua jewelry. In a free economy, there is not one central manipulated interest rate (i.e. Fed Funds rate), which all other rates follow, so the question sort of contains a false premise. That depends. A boom-bust sequence has to have widespread participation by many economic actors. So, the answer presupposes that there would only be one bank and one banknote in the entire economy. I don't believe that monopolies occur in a free market; I believe that they only occur with the aid of government coercion.

In better words: The choice to live is not derived.

What part of the speech are you referring to?

Ok, so where do you draw the line in defining money? Is commercial paper money? Are repurchase agreements money? Are money market mutual fund investments money? I have a post in the Fractional Reserve Banking thread under the Ethics forum that defines the various measures of money and monetary aggregates (M0 through M3), both in today's fiat environment, and in a future free market economy. Money is gold and any other commodity accepted at a depository institution. The notes that a depository institution creates are NOT money, they are substitutes for monies deposited. It would be an increase in produced wealth, and an increase in the (current) money supply. It would not lead to an undesirable boom-bust sequence, because it is an increase in actual productive wealth, as opposed to an increase in paper bills. The reason gold is a value is two-fold in a free society. One is that it serves as a medium of exchange; the second is that it can be used for other purposes like jewelry, decorating, etc. Assume that gold is found and mined in the free society. This decreases the value of each gold unit in terms of other goods; in other words, the valuation given to gold because of its utility as a medium of exchange falls. However, the decrease in the value of a gold unit will mean that one can purchase a unit of gold for less "other goods". Therefore, demand for gold based on its "other purpose" value will rise. In so much as this happens, the utility of gold as a facilitator of exchange will diminish and its utility as jewelry will increase. It is possible that, given enough new production, people would simply stop using gold as a medium of exchange (because it is too abundant, i.e. not scarce enough), and switch to some other commodity (say) silver. The increased production of a gold mine is simply that: increased production. Thus it adds to the pool of wealth, and is not the same as printing letters on a piece of paper. Producing gold and exchanging it for other goods and services is exchanging something for something, not nothing for something (fiat systems).

Right, so now we're back at the original question proposed in this thread. All you've effectively done is circle around the issue, but the issue is what we are trying to find an answer to. A restatement of the quandry may be appropriate: The fact is that we have a choice to live or die, but since to make choices we must refer to a standard of good and evil, which is life itself, we have no way to objectively validate the choice to live without becoming engaged in a circular argument. It appears that the best way to answer this is to reject the entire quandry by saying that the choice to die is really an affirmation of life as the standard of value, anyway.

I think this choice of term is ambiguous and muddies the definition of value, since value presupposes the questions To Whom? and For What?. I could see calling life the axiomatic standard of value or, the axiomatic end; that is to say, the final and ultimate end to which all other ends aim. Perhaps these terms are more clear?

I think that, in order to not talk past each other, as Thomas is saying, we should straighten out our definitions. Here are the definitions I am using. I start first with the definitions used today, under the current fiat system. So, in a free society, where currency is not issued by fiat, but rather by private bank: M0 (monetary base): Actual Gold in circulation + actual gold reserve held in bank vaults M1: M0 + banknotes + demand deposits (checking accounts) M2: M1 + small denomination time deposits + savings deposits + non-institutional money market funds M3: M2 + large denomination time deposits + institutional money market funds + repo agreements Are these the same as you would hold?

A conceivable answer to the question could be something like the following: A human, in fact, has no choice about what is his standard of value. The standard of value is man's life, which is given to him by his nature as a human being. He could reject that naturally given standard and choose to die, but doing so would not change the fact that his standard of value is objectively his own life. The choice to value death does not negate life as the standard of value, rather it affirms it. Since life is the factually given standard of valuation, and since to value anything, even death, must be to value it for some ultimate end, it must be the case that in so much as one does value death, one is valuing life, because life is the only ultimate end.

But aren't goals measured in terms of advancing one's life? If so, then it follows that you cannot choose life in order to achieve some goal, but you must choose goals in order to achieve life. Right....so, given this logical incoherence, how is such an ultimate purpose selected? is the question.

Oh, By the way, there is the emotion filled reponse to the question Why choose life? that goes something like "Because it is wonderful. Look around at the beauty and all the knowledge available. Think of the feeling you get when you finally solve a difficult math problem, when you achieve something of value, when you listen to Bach, when you watch the sunrise over the ocean, when you make a birdie on a hole in golf, etc." It's as if the answer comes down to a sort of personal emotion that cannot be objectively validated. There is the Rand quote "life is an end in itself", which is obviously true. But this seems to mean that there is no objective reason why one should choose to live, and consequently choose to value, at all. After all, we do, as humans, seem to have that choice...? It's not biologically determined...?

In a way, this is the central question proposed and answered by all good art. I could definitely make an argument that Hugo was searching for the answer in his work. Evidentally, many canonical writers have also struggled with the answer to this question, off the top of my head Woolf, Faulkner, Whitman, Sartre, Kirkegaard. Isn't it also the Biblical question of Job? I don't think Objectivism proposes an answer. I think Objectivism goes so far as to say: "Given that you do choose life, here is how you must act." I could be wrong, so I await other replies...

I think this is basically Robert Nozick's objection to Rand's ethics, and I am not sure entirely how to counter it. I choose my values in accordance with life promoting action; in other words, I choose my values so that I may live. The entire concept of valuation is impossible without speaking of life. Thus Life is the standard of value, and the standard of good and evil. But I guess Nozick's objection comes down to: What is the reason why I must choose life? Is this choice outside of morality, since life itself is the standard of value? Does this mean that it would be impossible for me to say that choosing life is good? If so, then does it follow that there is no real reason to choose life? Animals obviously don't encounter this problem, because they don't have free will, and therefore cannot willingly kill themselves. Human beings, on the other hand, do, and many times they choose death, i.e. suicide, over lilfe. I think this fellow has raised the same sort of question when he states "there are no objective grounds for choosing life as the standard of good" and then says that designating "life enhancing actions as 'good' begs the question. " I don't know how to answer this, but I would like to see thoughts on it.

The M in that equation represents the monetary base, not a monetary aggregate figure. The monetary base of a free economy is M=G+R, where G is gold in circulation and R is reserves held in bank vaults (you could make room for silver or other commodities as well, but for simplicity sake I am just assuming Gold to illustrate). If we go to the equivalent of M3, we would include money market funds in our "money supply" as well. Either way, there is no real reason to include 'banknotes in circulation' as part of the monetary base of a free market economy, any more than there is a reason to include 'all commercial paper in circulation' as part of its monetary base.

As usual we are in agreement, but I don't understand the mechanism by which this would occur...Why would the purchasing power of gold itself necessarily fall? So, given what you said: if Bank A takes in deposits and prints more notes than it can back with gold under the guise of FRB, then gold itself will lose purchasing power? Since the supply of gold has not changed, I don't see how this is the case, unless you're referencing the velocity of money, or something else. Other than that I don't see it, given the traditional MV=PY equation.

You and I are in substantial agreement on just about everything, but I disagree that there is any fraud going on. The bank is not passing a banknote off as money, it is passing it off as a claim to money. Gold is money, not banknotes. Banknotes are a stand-in for money--i.e. gold--to allow exchange transactions to take place conveniently. There is no fraud involved here. The bank is not making a claim that the banknote is money as such; it is making the claim that the banknote is exchangable into money upon redemption, while acknowledging a default risk. It's the same concept as a bond. The borrower always has the possibility of defaulting to the lender, but bonds can be traded around and act as a stand-in for actual money. Under your view, you would have to also claim that a bond is fraudulent. I think that we need to start viewing banknotes as bonds, because that's really what they are. A deposit in a financial institution is a loan to the financial institution. As is typical, all loans are subject to default risk. There is nothing fraudulent about this. My thought is that, in a free market, there would be banknote insurers, in the exact manner as exists today bond insurers. Higher up, there would be reinsurance companies that act as insurers to insurance companies (we have these today to cover all types of insurers).