m082844
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Posts posted by m082844
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I had posted this on my blog especially for Non-Objectivist readers. Please feel free to criticize or point out if there are further more points that can be addressed. Thanks.
When do you address "how do we master self-control?"? I was looking for that.
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How do you expect to find real value to your life in the world we live in by considering scenarios like this? What does it matter to your life (any part of it) if you decide to stay or go in this fantasy? If you must choose an answer, just pick any answer and live comfortably knowing that it can't help or harm you in any way whatever.I recently spoke to a hedonist who challenged the traditional Objectivist view by this example:
Imagine that you meet a person like Morpheus from the movie The Matrix. He explains to you that you are actually living in a virtual reality machine, and that all other people in this world, just like the world itself, are merely part of the software. Just like non-human characters in video games, we can't expect people in this world to be conscious at all, they just seem to be, and act like they are.
Naturally, you think he's joking, but he performs all sorts of "miracles" to prove to you that he is indeed from the outside, and that this is a computer simulation. The rational judgment at this point is to believe him, since he can seemingly defy natural laws.
Now, he offers you a choice. You can actually return to the real world if you like, or you can stay in the simulation. Your life in the real world is not too good, you live in a dictatorship, and if you exit the machine, your life expectancy and chances of achieving happiness in the real world are smaller than in this one. But of course, you would meet "real people".
Is it rational to go to the real world? Most people would say yes, because there's a huge happiness in knowing that you experience life with someone else. But what premises have led to that emotional response? (You know this is the Objectivist view on emotions) Is it actually rational to care whether your connection with others is genuine, as long as they react in the same way? If so, why? On a meta-ethical/meta-psychological level.
As you can probably guess, the hedonist said that the rational choice would be to stay.
I know many Objectivists don't like surreal examples about morality, but I think it's important, because it lets you focus solely on the issue in question.
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When discussing money, isn't it correct to say, "Money is (or should be) a form of property obtained by an individual for the purpose of exchange and as a store of value."? Isn't money private property and once in possession of this kind of property, anyone can buy anything, anywhere as long as there is someone on the other side of the exchange who is willing to accept the buyer's property, the buyer's money? And like any property, shouldn't the individual protect it from being taken? Within the context of the proper function of government, shouldn't government enforce this protection?
I am asking these questions because I've been sketching out the fundamental characteristics of inflation with an eye toward defining the concept. I am thinking that instances of violation of property rights serves as the CCD. As to isolating the units of the concept, I am thinking that what distinguishes these from other types of violations of property rights is that these are forcible ways to increase the supply of money by means of counterfeiting the supply of money, whether through criminal or legalized activities. From that, I wrote the following definition of the concept.
Definition: Inflation is a violation of property rights by forcing increases to the supply of money by private or legalized counterfeiting.
With that, I welcome your comments and suggestions.
Inflation is an economic term and may or may not be due to a violation of rights -- you're right though, counterfeiting by definition is a violation of rights. I wouldn't package deal inflation with rights.
A more accurate definition: inflation is the result of the increased ratio of currency to goods and/or services.
The increas in that ratio causes inflation, which may be due to a decrease in goods and not necessarily and increase in currency. For example, a natural disaster might inflate prices of destroyed goods as has been seen in many instances.
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Think of man as a variable in an algegraic expression; it means any, all, past, present and yet to be created rational animal. It identifies a certain category of entity in existence with a certain nature, with its most fundamental characteristic being its rational capacity. Like any variable you can fill any concrete instance into it, where you, me or Obama would satisfy the category of entity in question.From this quote from Ayn Rand:
"The standard of value of the Objectivist ethics—the standard by which one judges what is good or evil—is man’s life, or: that which is required for man’s survival qua man."
What does man mean in this context such as it is.
Ethics is, after all, a set of hierarchical decision points that let us choose the least undesirable choice where all choices are undesirable.
I'll appreciate all points of view.
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OK so my friends "accept" the 3 axioms:
1) Existance exists
2) Concsiousness exists
3) Law of Identity
But then say we can't deduce from those that we don't live in the matrix - or to be more direct that "I'm taking an act of faith by trusting my perception." A classic example is when I cross the street because the light is red, I'm acting on faith that my perception and reason were correct that the line was red and no cars would come. They also say there are "other" forms of obtaining knowledge (revalation, the bible), and that just because those 3 axioms are true, it doesn't mean there is knowledge out there that I am incapable of perceiving or reasoning (ie, the existance of God).
Thus, let's say that no matter what I will never be able to perceive the existance of God (or deduce him rationally), but he DOES exist. Or, I live in the matrix, but I am incapable of perceiving the matrix or deducing from reason that I am in the matrix, but it DOES exist. What would objectivism have to say about these assertions?
For your general query, look in the ayn rand lexicon for the "arbitrary."
Your "faith" based example of crossing the street is using evidence as the basis for "faith", which contradicts faith, so using the law of identity one rejects that example as a faith based example.
One relies on senses not because of faith but from induction; they are never wrong. They are physical phenomena subject to causes and they have no choice in their effect. Our mind learns at a very young age to interpret and integrate them into a frame of understanding. Any errors in what we think we sense is in our interpretation -- it can be tricked, but our senses can't.
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If you engage you'll likely find that your fundamental disagreement isn't welfare (i.e., politics), it's somewhere in metaphysics and/or epistemology. Ask him his views on rights. Then maybe ask his views on man's mind and it's link to survival. Then maybe his view on the nature of man and how we come to know things.
If you just want to push back to make him a weaker defender of welfare ask him what gives his mom the right to receive expropriated funds, from productive citizens? When he answers with some form of "they needed it for such and such", then reply with "then so does any burgler, but at least the burglar isn't trying to convince his victims or pretend that his in the right."
Or if you really care what he thinks and want to provide the best opportunity for him to change his mind then just give him "In defense of Selfishness."
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We are all in the process of dying and truth is more comforting than falsehoods. Love is what endures in life and memory. Comfort those in the last moments of their life with love.
Agree why would you spend your last moments with someone trying to dupe them into believing in something you know is a lie. Share what values you have left together.
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Yes. And more competent (independent thinker) in general. You ever wonder why so many politicians are incompetent? They likely depend on others to think or try to think through others, e.g., John "D student" Karry and polls determining his policy.
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I find that sometimes procrastinating pays off. Not everything needs to or can be done right now after all.
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Have you seen the http://www.importanceofphilosophy.com site? This seems complete to me, but I don't see objectivism written on it, even though I identify it as extremely similar (if not exact). Perhaps you can ask the owners of that site to integrate into this site?
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Actually, the price of assets will not decrease substantially if there is a run on a single bank, only if there if there is widespread panic.
Anyhow, at this point it is probably time to "agree to disagree". So, I'll simply summarize my view on FRBanks.
In moral terms, the only issue with FRBanking arises if the depositor thinks he is entering into a contract of bailment. If the depositor clearly understands his money has been lent out, and if he agrees to how a run will be handled, he and the FRBanker should be free to enter into an FRBanking deal. Others should be free to accepts or reject notes and checks of such banks. The government has no business stopping such contracts. Even if people wish to use toilet paper as money, as long as they all want to do so, it should be their right to do so.
The history of FRBanking shows that every now and then a bank run takes place on some banks, and sometimes across the system. Handled correctly, each such run should have resulted in the next generation of depositors demanding more specificity in the contracts under which they deposit money in the bank. Instead, governments invariably stepped in, forcibly breaking contracts or guaranteeing payment. Either way, the system was not allowed to evolve into a proper free-market system. In the U.S., the final straw was the 1908 bank runs that ended up with the creating of the Federal Reserve Board, and finally going onto a fully-fiat standard in 1993.
However, FRBanking, done right, could have evolved into a system that allowed depositors to monetize assets other than gold, silver etc. The crucial aspect that was not allowed to evolve was the contractual terms of the deposit agreement, particularly how a bank-run would be handled. One can speculate on what such terms might have been: for instance, there would probably be some terms that penalized withdrawals during a run, leaving non-withdrawing depositors holding claims to bank assets worth more than their deposits. Real experiences with different types of terms would have allowed the system to evolve. If no terms were found practical, the system would have faded away. Perhaps few would have been interested... but, it still would be legal.
Good argument. At best all I have is that FRB harmful so long as everyone is honest, but should be legal. You've managed to change my mind. In a free system I can avoid the damage of FRB, but in our current system it's more difficult.
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What are you talking about? You asked if I equate M0 with M2. I told you that I don't.
I'll be the judge of that for myself. Do you make purchase considerations with M2?
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. Thought about it.I like your positive attitude. I'm going to mull your example over for a bit until I have a clear understanding of its implications. I think it's a good example.
If FRB causes price increases, and uses real assets with increased prices to back deposits, then given a bank run situation the prices of real assets will decrease making it impossible for the bank to cover a large portion of its depositors.
This is my complete thoughts on the subject as far as I've been able to take the implications of FRB. http://lifeordeathpolitics.wordpress.com/2012/05/31/the-key-to-understanding-the-fed-the-dangers-of-fractional-reserve-banking/
I would start where it says "A second system of banking is called fractional reserve banking,". The rest is background info.
If a contradiction is in my thinking, it is likely to be there.
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I'm a bit surprised. You don't make purchase considerations based on how much money you have in the bank?I know. It's because none of you know the difference. But now you do, so it's time to stop.
No, I don't consider bank deposits the same as actual dollars. And, as we speak, neither do 1,116,000 people living on an island in the Mediterranean. In fact, as of today's ECB policy changes regarding bank bailouts, neither do Italians, Spaniards or Portuguese.
I don't even consider bank deposits smaller than $100.000 Euros/Dollars as actual money, even though they can be treated as such for the most part (due to the government backed insurance schemes). Just because the government abusively uses taxpayer money to back a bank, doesn't change the fact that banks can and do fail, and money in a bank is not the logical equivalent of money in your hand.If by inflation you mean a general increase in prices, then you need to prove that FRB causes a general increase in prices. Until then, I don't see the problem.
P.S. "has a tendency to cause inflation" is a nonsensical phrase. Causation doesn't have a will, or tendencies. It either causes inflation, or it doesn't. If it only leads to inflation in one set of circumstances, but not another, then that's because it's not really the cause. Something else is causing the inflation.
FRB has a tendency to cause price increases due to other factors that affect prices. All else being equal, FRB causes price increases due to an increase in M2 whenever it is used.
I think this is a well known example: a bank lends out a percentage of someone's deposit and it gets spent and deposited again. Now the aggregate total of money people think they have in a bank went up. Beacuse of this, when they calculate what they can buy, they are more confortable spending than if the available money left as it was lent out in the first place.
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Good, but though legal, the SPY would be impractical. It's major drawback would be its constantly-changing value, as the fortunes of the economy ebbed and flowed. Just recently, we've seen the SPY drop to 50% of its peak. However, risk can be shifted around from one person to another. For instance, someone might put $200 of his own capital and borrow $100 from someone else and invest in the SPY. The SPY can be the collateral for the lender. If the SPY goes down 50%, this person would lose $150 out of his $200, but the lender would still be secure. Now, imagine that this lending was in the form of bonds/notes of $100 each. You would now have a situation where these notes had a pretty stable value.
Now, consider a new feature added to this. Suppose only $50 of the borrowed money were used to buy SPY, but the rest was kept on hand. If the lender wanted, he could ask for up to 50% of his money back at any time, "on demand". Finally, consider a feature where money was borrowed from thousands of lenders and each could ask for his money back, "on demand". This would work as long as not more than 50% was demanded, across all borrowers. So, there would need to be some type of contractual clause dealing with such situation. For instance, the borrower might say that once the draw-down reached (say) 25%, he would start to sell his SPY -- absorbing losses himself, until he had enough to pay back the lenders.
In outline, this is how a good FRBank works. It starts with a layer of owner's capital. Then, it borrows using some long-term loans, some medium-term loans and some short-term loans. Finally, it borrows some money that is payable back "on demand". All this money is used to invest in real assets: things like the SPY, but also home-mortgages, auto-loans, and so on. When a good FRBank lends money or invests, it makes sure that it has a margin of safety. So, when it gives a home-mortgage, it considers how much home prices might drop, and lends in a way that assures its collateral is secure. In doing so, all its borrowings and demand-deposits are always backed by more than 100% of real assets -- which are the collateral that the FRBank has demanded whenever it has loaned money. [Of course, unsecured loans may be part of the mix; but, in the aggregate a good FRBank lends against good collateral.]
In effect, homes, cars, and businesses are monetized under such a scheme, and notes representing such assets -- but denominated in a fixed amount of underlying money (say gold) -- circulate nearly at par with gold itself.Sometimes it is better when a discussion takes a few months to chew on.
I like your positive attitude. I'm going to mull your example over for a bit until I have a clear understanding of its implications. I think it's a good example.
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Good question. If notes (M2) are implicitly/explicitly accepted as equalling M0, which is safe to say it is, then an increase in M2 will lower the value of M0, will it not?You are arguing that, by inflating M2, someone takes away from the value of M0. Why would that be?
Do you not equate your digital bank account (M2) to be actual dollars (M0)? Don't you make decisions based on that assumption? I know I do. Everyone I know that has had a similar conversation with me does.
Inflation is a general term that subsumes special cases. I mean by inflation that there is a general increase in prices. Increasing M0 obviously has a tendency, all else being equal, to cause inflation. Increasing M2 has the same effect, all else being equal.But you're referring to expanding both with the same word: inflating money. That's equivocation. Inflating M2 inflates M2. It does not inflate M0.
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I do believe I was making the distinction between M0 and M2; thus, the difference between FRB and finding gold. Unless I'm missing something.How does FRB cause inflation?Sorry, but you're equivocating between two definitions of "money supply".Discovering new gold, or a central bank increasing its monetary base, expands the monetary base (what the US central bank I believe calls MB and the UK calls M0).FRB does not affect the monetary base (be it gold, or central bank issued fiat money). It affects what in the US is called the M2 money supply. Not distinguishing between the M0 and M2, be it in the current system or in a gold based one, is a fallacy. In a gold bases system, the M2 money supply does not refer to gold, it refers to gold plus banknotes plus some electronic substitutes for money. You should also be aware of the further implications of that distinction, such as the multiple definitions of "inflation", depending on which money supply is being expanded.There are competing theories on what causes prices to rise, for instance. It's unclear that either a discovery of new gold, or FRB, will necessarily cause prices to rise. And the most popular definition of inflation conflates inflation with the rise of prices, so it doesn't even refer to the expansion of any money supply.
So just to reword it into terms you're using, I think there is an important distinction between increasing M0 (caused by discovering more currency) and increasing M2 (caused by FRB).
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Yes, that should be legal.Yes, I acknowledge there's a difference between FRB and metallic currency or commodity currency. I'm trying to explore where the difference lies, by moving from gold to silver and to other commodities... and then to something one step further away, and so on. My hope is that -- by this process -- to show the actual nature of the difference between FRB and a 100% gold-standard.Here's one last hypothetical on the way to FRB. The S&P 500 is an index of 500 stocks. The SPY is a tradable "share" out of a "basket" of shares that are in the S&P 500. As you see by the link, each share of SPY is worth about $150 today. Imagine a situation where certificates were issued against actual SPYs, so that we had SPY notes. Imagine you were at a hotel. While checking out you could pay in US$, or you could pay in Yen -- and they would use that day's exchange rate to convert it, or (imagine) you could pay in SPY notes and they would use the day's exchange rate to convert it (you get change back in USD$). If people were willing to do this, should that be legal?Of course people don't want to deal with a note that fluctuates in value. For instance, most shops won't take Yen -- they'll tell you to go to a bank and bring them US$. Similarly, most Americans want their contracts denominated in US$, because that is the "standard and measure of value" in their minds. So, SPY would be very impractical as a currency. However, once again, I'm trying to explore what should be allowed, not what is either stupid or sensible. Let's say there is some situation where some people decide they're fine with accepting SPY notes as money, should that be legal?
PS got busy there for a while; sorry I didn't get back to you more quickly.
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It may be inflation of one or deflation of the other -- it depends on whether a new supply of gold and/or silver was discovered and if gold and/or silver has been disposed of. But if it is inflation, then No. They should be able to coin metal and call it anything -- including the weight and percentages of the metals within an alloy.Before discussing inflation caused by FRB, I think it is worthwhile exploring an easier example: silver.
The close of the 1800's was a crucial period in U.S. history (the "Progressive Era"), which laid the groundwork for much of what FDR did. One of the populist cries was that the poor American farmer is being hurt by falling prices, caused by a rigid monetary standard. William Jennings Bryan gave a famous speech where he said that mankind was being crucified on a cross of gold. A key demand was to allow the coinage of silver.
One major problem with dual (gold/silver) coinage is that the government sets the ratio between those two prices. Having done so, the government then has to maintain that ratio even though the demand and supply of gold and silver is changing. One of the ways around this is to have the gold currency and the silver currency circulate side-by-side and to let the market determine the exchange rate.
Key question: would that be inflationary?
If yes, the follow-up question would be: if FRB should be controlled or restricted, should private citizens also be restricted from coining silver and platinum and using those as a form of money?
I think there is an important distinction, however, between discovered metal that causes inflation and a systematic ("artificial?") expansion of the money supply created by FRB.
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No, I don't see anything illegal about that.The government might legitimately become involved in some such situations: it would depend on the details. For starters, the way you've described it, the government would not ban it, nor would the government bring criminal charges. This sounds like a civil suit.
For instance, one old scam is "perpetual motion machines". Any respectable scientist will tell you that such a machine is impossible. What if someone offers to make one: "give me an advance of $100,000 and I will produce 10 of these machines, and give you a 50% share in the patent". Should the government stop this if the inventor is really and truly convinced that he has found a method that would prove that today's understanding of physics is wrong? No, it should not -- it is not the government's job to mediate on what is and is not true science, unless someone's rights are being violated in the process.
If the inventor is doing this as a scam, knowing full well that he will never deliver, then that is fraud. Even so, I think this is a hard one actually to prosecute. The other party can try to bring a civil suit, but if they both believed the theory and were acting accordingly, I don't see any basis upon which they can be stopped. If we stop them, would we not have to stop people from visiting tarot-card readers? What about Church... what if the priest is starting to have doubts about the existence of God... can his congregation sue him when they find out?
In a previous post, I stated -- without evidence -- that FRB was not a dumb scheme, if it was implemented correctly. So, in my view, neither the "it's a scam" argument, nor the "it's a silly ponzi-like scheme" argument really apply. Still, those two have to be got out of the way first.
If those two are somewhat put to bed, then my next question would be this: do you think it should be okay for people to use any real asset as a basis for money, and that the government should let people decided for themselves? Assuming a 100% (non fractional) standard, would silver, copper, etc. be equally acceptable if people want to use those, even if gold was a more intelligent choice? Are notes okay, as long as they are backed 100% by assets? If so, what if someone had an oil field with 10 million barrels of proven reserves, and he were to issue notes that were rights to those barrels. If it is all above board, people would be willing exchange something of value to get those notes. What if the 10 million notes began to circulate as a form of alternate money in the area around the well. Ten pounds of filet mignon for $100 or for 1 "barrel-note". Would you see anything illegal about that?
The one problem I have left with FRB is that of inflation. If a gold note is essentially traded like gold, the value of gold reduces as the number of notes exceed the amount of gold (due to FRB). This value reduction is a problem.
I could use the reduced value of gold to collect gold at a reduced price, then if FRB collapses to full reserve, my gold gains value. I haven't produced anything of value nor have I performed a service to speak of, yet my net value increased.
The flip side is a man whose gold's value reduces as more notes are created and he trades for notes right as a run occurs and looses everything. I understand taking a risk in a venture and coming up short, but what really happened here? The value of the currency was manipulated.
I suppose we should let it happen as a legal transaction. And I simply need to hold things of value that are not represented by notes, then as close to the last minute as possible (right before a run), i need to trade for the hard items represented by notes. Then start the whole process again.
Does this inflation and manipulation of value warrant an investigation for legitimate gov interference?
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There's no point in debating something, if you're not gonna bother using precise language that accurately describes it.The word "equal" would never be printed on a piece of paper, to suggest that that note is equal to an ounce of gold. It's not. It's a piece of paper. A piece of paper doesn't "equal" anything, except a piece of paper. It may be redeemable, under certain conditions, for gold, but it doesn't "equal" anything.Please, look up FRB, learn what the various terms mean, use them correctly, and then we can debate whether the practice is fraud or not.
You misunderstand me. I meant equal in essentials; it can be used like gold and reduces the value of gold when they are used. Like the OP said, notes are a claim against gold. And what is gold but a claim against a produced value (in the OP scenario)? One holds gold (in the OP scenario) trusting they can exchange it for another's labor; one hold the note trusting they can exchange it for gold, and by extension, for another's labor.
"Let’s say they had 100 ounces of gold in reserve (in the vaults) and they print out Bank Notes (BN) as claims against 150 ounces of gold and loan them out or use them as transactions for cash exchanges." -- OP
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Sold, it shouldn't be illegal for that reason. What about a situation where the originator of a scam is dumb and misidentifies the terms, and therefore, doesn't lie, but doesn't tell the truth? He commits an error; is that something that should be left alone by the gov? If so, why?I'm going to take this example, because I think it is important to distinguish between things that are stupid and ignorant, and -- on the other hand -- things that should be illegal.
Let's assume we have a pyramid scheme that was absolutely transparent. Suppose someone gave you a letter saying the following:As a fully functioning adult, if you accept these terms, why should the law stop you?
Take money. Suppose I go to a store with monopoly money and ask "Can I pay in monopoly money?" Should the law say that the person is not allowed to accept? Should his stupidity be illegal?
Actually, FRB done properly is *not* a pyramid scheme. Under proper FRB notes have value. However, before going into the argument of "how much value do they have", I think its important to find out where the law must draw the line between stupidity and actual illegality. I'm willing to concede that many FRB systems were ambiguous in what notes actually represented. So, for now, I'm not defending some particular concrete system. Right now, my point is simply this: if a person wants to accept something that has a value of "X" to any sensible person, and is willing to give value (say) 2 times X, in return... why should this be illegal?
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You make some great points, but I can't get past that the note has to equal gold at some point. So when the depositor exchanges his gold for the note, or the other way around, it's considered an even trade (one for one). But I think I understand you to mean the person holding the notes after the exchange is holding something that is not equal gold. And if a bank run occurs, it's not equal gold. I'm not sure one can say the note is not equal gold while holding it, and it magically equals gold during an exchange -- that seems to be another contradiction. What's the essential difference?
To draw another analogy, let's consider a pyramid scheme. If everyone is honest about all the terms and rules, is that acceptable activity in capitalism? If so, why? There might be a connect here between honest pyramid scheme and honest FRB.
Purpose of Objectivism
in Ethics
Posted · Edited by m082844
As an example, I'm an engineer and the course "statics" really built a system of thinking involving stationary/inertial objects that allowed me to design solutions to achieve desired ends. Most engineering courses built on this framework and expanded my understanding, and therefore, my power of control over the world around me involving physical objects. There is truth to the old adage, "with knowledge, power (usually in Latin)".
The same applies to a massage therapist I know. Biology and human anatomy helps make sense of what she senses in the human body (knotted muscles) and why certain areas are damaged and in pain, and what the remedy is. Bad therapists don't have these understandings.
I'm sure any profession worth the money for its services is the same but maybe to a different degree. What makes philosophy unique is that, unlike the specialized examples I gave, it is the ultimate generalization, and therefore, It affects everything.