Infrastructure - the joy and end of us all.

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Richard Hull
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Infrastructure - the joy and end of us all.

Post by Richard Hull » Thu Jan 06, 2005 6:15 pm

This post is a nautral expansion of the Frederick Soddy post immediately preceeding it in this forum.

Infrastructure is a requisite part of all civilizations. The greater and more complex the civilization the more it is dependent upon multiple and ever birthing and expanding infrasturtures constantly supporting and feeding each other, every single moment of every single day. The foregoing is especially true if the civilization is massive and demands growth, be it linear or exponential growth.

Complex and often silly and superfluous infrastructures are found further piled on this shakey pyramid if personal luxury and an incredibly high standard of living is achieved by a significant portion of the populace.

If the populace rules, in effect, if not in fact, then the removal of much of their assumed comfort and wealth will so inflame them that a downward turn can wind up becoming a one-way calamity.

This is where we are now............

YOU ARE HERE..... points the little arrow on the map of history and civilization.........the little arrow points to your toes at the edge of a great precipice.

Infrastructures vary in importance, but one has to hazard a guess at the lynch pins that could start a one way trip to oblivion.

Frederick Soddy and myself, quite independent of his influence, arrived at 1. Energy related issues and 2. Ballooned, runaway, un-reclaimable world wide credit debt as the infrastructure issues that would kill, wound or cripple hundreds of vital infrastrutures in a modern affluent civilization should they fail in any significant way to not only continue to expand, but just burp or cough. Even freezing of all future credit or zero energy growth would ruin all that we know today, sweeping it out to sea forever. We would surely survive, but at what level?

Imagine at this instant in time, the only credit you could ever have, ever again, is a mortage and a car loan. No matter what you will ever get, own or obtain form this day forward in the form of food, creature comforts, etc. would demand cash or its equivalent. Let us say that you would have to drop in the hands of the supplier an acceptable weight of gold or silver or personal labor or trade goods you own.

Not pretty? Gee whiz, this was the world of me and Beaver Cleaver in the 40's and 50's for God's sake. All coinage was silver or copper or nickel and carried its value within it. All paper money was silver certificates reclaimable at any bank for 4 silver quarters just like you had in your pocket. So why go to the bank? Just use "silver backed" paper money. There was no problem except the standard of living was pretty much based on what you could hand over in cash. Perish the thought!

In 1900, gold and silver were just leaving the scene as pocket ripping $1.00 silver cartwheels and heavy $20.00 gold pieces were left in the banks. All your paper money was either a gold or silver certificate redemable at any bank for the metals, if you had your truss on to haul'em away.

In the early 1900's and even in the 1950's we lived and bought to a level that we had cash in hand and this always keeps a society self limited to pretty much what is really out there to back all transactions.

To trained economists as early as the late 1800's this was just not the way to build a bold and expanding future. By the 1930's with every nation in the world abandoning the gold standard, leaving tit for tat in the dust, Soddy left chemistry and wrote of the horrors of the coming debt based society. He was viewed as an "out of his field" nutball to the day he died. This was true of all who spoke of a return to a more sound fiscal base for growth.

Today, if you are a business and have no cash, but need some, you can go to a bank and use as colateral your accounts receivables!! In today's business world, debt owed to you is as good as cash in hand. Businesses that are strapped for cash to grow and expand, but who have a lot of debtors owing them have no trouble themselves in borroiwng and becoming debtors. This pyramid of accumulated debt based on other debt as asset accends ever higher into the heavens. It is as Soddy said, the higher the standard attained, the more certain and severe the fall.

With limited energy now appearing before us as a Gorgon set to trip the call in of all debt just to keep warm, some few are stirring from a slumber that might just be too late for action.

I leave you all with this thought..........

Your 401 K plans...........your IRA plans..........Your retirement plans............

How many of your are so niave as to believe that there is a pile of money (cash) somewhere with your name on it that is stashed for you in safe keeping?

How many of you who DO realize that the money shown in your plan's statments of earning to you is not really there but actually tied into a system of investment and financial give and take? Continuing on for these folks accepting the reality of no piles of cash...How many of you really believe that if a massive fall occurs, that you will get back more than 1/100 of what you think you have on those statements?

Finally, How many of you think there is a pile of money in your personal savings bank with your name on it and all the other depositers names on it that represent your actual savings account balance that you can get to if a great fall comes?

Weigh and consider.

Richard Hull
Progress may have been a good thing once, but it just went on too long. - Yogi Berra
Fusion is the energy of the future....and it always will be
Retired now...Doing only what I want and not what I should...every day is a saturday.

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Re: Infrastructure - the joy and end of us all.

Post by davidtrimmell » Thu Jan 06, 2005 7:31 pm

Very interesting Richard. Soddy sounds like a fascinating character. Yes, just like in 1929 when people rushed to the banks to withdraw their savings, the banks very quickly ran out of money and closed. Sorry out of luck, by the way, we need that mortgage payment by the end of the month or we will foreclose, what no job? Very tedious world we live in. Debt is also great power, we (the US) have used it in many a nefarious way around the world, just read Perkins book "Confessions of an Economic Hit Man":

http://www.amazon.com/exec/obidos/tg/de ... ce&s=books

It will be interesting to see what happens, hold for bumpy ride!

Regards,

David Trimmell

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Re: Infrastructure - the joy and end of us all.

Post by davidtrimmell » Thu Jan 06, 2005 7:59 pm

Richard found a couple things that may interest you. First there is a online copy of one of his early books on economics:
"Wealth Virtual Wealth and Debt, by Frederick Soddy © 1926, George Allen & Unwin LTD"
The web site requires the DjVu plug-in for your web browser and provides a link for it:
http://abob.libs.uga.edu/bobk/wvwd/

And this paper:
"COMMITTEE ON MONETARY AND ECONOMIC REFORM
- - - - -
FREDERICK SODDY
- and -
THE DOCTRINE OF `VIRTUAL WEALTH'"

" PAPER PRESENTED TO THE 14TH ANNUAL CONVENTION
OF THE EASTERN ECONOMICS ASSOCIATION
BOSTON, MASS. MARCH 1988
- by -
J. MARTIN HATTERSLEY, Q.C., M.A., LL.B.,
FORMER PRESIDENT
ECONOMICS SOCIETY OF NORTHERN ALBERTA"

http://fn2.freenet.edmonton.ab.ca/~martinh/soddy88.htm

""The threatened collapse of our Western civilization has nothing to do with the political issues between capitalism and communism, but is the consequence of its false money system." -Soddy: `Money Reform as a preliminary to all reform', Birmingham, 1950, p.2

I couldn't agree more.

David Trimmell

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Re: Infrastructure - the joy and end of us all.

Post by Adam Szendrey » Thu Jan 06, 2005 8:38 pm

And Marx has said something quite similar. But we have to remember, that the current system evolved to be "compatible" with the average human behaviour. It's sort of a consequence. The system reflects the personality of those who have created it.

Adam

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Re: Infrastructure - the joy and end of us all.

Post by Richard Hull » Thu Jan 06, 2005 9:12 pm

The system obviously works........But only too well and has ballooned out to the burst point. One moment of lack of faith on a major institution's part and it could come tumbling down. The faith in, and worship of, the present financial system far exceeds the populace's faith in God.... for God is intangible. Faith in a system that daily provides gameboys, fur toilet seats and two SUV's in every driveway is easy to come by. Those preaching against such a faith are scorned, if not scourged.

The right super disataster could start the ball rolling. Then, a major breakdown in enrgy supplies could trigger the economic effect.

We are truly balanced on the tip of a very sharp needle.

Richard Hull

P.S. Dave,

I have ordered the book and recommend the latter paper to every one here as it requires no reader and can be printed directly. It is only 10 pages long and is a very interesting commentary on Soddy and his work by a cogent economist.

RH
Progress may have been a good thing once, but it just went on too long. - Yogi Berra
Fusion is the energy of the future....and it always will be
Retired now...Doing only what I want and not what I should...every day is a saturday.

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Re: Infrastructure - the joy and end of us all.

Post by 3l » Fri Jan 07, 2005 2:13 am

Hi Richard:

It is an unfortunate trueism that the economy is nothing but smoke and mirrors. The rise of the fake credit moblier style of banking rang alarm bells at the true thinkers of the tangible worth schools. Ann Rand harped until blue in the face...it did no good at all. Nixon drove the final stake through America's heart when the US deserted the gold standard of currency. The promise of the unearned credit is the lotus that will crash the twentieth century institutions. We have plenty of trees so let's print money.
Trouble is that paper money is no different than toilet paper.
Once the wizard of Oz is revealed, paper money won't buy anything! People will treat it like confederate dollars.
That will blow away stability and forment a crash.
Nothing will survive the crash that will sweep away the remaining myths of the good ole days. Hard times ahead. Just imagine the caos during the rearrangement. Even if electricity is running...how would you buy it? If you worked ....how would they pay you? Basic services would vanish as banks failed. As Toffler (Third Wave,Future Shock) has suggested a prosumer will be the wealthly individuals of the succeeding generations. What's a prosumer?
A producing consumer. A person who can fend for most of his needs like electricity,heat,land,water,sewer,food,clothing,shelter without outside assistance. A totally different paradyme from the last century. Artificial rules and structures will melt like snow. Large cities the crown jewels of 20th century progress will be vacant
untenable monuements to past excess. Without the stick and carrot of economic clout Washington will do little in the lives of her people. Without the resources ,the military will crumble and a new form of home rule will take effect. Centralized anything will flop over dead! Everyman for himself.

Happy Fusoring!
Larry Leins
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Re: Infrastructure - the joy and end of us all.

Post by pawinemaker » Fri Jan 07, 2005 4:20 am

If my memory serves, FDR was the one who abandoned the gold standard, and not Nixon.

I would expect that in the event of such a financial catastrophe, things like gasoline and oil would become more valuable than gold.

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Re: Infrastructure - the joy and end of us all.

Post by davidtrimmell » Fri Jan 07, 2005 4:22 am

Think Silver.

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Re: Infrastructure - the joy and end of us all.

Post by 3l » Fri Jan 07, 2005 2:25 pm

Hi Roland:

As I recall FDR issued an executive order that all gold be held by the government.
All Private gold was seized and put in Fort Knox.
It was illegal for any private gold to be held.
The Great Depresion made folks leary of paper money and gold and silver cut into the usability of greenbacks.
Gold and Silver certificates were issued for the seized bullion.
Reeamable in greenbacks of course! LOL!
I used to have one.
That stengthened FDR's rollout of dollars during the war.
Hard to run an unlimited war with a finite limited budget.
WW2 was barely financed under the gold standard even with the dollar rollout.
Nixon finally cut the tie between gold and the dollar.
Vietnam's rising cost made the President AND the Congress
undo this essential link.
Gold was legal to own again.
The dollar was then based on the Economic strength of America itself... Ie a Promise of payment.
It was great in 1947 after the war with America poised to rebuild Europe after the war but now the bloom is off the rose.

Happy Fusoring!
Larry Leins
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Re: Infrastructure - the joy and end of us all.

Post by Richard Hull » Fri Jan 07, 2005 4:12 pm

Both are correct, in a sense.

FDR made it a federal crime for any private person to buy, sell or retain gold. He removed the dollar from gold claims, thus freezing out the loss of gold bulllion from the treasury to foriegn debtors. In doing this, he froze the price of gold at an artifically established federal level to back dollars internally via gold on hand.

No US issued currency has ever been de-monitized. FDR did however declare all gold certificates forever un-redemable in gold, thus making them worth only their face value in silver certificates or fed reserve notes. The last gold certificates were issed PRIOR to FDR.

Nixon in the late 60's saw the shame of artificial internal controlled prices for gold and silver as the prices of both gold and silver on the world stage started to rise in the 1960's. The US was no longer the sole guy on the world stage. The effect was that marks, pounds and yen started being exchanged for US silver coins ONLY and the silver in them was worth far more than the face value pegged to them by the stupid US locked bullion price policy. All of this happened during the LBJ presidency!!! LBJ was forced, in 1964, to forever remove all silver from common US circulating coinage. The 50 cent piece limped along at a world adjusted near 50% content of silver for about 3 more years until finally even the silver left that coin.

Nixon realized that all over the world private people were hoarding gold and silver and accumulating wealth privately while the US still held its citizenry in check via FDR's old ruling. Nixon then pulled all backing from the US currency like every other nation in the world had long ago done and let the dollar float. After this, he also recended all laws limiting bullion holding and allowed all Americans to buy, sell and accumulate gold and silver bullion to any level, privately. He was forced to give a 6 month warning that the treasury would redeem all silver certiciates for that period only in the form of the floated silver price. You would give your certificates to the mint and recieve a bag of pure silver grain in return. After that period, the silver certificates would no longer be redeemable in silver but in FED RESERVE notes only.

Nixon did us all a big favor here.

So here we are and that is the story of silver and gold and our silly money-bullion policies 1930-1968. An economy hooked fast and rigidly to a purist gold and silver backing would stagnate at about an 1880 level. (there is only so much gold and silver on the planet.)

Don't get me wrong, real is real and faith is faith, but locking money substances to a standard is not the way to go in the 21st century. Limiting production of money substances to that which is in hand is the sane policy coupled with not buying that which you can't pay for immediately. The definition of currency or monetary notes given by Soddy in the paper mentioned in Dave's post is superb.................

"Money is not wealth, even to the individual, but the evidence that the owner of the money has not received the wealth to which he is entitled, and that he can demand it at his own convenience. So that in a community of necessity, the aggregate money, irrespective of its amount, represents the aggregate VALUE of the wealth which the community prefers to be owed on these terms rather than to own."

Brilliant!

Soddy's similitude is sound, but unfortunately this idea of a dollar printed for a dollar's deferred value is not so now for all the money in circulation currently would represent only a tiny fraction of the debt. Therefore, the money itself is not truly representative of what is deferred in the real world and is truly worth far, far less than it is commonly exchanged for. This is a FAITH based economy now. The motto on our bills is prophetic........."In god we trust"

Richard Hull
Progress may have been a good thing once, but it just went on too long. - Yogi Berra
Fusion is the energy of the future....and it always will be
Retired now...Doing only what I want and not what I should...every day is a saturday.

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