(part one in the series)
(photo credit – Dave’s batphone while cat woman and the boy wonder waited patiently in the car on the way back from the beach)
For those of you who thought that Dave had been raptured according to plan and were wondering with whom exactly you would be trading your time in exchange for ideas in the future… Dave’s still here. Although Dave does have plans for how he will be spending eternity, this time he was simply caught up in a beach trip with a bad internet connection if you were wondering why he hasn”t posted lately… feel free to demand a refund.
For more infallible proof of when the rapture will occur exactly (May 21, 2011), click here http://www.familyradio.com/PDFS/ip_en.pdf, or simply click here for “What’s New” in rapture news: http://www.familyradio.com/english/updates/new.html. Now don’t get Dave wrong. I’m with John the Baptist when it comes to sharing the Good News and proclaiming along with John that we are to “Make straight the way of the Lord.” It’s just that “the way” is not what you might expect it to be if you are a specific follower of Harold Camping on twitter or the outdoor advertising industry in general. It certainly was unexpected the first time when He showed up in a manger and later riding on a donkey. Although Dave’s ideas may not be as infallible as those of Family Radio, I’m fairly certain that billboard announcements are likely to be an unnecessary advertising expense when the trumpet sounds.
Rather than lecture on the full text of the anatomy of setting that gray date known as TEOTWAWKI (the end of the world as we know it), Dave is going to focus on something that he knows more about, or at least thinks about during his REM sleep and that is money – the love of money to be more specific. You see, there was another follower of the way who said that the love of money was the root of all sorts of evil. He was Paul, (previously known as Saul) and he knew all about evil. He was one mean Jew from Tarsus and was also a Roman citizen and he made it his business to persecute the emerging church by endorsing the first Christian martyr by the stoning of Stephen for following Christ. Saul went on to become the apostle Paul and to unlock for us through his writings concepts such as the atonement and inspired Martin Luther’s concept of sola fide which was the cornerstone of the protestant reformation.
Dave wanted to do a series on money, coins to be specific (fiat bank money, physical folding fiat, precious metals money “Utah style” and digital “dollars” ala bitcoin, etc.), and how money shapes our society and even our psyche and the connection between our consciousness and the value we place on money, metals and markets (rigged or otherwise). For all of you who are feeling left behind by Family Radio camp meeting in the sky of Dave’s blogless beach trip, don’t despair, the check is in the mail and the blog post is in the tip of my fingers and is heading to an internet near you.
A Starting Point
Most people don’t understand the underlying significance of defining scope. To define scope you must choose both a time and a place. Think of it as Elvis Pressley standing on the land that would become Graceland and driving a stake into the ground and saying “We’ll build it here.” Or what about Brigham Young’s declaration as he spied the great lake only to later discover thereafter that it was indeed the salt of the earth. We all stake our own claims everyday. We may be making claims for physical delivery on the virtual gold mines of the Comex or simply claiming to speak our minds through the virtual data mines such as Facebook and LinkedIn (IPO gold mines).
The decision by Satoshi Nakamoto to stake a claim and allow for 21 million bitcoins on November 1, 2009 was just such a starting point. It could be argued that due to divisibility of bitcoins up to eight decimal places that they possess an abundance-based component rather than a scarcity-based classical economic model. Either way they possess the key aspects of time and space although they are neighbors in close proximity on the number line divisible only between zero and one. For all practical purposes it really doesn’t matter, but for principle purposes it is a big deal (more on that later). The point is that bitcoin drives a stake in the ground at a time and in a space where the confidence game of fiat currencies is being called into question by nearly everyone with a pelvis (not just heads of the IMF) and just like Elvis at Graceland, there’s no calling back your consciousness once the hound dog has been released on the bare bones of the global fiat banking cartel.
Who Let The Dogs Out?
Before we can get this full-fledged pity party for fiat empires started (to coin a phrase), you need to consider for a moment the connection between coinage and consciousness or what Dave has described as The Coincinet ™. Dave probably has three favorite current commentators on the connection between consciousness and cash. One is Sandeep Jaitly of Bullion Basis in the U.K (http://www.bullionbasis.com/). The second is an anonymous blogger who goes under the name Friend of Friend of Another (FOFOA) http://fofoa.blogspot.com/. The third side of Dave’s triangulation on currencies is formed by Grigori Perelman whose math is so complex that I can’t even read it much less explain it. Suffice it to say that for Perelman, solver of the Poincare conjecture, a dollar may not be a donut but donuts are coffee cups and because of that his one million dollar cash prize still goes uncollected… that’s where cash connects with the topolgy of coinology.
I have significant differences of opinion with all three of these gentlemen, however their depth of research and understanding allows Dave to focus on the implications of The Coincinet ™ to everyday life, rather than attempt to drill down into the depths of an intellectual rabbit hole that Dave is not unqualified to dig into. There are two other folks that have inspired Dave to continue to toss the coin in hopes of unlocking a pattern between the heads and tails which if it were true, a coin would share more in common with a dollar than a donut. You see a coin doesn’t really have a head or a tail. A coin is like a sphere, at least to a scientist. Take a wooden nickel for example, or better yet a coin made from Play-doh. It can easily be shaped into a ball. It doesn’t have a head and a tail, like you and me. You have a mouth and a tail (topologically speaking) and that makes you a torus where things can pass through you and you remain unpunctured.
Wait just a $2 per pound cotton-pickin’-minute. What is Dave talking about; dollars, donuts, coffee cups, toruses (or is that tori?) and conjectures? Has he gone off the high dive into something as empty as one of Goldman Sach’s dark pools of financial dementia? Since the oracle of what constitutes true insider trading, Warren Buffett, says the entire world’s above ground gold supply would fit into a swimming pool (not an above ground pool, but two olympic size pools to be more exact) and John Maynard Keynes gave gold the standard handle as a “barbarous relic”, what does this have to do with the price of tea in China, or the price of Malaysian-made chinos at the Gap when priced in gold Dinar?
The Business of Rendering Begins at the Ending
Before you can fully appreciate what goes into the making of money, you will need to get to the bottom of the barrel. Once you get to that bottom and start scarping the barrel, then you’re in a good position to fully appreciate just what it is that goes into value creation. Whether you’re studying barrels of monkeys or barrels of fun, the process is the same, so why not start your study of rendering on the business end of one of life’s most basic needs – protein.
You may not realize it, but there’s literal gold inside of each and every one of these grease pit dumpsters that you’ll find parked next to the trash dumpster behind fast food restaurants and the finest dining establishments alike. These iron clad titans of industry not only possess the remnant of used oils from the deep fat friers of every KFC across the globe, they are also home to one of the most efficient and environmentally sensitive fuel sources – biodiesel. The recovery, recycling and reuse of this brown gold however is one of the dirtiest jobs on the planet and that’s where money, the real grease for both global and local economies enters the picture.
You see jobs are called jobs because for the most part no one wants to do them. They’re dirty, they’re difficult and they can be downright disgusting as is the case for the proteins rendering industry. Not only does the rendering industry rely on the refuse from your local Burger King friers, it is also the final home to all the meat, bones and by-products from every chicken ranch between here and Las Vegas. If it wasn’t for the renderers and their willingness to render unto Caesar, then all that slaughtering would end up right in the landfill and not only would the brown sludge not be turned into gold, it would be greasing up your local watershed something awful. The fact that oil and water don’t mix is a basic ingredient in the recipe for value creation that is required for local economies to rise like a Bojangle’s biscuit.
As if the aroma wafting from the inside of fifty gallons of a grease-filled guzzler wasn’t enough, the basic human desire to avoid getting dirty and working too hard in general are fundamental financial principles behind the creation of cash money. You see money, real sound money, serves two purposes. First it keeps you out of the dumpster when you’re morning routine calls for a fresh fried chicken biscuit and secondly it stores your wealth for tomorrow and the next day when you’re personal protein search for sustenance resumes. A British gentleman named William Stanley Jevons first coined the phrase a double coincidence of wants in the mid 1800’s to describe the process of someone who needs a forty pound sack of flour offering you a hot chicken biscuit when you’re hungry and your having just such a sack of flour. Then there’s the problem that one sack of flour is worth forty chicken biscuits and you’re just not that hungry. You can see where Jevons was going with this. The odds of others having just what you need and your having just what they need in perfect Goldilock’s amounts, conditions and temperatures makes for a tough marketplace for the Colonel Sanders even with seven herbs and spices.
The Main Attraction
What is sound money exactly? Let’s take a look at soundness, or sound to start with. When you think of sound, do you think of a body of water like Puget Sound or do you think about a tree falling in the woods whether there’s anyone there to hear the sound. Maybe you think about sound architecture such as buildings that withstood the recent earthquake in Japan. You see sound is highly subjective and like beauty, it’s in the ear, or more accurately the brain. What sounds great to one person, a baby’s cry to a delivering obstetrician for example is disturbing to a new mom in the middle of the night and entirely ignored by most Dad’s if sleeping comfortably next to their breastfeeding wife. Take that same Mom out of the formula and you have a Dad on full panic mode hearing a pin drop. Good and sound, like good taste, is something that there’s no accounting for and that’s a problem for the accountants.
You don’t have to look back in time or from coast-to-coast to find someone trading beaver skins for lamp oil or consigning used Chanel handbags to cash in for plastic surgery in an effort to appear more Jersey Shore. Whether it’s Australian aboriginal beads or Australian gold Kruggerands trying to come up with a medium of exchange is as old as, well, the world’s oldest profession. Whether you’re exchanging comfort to a caveman in exchange for one of those Turkey legs from the State Fair or you’re Dee Hock trying to cobble together the originalVisa network (remember Bankamericard?) from a busted banker in Fresno, soundness is what your looking for and the first rule of soundness is acceptance. Whether you’re the neolithic cavewoman, Dee in the 1960’s or Twitter founder Jack Dorsey launching Squared (see his new mobile disintermediating app Card Case) you need one thing to get the stone rolling so you can move out of your cave and onto main street – acceptance.
The acceptance of money is a direct reflection of money’s ability to satisfy William Stanley Devon’s double coincidence of wants. Without that acceptance and its inherent divisibility, you would have to take delivery on a wagon load of Whale oil in exchange for your wagon load of beaver pelts when maybe you’re just looking a single barrel of whale oil so that you have extra pelts left over for a barrel of monkeys to entertain you in your cabin over the long winter. Exchanging pelts for money and then money for oil, is a preferable solution. If you’re the cavewoman and are looking for three square meals, you may find cash to be a preferable alternative if your client is running out of turkey legs it gives you the flexibility of finding sustenance elsewhere while providing a measure of protection and fresh air outside the cave. That’s why she encouraged her client to consider trading a few of the turkeys for a more fungible and less fungus prone form of exchange. She was not only influential in developing economies, her contributions led directly to population growth – a crucial component for community.
The Real Hero – Hogan or Sargeant Schultz?
Once you have the acceptance problem resolved and the community recognizes the ratios between the value of a fried turkey leg and say the attractiveness of a pair of women’s nylon hosiery, the entire camp can get down to the business of concerntrating on the trade. This is where supply and demand enter the picture. Whether you’re talking about the value of fresh-baked struedel to Sargeant (I know nuthink!) Schultz or champagne and pantyhose to Colonel Klink in his pursuit of Fraulein Helga he who has the gold gradually begins to make the rules. Whether those markets operate underground through a network of tunnels or right before our eyes in the marketplace of ideas the price discovery process takes hold. The early bird begins to get the worm on a regular basis and the second component of money begins to show its face on the other side of the coin – Wealth Building.
You see it’s not enough for sound money to simply serve as a form of exchange, it also must serve as a store of wealth. If people are going to hold onto it, they want it to retain its value, or better yet increase in value over time. It was Einstein who said that he’s never seen a more powerful force in the universe than compound interest. You can look out your window on the next snowy day when schools are closed and see it for yourself when a neighborhood kid attempts to create a massive snowball as the base for his snowman. It’s the same effect that we find in feedback loops, fractals and even with Facebook and the network effect and that was the idea behind the first person who made the first loan and discovered that they could charge compound interest. You would need to travel back to the 1600’s and John Napier to unlock the power of compound interest or the invention of the algorithm and its convenient answers to interest(ing) queries such as the rule of 72.
For example if you’re attempting to find out how long it would take to double your $1,000 investment if you lend it to your brother-in-law at 9% compounding interest. You simply take 72 and divide it by 9 and you have 8 years as an estimated, off the cuff, answer.
Of course, the opposite is true also in the case of inflation. If you have a nest egg of $2,000 and prices are going up 9% per year it will only take two years for your purchasing power to be reduced to $1,000. This is where Gresham’s law comes in and it’s why you most likely have a jar of pre-1965 silver coins on your dresser or kitchen counter diligently collecting sound money as it crosses your path. You see according to coinflation.com today, the Mercury Dime is worth $2.69 so there’s hardly anyone who wants to use it buy a dimes worth of products, assuming you can find something to purchase for a dime. So Gresham says that the sound money stops circulating (ends up in the mason jar) and the non-sound money keeps circulating. For the intellectuals out there who are becoming bored with the basic nature of this tutorial, stand-by for a big surprise. Gresham’s law has a hole in it, like a donut. It’s a torus and it also works in reverse. That’s what Dave is crying out about. I bet I got your attention now.
(to be continued)
Here’s a link to Part 2 – A Voice Crying Out From The Internet (Part 2): http://tradewithdave.com/?p=6628