Monday, July 10, 2006

Central Banking, the Depreciation of Self-Worth, and Decivilization

I greatly enjoyed this essay by Eric Englund. Maybe you will too. Here are the first three paragraphs:
As J.G. Hulsmann stated in his seminal essay The Cultural and Spiritual Legacy of Fiat Inflation: “The government’s fiat makes inflation perennial, and as a result we observe the formation of inflation-specific institutions and habits. Thus fiat inflation leaves a characteristic cultural and spiritual stain on human society.” It is, therefore, crucial for people to awaken to the fact that the manipulation of money and credit, on the part of central bankers, is tantamount to manipulating the minds and hearts of human beings—a matter also covered in a jointly-written essay. Right behind owning one’s own body, the second most personal asset an individual owns is the fruit of one’s own labor—with such fruit typically taking the form of money; which is exchanged for food, clothing, transportation, shelter, etc. Accordingly, with the common yardstick here being money, a person’s self-worth, in part, can be measured by earnings power, accumulated savings, and personal net worth.

With central banks, however, continuously perpetrating the immoral and fraudulent act of fiat inflation, money perniciously loses value over time. When such an important and profoundly intimate self-measuring tool (money) loses its stability, people tend to lose their moral bearings and social decay ensues. And, correspondingly, state power increases—for awhile at least—as the populace becomes evermore dependent on state bureaucrats for guidance. To be sure, this seems quite abstract. Hence, it is my objective to bring you tangible examples as to how fiat inflation, as wrought by central bankers, has had a deeply personal impact on people and is a key factor behind the gradual decivilization process engulfing humanity.

An appropriate place to begin pertains to the impulsive and adolescent financial behavior so commonly displayed by American adults. Since the bursting of the NASDAQ bubble in 2000, the Federal Reserve has gone on a fiat-money-and-credit-creation bender. In turn, the masses have imbibed this easy credit and are drunk with confidence that they are on the road to riches. Just look how effortless it has been to purchase McMansions and expensive cars in order to convey that you are in the game, you are a player, and that you are on your way to Easy Street. Houses, after all, will only increase in value and make us all wealthy in the long run—this mindset will change once it is recognized that the housing bubble has burst. The most seductive aspect of this game is that one does not have to delay gratification by saving. Most certainly, by today’s standards, saving reflects a lack of financial acumen and certainly isn’t much fun. No. In order to reveal financial wisdom, one must maximize the use of leverage and minimize the size of a down-payment. Consequently, borrowing hundreds of thousands of dollars, to purchase a dream home and two luxury automobiles, defines financial sophistication in the United States. Borrowing, indeed, has become a virtue whilst saving has become a vice.


marine_explorer said...

"self-worth, in part, can be measured by earnings power, accumulated savings, and personal net worth…"

I think a many of us came to this conclusion years ago, but found it awkward to address in our social circles. Even if the implications were alarming, who wants to hear the “good life,” as measured by what we consume, is an eventual dead end? So you’ve spent $300K on crap to fill your home and garage—so what?

Working 40+ hours/week, you may want to believe your income will bring some meaning to offset all the BS you endure in the corporate world. Our jobs often drive our need for gratification. If our salaries don’t gratify us enough, perhaps credit will--which may explain the "impulsive behavior". But take away your power to consume, and what is left? For all our sakes, let’s hope we all can survive such a transition.

Marinite said...

let’s hope we all can survive such a transition.

Indeed. With so much of ego and identity tied into money, a sense of net worth, spending power...well, Heaven help us.

I got a kick out of the dude's comments about permanently adolescent parents. It's so true for so many folks. I mean, how many "prom queens" do we have living in South Marin these days? Not to pick on females or anything but I don't know what the equivalent expression is for males these days.