Fun Online Polls: How much money is there & Republican candidates.

Your answers to last week's Fun Online Poll were as follows:

Taking assets and liabilities into account, how much 'money' is there in the world?

None - 81%
Billions and trillions - 11%
Other, please specify - 8%

Thanks to everybody who took part, I'm delighted to see that the penny has dropped [sic] with 81% of you. While there are indeed billions and trillions in financial assets (be that notes and coins, bank deposits, corporate or government bonds) by definition, there is always an equal and opposite amount of financial liabilities (either the government, companies or the banks owe other people the same amount). Remember: if you have a stash of bank notes under the mattress, you are making an interest-free loan to the government!

Responding to ChefDave in the comments under the poll: Yes, in the very short term, there can be a mismatch between the amounts recorded as assets and as liabilities for book keeping purposes.

Let's say somebody takes out a mortgage of £100,000 to buy a house for £100,000. The house is a real asset and the mortgage is a financial liability of £100,000 to the borrower and is recorded as a financial asset in the bank's books, so on Day One, the net financial asset/liability is £nil. Now, maybe the borrower loses his job and the house falls in value to £80,000, but the bank still records the asset at £100,000. Oops, mismtach!

But that's only in the short term. Sooner or later the bank will repo' the house and sell it for £80,000 and will have to write off the rest (which is a release from a liability from the ex-borrower's point of view i.e. a windfall gain). The bank's owners (shareholders) then have to share that loss of £20,000 between themselves, so the value of their shares falls by £20,000 and the balance is reinstated.

And so on. Saying that "the economy is drowning in debt" betrays the same misunderstanding. All this really means is that some creditors will not be repaid in full; or that actually enforcing all the debts would cause more harm than writing off some of them.

Physical gold of course is not money, it is in itself a valuable asset which can be used as a medium of exchange or a way of measuring liabilities - i.e. if I borrow ten gold coins from you, then this a financial liability and your receivable is a financial asset. This still nets off to nil gold coins and does not change the number of gold coins in existence. And the fact that a country's currency is expressed in terms of gold ('Gold standard') does not stop it being a fiat currency. The government can change the exchange rate whenever it wants, this is just a question of making a foul compromise between political and economic forces.
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Ross has posted an Arbitrary list of the best to worst Republican candidates for President. Staying in the spirit of things, that's this weeks Fun Online Poll: "Whom would you like to see as the Republican candidate for President?"

Vote here or use the widget in the side bar.

Ron Paul: The other Republican hopeful who isn't completely insane

You can take a Faux Libertarian to water but you can't make him drink

I stumbled across this exchange on Ron Paul's 'blog from three years ago, the typically mild-mannered proper libertarian, the unfortunately named Martfuncher explains as follows:

The Founding Fathers believed that property ownership was THE basis for freedom. They viewed property as the means of production. If a person can produce and keep the fruits of their labor they can control their own destiny and pursuit of happiness.

The Founding Fathers wanted as many people as possible to own land (the means of the production). They did not want people to amass large holdings of unproductive land thereby depriving others who might make that land useful and productive empowering their own freedom.

A small land tax was a way to penalize and discourage hoarding of land and the keeping of it in an unproductive state and at the same time out-of-the-reach of those who WOULD make it productive. Notice that the first and preeminent principle of socialism/communism is to deprive persons of the ownership of property and the means of production and to confiscate the fruits of labor.

Of all the taxes I believe land tax is one of the "good ones". It is not responsible to hoard land in such an unproductive state that the owner is unable to even pay a small tax when there are many others who would gladly put the land to productive use....

And then the inevitable FL shit storm breaks loose:

If "access to and ownership of land is THE basis for freedom" how can we be free if land we own can be taken from us for inability to pay taxes on it?

Er... if you can't afford to pay the tax, then you are over-occupying and hence, in economic terms, a land hoarder, a privatised tax collector, a rent-seeker, a feudal oppressor or whatever you want to call it. You may pretend that this makes you A Free Man, but that's not much of A Freedom if you have to rely on the force of the state to make others Unfree by enforcing and protect your interests against others - without you even being prepared to pay for it, even though others would - overall there is a net loss of Freedom.

In practical terms, it's quite obvious that everybody will be able to find something to suit their budget. Those willing to work the hardest and pay the most will get the nicest bits of land but end up paying the most; and those who can't or don't want to pay have to make do with what they can afford from their wages (plus Citizen's Income if you raise LVT above and beyond what is necessary to pay for core functions of the state).

It's the closest you'll get to a free market in shares in what "society" or "the community" has to offer - nobody will have to pay another private individual for something which that individual hasn't created - which of necessity contains a small core of things provided by "the government". If you want more of it (lots of other people, streets, utility and broadband connections, hospitals, shops, job opportunities) you pay more per square yard than if you want less state (open countryside, poor roads, no mains utility connections, no broadband, no shops or hospitals, limited job opportunities etc).

The choice is yours.

Killer Arguments Against LVT, not (97)

As we near the magic one hundred mark, let's turn to the quasi-mythical objection as propounded for example on a pro-Ron Paul website:

My question is, how do think you can own your home if it is contingent on your paying a state property tax. If you don't pay the tax, the government will place a lien on the property and dispose of it to satisfy the tax debt. Please tell me how you will ever own your property with this bogus tax in place. Feedback would be appreciated.

The comments seem to be split between Faux Libertarian indignation and realist-geo-libertarianism, the neatest summary being probably this by TenBobNote:

You can never really own your property because we are on this planet temporarily for but a brief moment in time, we use what we will and claim them to be ours but they are all simply borrowed.

1. It's difficult to know whether we are arguing on the level of economics, morality or administrative simplicity, but the correct response is, from a full-on LVT/CI Georgist point of view, that every citizen will always own his or her individual share of the land, because the bulk of LVT receipts would be dished out as a Citizen's Income.

2. You may choose to occupy a smaller or less valuable home that the average citizen, in which case you can spend the difference on something else; you may be a higher earner or be prepared to do without other things in order to occupy a larger or more valuable home (in which case you have to pay the difference); you may end up living on the streets and spending the lot on booze; but (unless you do something really dreadful, or move abroad), that Citizens Income will never be taken away from you.

3. You may imagine that you own your house, but it still requires upkeep and maintenance, heating and utility bills to be paid or else it quickly becomes uninhabitable. The same applies to a car; surely you still own your car, even though you have to pay for petrol, repairs and insurance, knowing full well that after a few decades it will be nought but a pile of scrap.

4. You may even imagine that you own yourself (and this is the closest that you can come to truly owning something), but without being prepared to spend money on essentials (like food or heating or medical treatment) you will die, and we are all going to die anyway, however well-fed or cared for.

5. I fail to see why doubling people's net incomes and reducing the costs of 'everything else' slightly (which is what scrapping all other taxes would achieve) and increasing the net cost of land 'ownership' slightly (you have to make up the shortfall of your Citizen's Income minus any LVT due) is such an affront to common sense, and I do sometimes wonder whether this obsession with 'owning' land is somehow a quest for immortality, cf. the reverent tones that people adopt when they say "this land has been in the family for centuries".

Ron Paul on the housing bubble

As ever, Ron talks a lot of sense:

"The solution is for government to stop micromanaging the economy and let the market adjust, as painful as that will be for some. We should not force taxpayers, including renters and more frugal homeowners, to switch places with the speculators and take on those same risks that bankrupted them. It is a terrible idea to spread the financial crisis any wider or deeper than it already is, and to prolong the agony years into the future.

Socializing the losses now will only create more unintended consequences that will give new excuses for further government interventions in the future. This is how government grows - by claiming to correct the mistakes it earlier created, all the while constantly shaking down the taxpayer. The market needs a chance to correct itself, and Congress needs to avoid making the situation worse by pretending to ride to the rescue."

H/t Sold 2 Rent 1 at HPC.

Rep. Ron Paul talks sense

Via Right Side Forum, comes this ...

Jumping H F***! How much commonsense can these PC journalists handle?

Ron Paul, you rock!