The Other Side of the Equation by Jim Klein

Publisher’s Note: Jim Klein has been a friend of mine and this site for years and he is one of the smartest observers in the individualist abolitionist milieu out there. He always makes a clear and concise case for why life should triumph over death and peace is a better solution than government subsidized and incentivized eternal conflict. Enjoy. -BB

“Hey Joe, may I borrow your lawnmower?”

“Sure Tom, there’s half a tank of gas in it.”

There.  That’s a loan.  Joe loaned Tom his lawnmower.  It was an agreement.  It was about something physical–the lawnmower–but the loan itself was just a mental act.  It was an act of consent between two volitional men.

There’s nothing else to it.  If Tom fills up the tank, then it was a profitable loan for Joe.  If he empties the tank, then it was a loss for Joe.  But neither profit nor loss has anything to do with the nature of the loan.  We can add terms to the loan–Tom will sharpen the blade, fill the tank, pay some money, use it for one day–but none of those terms change what the loan is…a mutual agreement, a promise to deliver or use a good or service.

That’s what your money is…that and nothing else.  It is a loan, a loan originated at a Central Bank and passed through many, many hands until it gets to you.  It is a promise to do something.  The Banks and government promise that others will accept that money “as payment for all debts, public and private.”  And you–the borrower–promise something too, that you will provide a good or service sufficient to have someone else trade that much money–their claims to loans–with you.

But no matter how many hands are involved, and regardless of how people value the goods and services for which they trade, it’s still just a loan.  It’s something you promise; it’s something you value; it’s something you think and choose.  If the loan is collaterized, then there is a good or service behind the loan, such that if one party defaults, then the good or service belongs to the other party.

At one time, money itself was collaterized, usually with gold.  This did not change the nature of a loan.  Through fractionalized banking, the relatively stable amount of collateral backed an ever-increasing supply of money.  So while the note said that it was a claim against gold, it wasn’t.  Like all loans, it was a claim for someone’s promise, in this case Central Banks and governments, to come up with the gold if necessary.  But there was far less gold than the amount collaterized, again owing to fractionalized banking.  In common lingo, we call that “cheating,” especially when you know you can outlaw the requirement to honor the collateral of the loan, if it ever comes to that.

It’s an old story—an unsuccessful con man becomes a successful strong-arm man.  On the societal level, we call this “order.”  But it only works orderly if everyone involved sticks to their promises.  We already know the Banks/government don’t stick to their promises.  They issue an ever-growing amount of money to denominate a population’s goods and services–and along the way make a profit just for issuing the loan in the first place–and are offering a claim not only on current goods and services, but future ones as well.  This is often the case with a loan.

Notice that the scam of ever-increasing loans would be immediately obvious were it not for taxes and the various sinkholes of governments.  While a government needs taxes for its own (claims to) goods and services, it also needs a way to take money “off the table,” so to speak, in order that nobody notices the insane growth of loans in circulation.  It does this at origination, whereby the issuance of the loan itself requires an ongoing fee, commonly called “interest.”  Through the never-ending issuance of money, and the associated interest that goes along with it, a certain amount of the ever-cycling money is paid as interest to the Central Banks.  As with a “rake” in a poker game, this keeps the money in circulation–on the table, we could call it–steady enough and low enough so that each participant is satisfied with what he believes will be his claim to goods and services.  Were it not for these “originating fees,” ultimately paid by taxes, the participants would quickly see that they are trading current labor for a promise of much less labor–via goods and services–in the future.  They would quickly say, “No deal.”

But they don’t, because a percentage of those claims are constantly funneled “off the table” through the simple waste of Government and especially through the never-ending charge for the origination of the loan.

None of that is the point of this essay.  All of that is about the denomination of goods and services, but it is not about the goods and services themselves.  That is “The Other Side of the Equation.”

However you denominate something–with beans, scrip, money, numbers alone, whatever–the relevant thing is what’s being denominated.  In a single word, that is called production.  Production is what we do to create goods and services.  Production is the action of obtaining goods, adding value and offering the products to others.  Production is the act of doing a service that others wish to have done.

While it’s no secret that our money has been tricked out, generally in order to have a claim against the future labor of future generations, that oddly doesn’t matter right now.  We’re all alive now; we can just ignore that for another day…which is good, because it’s not literally the money that will kill us or future generations.  Falling for the scam of the money, is what does that.

What matters right now is what’s being produced, and what will be produced.  It is this half of the equation, which presages the downfall of this society.

Around the world, production has been stifled on levels never before known in history.  Working is heavily penalized and not working is heavily subsidized.  When you penalize something, you get less of it; when you subsidize something, you get more of it.  Really, it’s quite that simple.  When a large part of a population doesn’t produce–and worse, sucks the production of others for their bare subsistence–the amount of total production goes down.  Duh.  Never mind the unconsumed production which can be used for even further production gains…those are called “investments” in a sane world.  These days, “investments” means “bets.”

And yes, you can add in the increased efficiency of technological advances, but that’s effectively a mulitplier constant.  That’s because this is what humans do—they create, they optimize, they figure out how to get more production out of the same time of labor.  Humans have been doing this since the dawn of the species.

When they stop doing that, for whatever reason, production dwindles.  This is the situation today.  Production is sucked away in order to be wasted by government, which is inevitably a less efficient use of goods and services.  Production is sucked away for the so-called “Free Shit Army.”  Producers are so fed up that many have withdrawn of their own free will and “gone Gulch.”  Whatever the causes, production–real production, not the denomination of production–has been declining for a long time now, in the USofA.

Perhaps most egregiously, because ultimately it’s all we have, the time for production is ever-dwindling, owing to the vast amounts of time and effort devoted to regulations and bureaucratic overhead.  An hour abiding a regulation is an hour not producing.  It goes on and on and on…the production of free-willed individuals, even those willing to offer it in trade for money, is going down.  And down and down and down.  It is only a matter of time, should this trend continue, that the production will not be sufficient to produce the bare sustenance of food, clothing and shelter.  Go look up “Holodomor” to see what happens then.

Notice that the denomination of this production doesn’t matter at all.  You could have ever-inflating money, ever-deflating money, gold, scrip, whatever…the only thing that matters is that a unit of production be what the trader believes it to be, and likewise the denomination be what it appears to be.  This is historically the scam of currency—it isn’t.

That’s all.  The issue of freedom is the issue of production.  Production is what we do.  And until men and women are free to do it–without regulation, without permission, without being forced to denominate it in fake loans for future slavery, without having the  results of their production sucked away by those who produce nothing at all–then nothing will change.  It will be an ever-growing claim against present and future slavery, until the slavery isn’t sufficient to even feed us any more.

How does one stop this madness?  Simple…produce for yourself and those for whom you wish to produce.  Accept whatever denomination that honest people agree to trade, or even no denomination at all.  That last would be “barter” and while not ideal for complex societies with massive division of labor, it may yet prove to be all we have left.  Till then, there’s lead, gold, silver, bitcoin and a thousand other choices.

Money is not inherently a scam.  Nothing is a scam until information is fraudulently offered or withheld.  But currency money is a scam right now, all the world over.  This is becoming widely known, so it’s only a matter of time until Central Bank money will no longer be accepted by free individuals in trade for their goods and services.  Hopefully that will stop the massive penalties for producing, and especially the theft of that production, called wealth, from those who produce.

It’s either that, or eventually we all starve.  Joe’s loan was not Joe’s lawnmower.  Money is not wealth.  Maybe things will change when this becomes widely recognized.  The Central Banks of the world may be able to make money worthless, but they can’t touch the creation of wealth without the producer’s consent.  That’s entirely, meaning literally 100%, up to the producer of it alone, and nobody else.

Out-good ‘em.  They’ll never see it coming cuz they don’t know what it looks like.

 

8 thoughts on “The Other Side of the Equation by Jim Klein

  1. Very very good reasoning. As Jim knows, I have been developing an alternative community currency here on Vancouver Island called The Tetla. If anybody would like to do likewise and wants a hand, please feel free to let me know. Cheers.

  2. I thought this a very reasoned and logical depiction of our current situation. Jim, this is an article I can share with the unschooled about what is being done to the world economy in terms they may grasp. Usually when I bring up fractional banking I immediately get the glazed over stare. This should help.

    Great job.

  3. Wow, everyone should read this.

    Very well said, Jim.

    Well that right there at the end, “Out-good ‘em. They’ll never see it coming cuz they don’t know what it looks like.”

    Weaponize your Liberty right there.

  4. I don’t know why but I’m finding consistently from day to day I understand less and less. It’s unnerving. I’m trying to build a website and I’m dealing with Wpress software. It’s just total chaos trying to make sense of it. And so it is here. I understand some of what Klein is saying here. But at a certain point he absolutely 100% lost me. And like I say, this is happening to me twice or three times as much now as a few short years ago. I get how money = a loan (from Central Banks to chump citizens) = a mental act (of each side holding certain expectations). OK, fine. The ‘denomination of production’ sounds like a $10 way of saying using money to assign a price value to something produced, but I may be wrong b/c this is where his article starts sounding fishy. I really respect writers who write clearly, precisely, step by step, with examples … but such writing is almost never encountered these days. What is the denomination of production for this essay? Do you better understand how money works now? No? I’m not surprised. So what use is it? Really, I read so much every day and realize after the fact it did not expand my understanding one iota. It’s like the inflated denomination of production is happening in all realms, the intellectual perhaps even more so. It seems this kind of cognitive fog is especially prevalent among American writers. I don’t know why. You’d expect the opposite. Whatever.

  5. Take a breath, Stephen. You can just ask, you know.

    “The ‘denomination of production’ sounds like a $10 way of saying using money to assign a price value to something produced, but I may be wrong b/c this is where his article starts sounding fishy.”

    Fishy? Maybe you didn’t consider that you got it right! Yes, money is used “to assign a price value to something produced.” That is, it’s a MEDIUM of exchange. It’s something that both parties AGREE is the value for a particular good or service, without being the good or service itself.

    IOW it’s a DENOMINATION of the good or service. If you tell me why that’s so confusing, then maybe I’ll change the word I use. But frankly, it strikes me as clear and concise. The important point is that ANYTHING can be used for this purpose, as long as the parties AGREE. Again, I thought this was clear.

    “What is the denomination of production for this essay?”

    There is no purpose to denominating this particular bit of production, because nobody is doing any trading with it. If I were selling it, and you wanted to buy it, then we would either barter or come up with SOMETHING to denominate it.

    Is that any clearer, what is meant by “denominate”?

    “Really, I read so much every day and realize after the fact it did not expand my understanding one iota.”

    If this happens so frequently, then you might want to consider that the problem may not lie with everyone else. One thing’s for sure—if you “read so much every day” and find that “it did not expand my understanding one iota,” then you are definitely wasting your time reading, unless your purpose is something other than expanding your understanding. If it is something else, then I’m extremely interested in what that purpose might be.

    If you still have any questions, or don’t understand something about what /I/ wrote, then by all means just ask. Maybe there’s an answer and your understanding will become clearer.

    • You either produce or provide capital formation to support production of goods and services or you steal shit. The Keystone Keynesians and their Marxoid spawn have had to turn the economics profession outside of Austrians into intellectual cripples who cannot even distinguish between positive and normative analysis.

      Macro-economics is nothing more than a cute academic rationalization for fiat currencies and wishing away all the nonsense it creates and distortion and destruction it visits on every capital market it touches in the above-ground economy. Like political science, it is a zeitgeist machine to put a happy face on initiated aggression, violence management from the state and the legitimacy of theft and terrorism as a foundation for building and maintaining societies.

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