Wednesday, January 9, 2019

Moore’s Law has replaced the gold standard

I collect gold in the form of important insights, and in this article I’d like to share some of them with you. 

Until a few years ago I never thought of Moore’s Law and a gold coin standard as having an important connection, but they do.  Gary North lays it out (8/17):
The gold standard was an institutional restraint on the expansion of government spending, and central banks were designed to thwart the gold standard. We live in an era of the triumph of central banking. We therefore live in an era of the comprehensive defeat of gold coins as restraining factors on the expansion of the government.
Here is the good news: we no longer need gold to do this. 
I favor a gold coin/digital standard established by the free market -- not any government -- but we no longer need it. If we did, then liberty would have been lost after 1971 or 1933. 
Moore's law has replaced the gold standard as a means of restraining civil governments' central planning. . . .
The escalating effect of Moore's law in reducing the cost of information is changing the whole world in ways we can barely perceive today. There is no way that any federal bureaucracy can keep up with the social, economic, educational, and political transformations that are taking place as a result of Moore's law. . .
People are finding ways to participate in the world economy that are outside the jurisdiction of the administrative state.
The inevitable bankruptcy of every national Western government because of compulsory government medical insurance programs and old-age retirement programs will complete the destruction of the Hamiltonian movement in America and the Keynesian welfare state everywhere else.
Since states are involved in just about every area of our lives, and since few people talk about whether they’re necessary or not, it’s always refreshing to read Murray Rothbard.  In Anatomy of the State he explains how the almighty state operates to support itself:
The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively “peaceful” the lifeline of the parasitic caste in society.
States, however, are not the same as government, as Albert Jay Nock tells us in Our Enemy, the State:
Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. 
The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. 
It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
The trouble is, all governments today are states.

Robert P. Murphy, author of Chaos Theory, a highly-readable primer on anarchy, has long defended the idea of a stateless society.  In this article he addresses a common concern of critics that under anarchy warlords would take over.  Murphy claims that,
for any given population, the imposition of a coercive government will make things worse.  
The absence of a State is a necessary, but not sufficient, condition to achieve the free society.
To put the matter differently:  It is not enough to demonstrate that a state of private-property anarchy could degenerate into ceaseless war, where no single group is strong enough to subjugate all challengers, and hence no one can establish “order.”  After all, communities living under a State degenerate into civil war all the time.  We should remember that the frequently cited cases of Colombia and now Iraq are not demonstrations of anarchy-turned-into-chaos, but rather examples of government-turned-into-chaos.
For the warlord objection to work, the statist would need to argue that a given community would remain lawful under a government, but that the same community would break down into continuous warfare if all legal and military services were privatized. [His emphasis]
Why does almost everyone accept the existence of states as axiomatic, when judging by what they actually do they’re nothing more than bandit gangs writ large?  Are we the propagandized adults in The Emperor’s New Clothes?

The American state is a burden and a threat but so far it hasn’t completely regulated the American economy -- to our great benefit.  Gary North (7/2015)
Economists define economic growth as follows: "An increased range of choices at the same income level." 
Using this definition, Americans are the richest people in history. 
We have more liberty, income, and geographical mobility than any nation on earth. We live in a huge free trade zone. We have the same language. We have a common monetary system. We have a highly developed road system. We have an airline system almost devoid of price fixing. We have more housing options than anywhere else. We can buy a home with a 30-year fixed interest rate at 4%. We can start a business in one hour -- two hours, at the most. We have the best higher education system in the world . . . and it's going online for free. We have a common law system, where everyone is innocent until proven guilty, except when dealing with the IRS. We have the right to own as many guns as we want.
“Money is the whole thing,” said a bitter Rod Steiger in The Pawnbroker, claiming it is the only thing that matters in life.  It’s so important some people would counterfeit it to get what they want.  And this turns our attention to the government and its central bank, the federal reserve.  

The secret of retaining the public's confidence in any currency unit is simple enough: convince users of the money that the issuers are responsible, reliable, and trustworthy. 
Government and its licensed agents have a monopoly of money creation. Private competitors are called counterfeiters. 
Sadly, in our day, it is very difficult to understand just what it is that counterfeiters do, economically speaking, that governments are not already doing. Fiat money is fiat money. 
(Perhaps the real legal issue ought to be the illegal use of the government's copyrighted material. Copyright infringement makes a much more logical case for Federal prosecution than counterfeiting.)
Central banking is one of the greatest cons in human history.  

The justifications for Federal Reserve Act of 1913 was to prevent bank failure and maintain price stability. Simple before and after analysis demonstrates that the Federal Reserve Bank has been a failure. In the century before the Federal Reserve Act, wholesale prices fell by 6 percent; in the century after they rose by 1,300 percent. Maximum bank failures in one year before 1913 were 496 and afterward, 4,400.
With a record like that it's no small achievement that it's still around.  But don't sound the trumpets because the public won't understand.  And people don’t care.  As long as their digital or paper dollars continue to buy stuff without too much pain, they’re okay.

As consumers they want high quality and low prices. But who’s going to give them a deal like that?  Big business.
There is a slogan about American big business wanting to hire low-cost immigrants. Don't blame big business. Big business caters to the vast middle class. Big business wants to cut prices to penetrate new markets. Middle-class people buy from Amazon and Walmart and Target for a specific reason: to get the best prices. Big business is responding to consumer demand. 
It is consumers, not big business, who demand low prices. Big business would like higher prices, but consumers won't let them impose higher prices. 
So, big business goes out to find ways to cut costs, so that big business can cut prices. Cause-and-effect is not from big business to the consumers; it is from consumers to big business. 
This is the logic of free market economics. — Gary North (1/2016)

George Ford Smith is the author of eight books, including The Flight of the Barbarous Relic and The Fall of Tyranny, the Rise of Liberty.  He is also a filmmaker whose latest work is a five-minute documentary about the Christmas Truce of 1914, A Christmas to Remember.

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