A Bird in the Hand

A Story and a Lesson in Physics, Metaphysics, Law, Politics and Economics

Deefburger 09/05/2010

Tangible & Intangible

“A bird in the hand is worth two in the bush.”

I expect that this statement is very familiar to anyone reading these words.  The concept it conveys is two fold: It is the concept of value and it is the concept of tangible value versus intangible value.  It is a simple illustration, a thought experiment, if you will, of tangibility versus intangibility as a human judgement comparison of value.

It couldn’t be more plain or simple.  Actually having one bird in your hand is worth more in value to you as a human being (who, it is presumed, wants to have a bird in the first place, perhaps to eat and stay alive another day) than two in the bush which one might have if one put the effort in and successfully, after a time and effort and expense, acquired the two birds.  This is a great effort of both time an resources, which are scarce in your world, and as such have value.

The bird in the hand is possessed now.  The two birds, or even a whole flock, are only possessed later after a great expense in time and effort are successfully carried out, and the two or more birds are acquired and are now in the hand.

The difference is the difference between tangible possession now of one bird and intangible possibility of possession in the future of a bush full of birds.

Is it possible to possesses now, in a tangible way,  an intangible thing?  Yes, via the use of an intangible device.  Intangible devices abound in our modern world.  The devices themselves are tangible objects, that are representative of other things that are tangible.

For instance, the bank is currently in possession of such a device that represents your house.  You are in possession of the actual house, the bird in the hand.  But the intangible representation of the house, the deed, is in the hand of the bank.  The deed is the intangible device.

Another example is a photograph of a girl, maybe your daughter.  She is not in the hand, though as her parent you might wish she was.  But her photograph, which is tangible in and of itself, is in your hand.  You have tangible possession of a representation of a tangible girl who is currently intangible to you, perhaps because she left for school a week before.  The value of the photograph to you is the content that the photograph represents, the physical girl.  She’s not here to get the hugs herself.  She is in the bush, so to speak.

What is clearly more valuable to you is her physical presence.  The photograph is a poor replacement.  So tangibility is tricky, but not unfathomable.  The girl and the photograph are perfect illustrations of how we will marginally rank the value of what is tangible  versus what is intangible when the subjects are the same thing, the tangible version is the most important, the intangible being second.

A daughter in your arms is always worth more than the same daughter in a photograph.

Present & Future

The present is the tangible form of time.  The past and future are intangible forms.  Tangible form requires an object, such as a bird, or a moment, to be real and present. Future Intangible form is probabilistic, because it is based upon some future event which may or may not take place.  The event, to exist as an intangible object, must be possible.  Two birds in the bush are possibilities of tangible possession of two birds.  One bird in the hand is a present now of tangible possession.  The intangible Past exists only in our memory or our records of events which have already occurred.  For instance, you may still be holding the bird that you were holding an hour ago or a photograph of a girl you took last week.

Now, then, is Tangible time.  Intangible time is in the future or the past.  What is interesting to note here is that the past, the history of what was now, must be observed in order to determine the form of the future possibilities.  A bird now, is a done deal.  So the past, is a record of the intangible that was converted into tangible “now” form.  By studying the the memory of the past, we can evaluate a possibility of future events.  We must consider our own past in the acquiring of birds, in order to evaluate the possibility and potential value of the two birds in the bush.  We must weigh the time and effort against the possible costs and decide upon an outcome.  That decision is the one that the phrase implies: Am I going to try and get two birds when I already have one? or am I going to ignore the two birds and be happy with the one I have?  Present or future?

The Present is the only time you can know now. Record it in an intangible device, and you can remember it too, and know it again later.

Lawful & Legal

Law is based upon nature and the way nature works.  The earliest laws were attempts to codify the way nature worked so that one could live knowing what to expect from nature.

Natural law is simply the way things are, not the way we wish they were.  Gravity is.  We can work against it, but not without it.  It will not change it’s nature to suit us.

Gravity is a natural law and it is relevant to tangible things in the tangible world.  Matter and light behave according to natural laws.

 

“Lawful” as a word in our civil code is dealing with tangible substance and real things.  When in the law the words “lawful something” are used, the something part is the actual thing itself.  For instance, in Title 12, Chapter 3, Sub chapter XII, Section 411, it says

 “They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.”.  What the term is referring to is the tangible substance that the notes are enumerated in, One Dollar lawful money, a tangible thing.

The notes themselves are legal devices representing the tangible lawful money.  The notes are tangible representations of other tangible things, in this case Dollars of lawful money.  The notes are a convenient replacement for the lawful money as intangible devices.  The notes themselves are worthless.  But they represent a specific, but currently intangible value, the lawful money that is not currently in possession.  The lawful money is safely within the bank that issued the note.  The note then, can be moved instead of the heavier and bulkier lawful money.  The money can then be redeemed at a different bank, but for the same value of tangible lawful money, in the hand.

A bird in the hand is lawful possession of a bird.  You now have a bird, in your hand.  In lawful terms, this is tangible possession of the bird, at the time.  This is lawful possession of the bird.  

Legal refers to legislation.  Legislation is added to the law in order to account for changes in understanding, circumstance, or both.  Legal constructs are tested in the courts against the current body of law, and if found to be consistent with that body of law, are adopted by the judicial system as precedent.  Until a challenge to legislation is brought before the court, and successfully challenged, the legal construct stands as law.

Legalities are there as rules to follow, but can be challenged either by suit or civil disobedience.

Is there such a thing as legal possession? Yes. If you are the land owner and the bush that the two birds are in is owned by you, legally, then you have a legal claim of ownership to the two birds in the bush.  But the two birds are of no use to you in the bush any way, lawfully.  Natural law is the law of tangible things.  There is no higher law possible.  So legally, the birds may be in your possession by the nature of their being in the bush on your deeded property, but they are not lawfully in your hand.  Until they are, they are not dinner.

Another example would be you, your car, and your house.  You have lawful possession of all three.  But do you have legal possession of all three?  Probably not.  The bank has legal possession of at least the house, if not also the car.  The bank(s) lawfully posses the legal notes of title and deed, but they do not lawfully posses the properties, you do.  In a sense, just as the two birds lawfully posses the bush, you are a bird in the bush, relative to the bank.

Payment & Tender

I have a bird in my hand, and I have about a dozen others in the back that I have as well.  Let’s say they’re chickens.  And you want chickens because you are hungry and you don’t have any in your hand at the moment.

Let’s say I have a problem getting the door open on the chicken coop.  You happen to have a skill of repairing doors and latches.  So we strike a deal and make a trade, one of my chickens for your fixing the door on the chicken coop.  You do this, and I am paid a gain by your opening my stuck door.  I then give you one chicken in exchange for this gain to me.  What we just did was lawfully exchange.  What each of us did, in the present, was do or move physical things in a way that the other of us was unable to do at the time.  We each had a value that we moved, tangibly, in the direction of the other.  You now have a bird in the hand, and I now have a door that works.  We paid each other lawfully.  I lawfully tendered a chicken, you lawfully tendered your time.

Now let’s say my farm is planning on reducing the chicken population this afternoon, but the market is open now, this morning.  Instead of boxing up birds now, and hauling them to the market, I take pictures of my chickens, one each, and sell the pictures as chicken notes at the market, redeemable in those very same chickens at the farm that afternoon.  The notes are intangible devices for future chickens.  I get paid this morning for each chicken note, and the buyers get paid in chickens that afternoon when they stop by to collect.  When they do, they hand me the note, and I then hand them the chicken.  They have just been paid a chicken.  I was not paid by the note, I was paid by the buyer when I tendered the note and agreed to exchange it later for one chicken.  You got your chicken upon redemption of the tendered note.

I tendered chicken notes.  Chicken notes cannot be eaten like tangible chickens can.  Chicken notes do not lay eggs.  Chicken notes are not payment, they are debt instruments of lawful value, not the lawful value itself.  The chicken note is my debt in lawful chicken value, that I must redeem upon presentation at my farm, where, lawfully, the chickens are.  The note obligates me, at a later time, to hand over one chicken to the bearer of the note.  Why? Because it is the presumption that if the bearer lawfully possesses the note, then he must have lawfully paid me for one chicken.  I am the one obligated to pay, still.  All I passed to the bearers of notes was the notes, so far, and I already lawfully posses what the bearers of notes paid me.  I am already in lawful possession of payment in an exchange that has not lawfully completed yet.

So when the bird in the hand is a chicken note, it isn’t a bird yet.  It’s an intangible future thing, not a bird in the hand.  It’s a chicken note in the hand and it is only worth the same as a chicken in the hand, when it is traded for the tangible chicken upon redemption of the note.  I haven’t really acted lawfully yet.  But when I do, the note is destroyed by me, because it represents my own debt, and I do not want it to exist.  If that note is not destroyed, I could end up legally owing someone else for one chicken, that I already redeemed the note for!  So I destroy it upon redemption.

Most people have seen this in punch cards for free sandwiches or coffee.  The punch holes are tangible evidence of debt creation.  Once the debt card is full, it is redeemed for one coffee or one sandwich or maybe even one chicken, but you don’t get to use it again!  The creator of the debt destroys or cancels the note.    

So tender is the promise of payment in the future, encoded in some way within some device like a note.  It is intangible payment.  The tangible payment comes upon the redemption of the intangible device tendered, the note.  Lawful payment is the movement of lawful value.  Legal tender is the device used to convey future lawful payment.  Legal tender is an intangible device.  It is like holding two birds in the bush, as a photograph or by deed.  

Dollars & Notes

Chicken notes are not chickens, but they are redeemable in tangible chickens, or a refund, if there are no chickens by some accident or intent.  The refund is whatever the payment was when the note was tendered.

Dollars, as you know them, appear as notes and coins.  When you take a One Dollar note out of your pocket, you have a note for one Dollar lawful money.  Chicken notes are not lawful chickens and so too dollar notes are not lawful Dollars.

What they are is legal tender.  They are notes intended to be used as money in place of lawful money.  Why do this?  Why not just use lawful money?  Same reason to use chicken notes instead of chickens,  they are more convenient to carry and transfer.  So what is lawful money and why is the note more convenient?

One Dollar lawful money is a U.S. Silver Dollar.  The Silver in the coin is the Dollar lawful money.  It is a specific weight and purity of Silver.  Silver is a tangible, physical element that occurs naturally, sometimes in it’s metallic state.  Gold almost always occurs in it’s metallic state.  Both metals often occur together, alloyed naturally in their metallic state in an alloy called electrum.

Historically, electrum is considered to be one of the first metals used for anything, not just money.  Gold, Silver and Copper have low melting points and are malleable, they can be hammered into a new shape and they will keep that shape.

Gold and Silver are not very chemically active, though Silver can be made into some very interesting and useful compounds, such as photographic emulsion.  It is the nature of these metals that made them available to human beings as well as valuable.  They have specific and consistent weights and densities.  They can be refined to a fineness of .999% using simple means that have existed for centuries.  They do not corrode and decompose like Iron, or Aluminum.  They remain stable buried in the ground or at the bottom of the ocean for hundreds of years. They are tangible, frangible, malleable, melt-able, form-able, cast-able, and a whole host of other amazing properties.

Frangibility is the ability to break something into smaller pieces, and still have the same thing.  All liquids and gasses are frangible.  But a stick is not frangible.  You can break it apart and all you have is a weight of smaller sticks, and those sticks will not stick to each other to be the original stick ever again.

Metals however solid they may be, are frangible.  They can be broken into smaller pieces, and then the pieces can be melted back together and re-formed into the original thing.  This ability, along with the relative scarcity of gold, silver and copper, as compared to iron and aluminum which are most of everything else on Earth, made them naturals for something we know today as money.

Money is simply a medium of exchange.  Lawful money is made from gold, silver or copper, or some other tangible, physical substance.  It has also been seen as corn, rice, beans and other things when the metals themselves were scarce.  Notice that grains are somewhat frangible, and they are directly useful, making them good for use as lawful money.  I have used a six-pack of beer for lawful money several times.  It’s frangible down to individual bottles, and every bottle has a direct use or value if you can get it open.  In some countries and times, chickens have also been used, along with camels, goats, horses, cows and pigs.  Always, lawful money has a direct value and is a tangible substance that has universally accepted appeal or meaning.

But these tangible things, because they are real, and have real weight, and real form, are not convenient to carry in large amounts, whereas a single note can convey the meaning without having to move the lawful value.

A Chicken means a possible dinner or eggs.  A sack of grain means possible bread or beer.  Notes are of no intrinsic value, except as paper airplanes or weird wall paper or pencils.  

What is important to remember is that the dollar notes are notes.  But there are coins also that are legal tender, but not lawful money,  even if they contain copper.  These coins convey the same meaning as the notes, and as legal tender are redeemable, if you have enough of them, for lawful money made of silver or gold.  They are made to be worth less than the value they represent, so that they must still be redeemed for lawful value in the amount the tender is enumerated in.

For instance, the penny is made of copper, or was until recently, but is worth much less in metal than one cent, or 1% of one Dollar lawful money.  It is tangible as a coin, but not as .01 Dollars lawful money.  It’s lawful money value is much less than .01 Dollars, just like the note.

The U.S. Sacajawea Dollar is another example.  It too is made of copper and has a copper value, a lawful value, much less than one Dollar lawful money.

Any form of Silver or Gold of high purity is lawful money, but might not be legal tender.

Today, the U.S. Treasury sells U.S. Dollar lawful money for about 45 dollar notes, legal tender!  This would be like me selling chickens for 45 chicken notes instead of just one, even though each note itself is my debt “worth” one chicken!  How could this happen?

Bank & Economy

The economy is you and the people around you trading lawful value.  They are trading lawful value even when they are using notes, though the notes are not the lawful value itself, as we have seen.  What it is we see around us, the buildings being built, the children being taught, the chickens being bought, brought home and cooked, is the economy.

The bank is the keeper of the notes.  The bank is responsible for all of them.  It says so on the notes.  I’m responsible for chickens and chicken notes.  But I’m not a bank.  So what is the difference?

The difference is in the tender.  What I am tendering as notes are chickens.  The bank is tendering notes as Dollars legal money.  As long as they have the lawful money, there is no problem.  As long as I have the chickens for each of my notes, there is no problem.

There is lawful money, but not for each note.  There is a ratio of notes to Dollars and it’s beyond the ability of the bank to redeem even 1/1000th of the notes outstanding.  If I did that, my whole town would be overrun with chicken notes.   How did we get to the point of having no lawful money?  I have only notes in my lawful possession except for one antique U.S. Silver Dollar lawful money.

Lawful money has disappeared from our view.  We only buy it for 45 notes if we really want one.  Why don’t we want one?  Who owes it to us if we do?

Convenience and Forgetfulness - The simple cause and effect that prove Gresham’s Law

Let’s say I get hit by a tornado one day and lose some chickens I sold notes for.  No problem for me as a debt to the note holders, because I have the payments they gave me earlier.  So, I refund the notes with payment when I run out of chickens.

But I suffer a loss of tangible chicken value and I need all of the payment money.  So I struggle through my loss and build up my chicken stock, and a little extra so I have wiggle room and I just don’t tender notes for those chickens.  I have a reserve of chickens.

Next time, when I have trouble, I can sell extra chicken notes and redeem them for some of the extra chickens.   I save real chicken value.  So one day I do this and only some of the chickens are redeemed.  I have chickens and I have payments, but no redemptions for them.  I have a surplus of tangible value, and nobody seems to care.  It would seem that the note, not requiring refrigeration, can be held until a chicken is needed.  Well, a chicken note is paid for with one silver coin, let’s call it the Govern.  Mom comes home, kids want candy, she hasn’t got a Govern or a chicken but she does have the chicken note.  So she gives the kids the chicken note and tells them to go trade it for candy or a Govern.  The candy store recognises the kids, and the note, and accepts it as payment and gives in to their cherubic little faces, like he always does.  The note is now circulating in the economy like a Govern, and valued at the same rate.  One Chicken is one Govern or one Note.  1:1:1.

So now I am holding unredeemed Governs that I can’t use until the notes come back!  I have to always have the ability to redeem the notes.  I want to use the money, but I have outstanding debt in the form of circulating chicken notes.  But as time goes by, the notes get lost.  I hold money that has no connection any more to the debt in circulation!  Eureka!  I found the fountain of money!

I still have chickens too.  

So I play with this a bit.  I begin to gamble.  I’m betting some of the notes get lost or forgotten.  So the extra payment is spent, and I reserve one chicken extra.  And time goes by and finally, the candy man comes by with his note.  That day I’m one chicken down, but I built up my reserves.  When I look at how long it took for the candy man to finally put me over, I realize it’s been months!  I can bet on chickens being available in the future, and get paid for them now.  The notes, even though they represent my debt to the holders, is seen to be the same as the Govern and it requires no refrigeration, like a chicken, and is not as heavy and bulky like a Govern, so they hang on to it, and use it as money.  If people are using it as money, then they won’t redeem it for chickens with me, they’ll redeem them for other things from other people.  But when those people receive the notes, they don’t destroy them.  Those notes are MY debt, not theirs, so they keep moving my debt as though it were money.  As the source of the debt, I am left holding real tangible value relative to everyone else, the economy.

But I’m not holding all of it.  I’m producing chickens at a rate that keeps up with the daily demand for chickens, but it’s everybody else using the notes as money that are making up for any tangible value the notes must represent.  Only nobody remembers that the chicken notes are for chickens, not candy or silver.

So I get rich, in tangible value, and people outside the farm are “getting rich” with tangible value for themselves by trading the notes away from themselves and receiving tangible lawful value, just like I did.  But who ever is holding my debt note is holding no tangible value currently.  They just have a few chicken notes.  If all of the notes come back to me, I have enough reserve Governs, and reserve chickens to cover the debt.  That is until Fred comes over one day and says he figured out a new angle on the chicken notes.  He’s a banker, so he must know what he’s doing, I guess.

Fred’s big plan is to push the reserve ratio away from 100% and he’ll cover the loss if something goes wrong.  He says he has a multiplier scheme that will make him and me very rich, and everybody else around rich too, or so he says.

All I have to do is create a note, a sort of master note, a bond, for so many future chickens.  He will create the chicken notes and give them out at the bank.  He’ll keep tabs on notes, and let me know when it’s time for another bond.  But to know that, he needs to know how many notes come in for chickens at the farm, so we create a chicken note bank of sorts, only Fred says the bank is a fractional reserve bank.  He will maintain the reserve ratio, so that we can maximise the number of chicken notes in circulation within the economy.  As long as they are circulating, they aren’t being redeemed!  Fred has one of the only banks in town.  If he’s circulating chicken notes he’s able to take deposits of them, and make loans of them as well and convert them too and from Governs.

Chicken notes were already popular, because they were convenient.  What Fred is gambling on is peoples trust, in both me and him.  Nobody complains about using the notes.  Some people like to collect them so I’ve been known to punch a hole and cancel them.  I even got my own cancellation shaped hole punch.  The chicken notes themselves have numismatic value as interesting notes.  They have pictures of my chickens on them and everyone knows them by name.  They collect them like they do canceled postage stamps.

And so, with a contract signed, we started our venture.  US Chickens Chicken Farms and Fred’s Reserve Chicken-note Bank, and the new improved “currency”, or so the promotion went.  The chicken notes had my best chickens represented there on the face of the note, all official and bank looking, as though getting one chicken for it would be like trading the Mona Lisa for a cookie.  Fred’s printer does a great job.  “Fred’s Reserve Chicken Note” at the top and “Good for one Chicken or your money back”.  Beautiful.  And worth something, at first.

Government and Citizenry

Mayor Mory is the mayor in this town.  It’s been that way for a while now.  He’s a shrewd man and an even shrewder politician.  He saw how the notes coming out of Fred’s bank were popular with people because they were convenient.  He used them that way himself.  He recognised that nobody redeems the notes for chickens any more.  Fred even expanded the line of notes to include new denominations, for convenience of course.

Mory had known Fred a long time, and knew if he ever wanted to trade notes back in for Governs at Fred’s bank, he could.  But he thought about that for a while and one day it hit him.  He realized that the value of the Governs themselves had disappeared into Fred’s bank.  Mori wasn’t holding any Governs himself, and he realized that the only places he could get them, if he wanted them, was the Treasury or Fred’s bank.

Mori saw the connection between my chickens and his treasury.  His treasury could operate the same way, through Fred’s bank.  All he had to do was pass a law legalizing Fred’s new notes,  the new “Fred’s Reserve Notes” worth One Govern.

So he did.  He convinced everyone that the new notes would be just as good as the Governs and would allow for greater prosperity for everyone.

Now, Mori’s Town council can cook up any kind of spending, and on almost anything, and Mori will be a hero, and get re-elected.  All the council has to do is legislate the spending, and Poof! Notes appear out of nowhere, sort of.  They appear out of Fred’s bank.

The Council members the next election were not the same people any more.  People who had something to spend money on were there, or they knew somebody who had something to spend money on.  The more some-body's you know, the more likely you are to have the notes you need to buy your campaign.

The mere acceptance of notes was not what happened to the economy of the Town.  What happened was the forgetting where the tangible value went,  forgetting even to ask.

The risk a population takes in the acceptance of convenience over reality, is that a dream is lighter than a life lived.  We tend to reach for more efficient ways to live because they improve our world slightly when we do.  The idea of lawful payment is not lawful payment itself.  The dream will not be eaten.  The two birds will remain within the bush.

What happened was that people forgot the note was a note only.

Tyranny and Servitude

Mori’s Government was now in control of a population.  That population, all those people outside the bank, the government, or my chicken farm, was the economy, and that economy was being tapped of lawful value by us all.  Governs, the Official Coin of the Town disappeared from view, slowly, as the economy forgot about it.  The economy was certain it was safe, money in the bank, because everything seems to be working.  Everyone said this to himself at one time or another.

But as time went by, more and more people ended up working for the Government, or for somebody who’s company did.  It happened because the legislation created jobs at the same time it created the pay through Fred’s bank by spending on special projects.  There was the fence contracting companies that sprung up along with the fence they built to keep the coyote’s out.  There’s the police and fire and water and sewer, and all the other wonderful conveniences that can now be expanded as far as the Council can spend.

The problem to the economy is that the economy is no longer making their spending decisions on their own, only they don’t realize it.  Just as they do not realize that the Governs are missing, so too they do not realize that the Governs have been replaced in all of their transactions by Fred’s bank or one of it’s now numerous agents.  What people don’t see is that every thing they do that is economic,  with the exception of personal gifts and barter, involves Fred.

What the economy is missing is what my biggest fear is in Fred’s scheme.  It’s the redemption of notes.

The people in this town are not stupid.  They did not wake up stupid one morning and decide to forget about Governs as money.  The Govern is the money in their mind, because the note says so and it’s official, legal tender.  They use it every day and they have no choice, that they know of.  Everyone else is using them too.  They always seem to be worth something when they are traded.  What is not seen is that they are never traded for tangible value at the bank.  The bank no longer deals tangible value over the counter.  Only notes.

All of their transactions of tangible value are legal exchanges, but only lawful transfers.  This illusion of lawful value is the power of the fractional reserve.  Fred’s and Mori’s scheme is insidiously unapparent to the economy.

The amount of control is practically total.  It’s the scaring people into more legislated spending  that is the hard part for Mori.  People have to want the Government to spend the money.  That way the Government is off the hook for what the people got instead of the intentions of the legislation.  Mori and the Government can hire guys to blame the economy, which is the people and population that is being controlled, whenever the legislation fails, or the markets fail.  Every transaction the people make involves the bank.  There is no escape, apparently.

Even today, I just tell people I’m out of chickens because everybody bought them up already, and I’ll have more later.  Nobody questions this logic.  Then the Council votes to make a mandatory chicken production limit, and subsidizes my farm to keep the value of chickens low.  Mori puts a chicken note in every pot and get’s elected again, and puts more notes into the economy in an unlawful exchange of tangible value for worthless notes, and my farm never has to worry about legally required chickens.  They are legally limited in number and also legally cheap.

Legally now, I don’t have to have chickens at all.  I can still issue notes, legally, but I do not have to redeem them any more if I don’t have enough chickens.  Why? Because of the legal chicken limit of course!

Mori’s Treasury has the same limits.  So does Fred’s bank.  By a law passed by the Council, all of us are not required to redeem.  The metals used for the treasury coin are now legally commodities instead of money, just like chickens.

Nobody complained because nobody knew they should, except a few cranky old men.  As long as the people want these things,  the bank is justified in doing what it does, legally.

But things don’t continue to go well.  Dreams are not as heavy as lives.

By collectively reaching for two birds in the bush, we have collectively forgotten about the bird we had in our hands.  It’s gone now.  And we’re not eating again tonight.  We have a mortgage note to pay and there is no money since the markets crashed.  The mortgage is owed in notes, for notes created by the bank on our behalf, the agent bank that is.  

Fred is insulated by this arrangement.  The “bad guys” foreclosing on homes and “re”-possessing cars are the ones who look to us as bad.  Fred is fine.  He says the people got greedy, and the economy failed.  They believed him, it’s his job, by law and legislation, to know.

All of Fred’s and Mori’s and the Council’s remedies for the problems involve everything except the transfer of lawful value from them, to the economy.  Just the opposite.  More of the same transfer of time and materials into what is now a multi-headed monster run by all our own friends and neighbors.

But when things are good, it’s all Mori’s doing, the councils doing, Fred’s doing, my doing.  We’re glorified.  When things are bad, it’s the greed, drugs, education, food, whatever, so long as it’s economic and not the bank.  As long as it’s just the economy, it can be dealt with by more legislation and bureaucracy and notes.  Heads, We win.  Tails, the economy loses.

Stricter rules on trade.  Stricter limits on mobility.  Stricter limits on wages and rents.  Stricter measures for crimes, and even new crimes.  More prisons for the new criminals invented in the legislation.  More police to find them.  More security and more control.

More of everything except lawful payment.  More of everything except freedom from the legislation, freedom from the control, freedom from the bank.

Houses and cars are taken by the banks that make those specific types of “loans”.  They never paid anyone in lawful money, but they take the lawful property any way.  Apparently, it’s legal.  It’s just not lawful.  Nobody fights it because they don’t see the problem.  They don’t see what is wrong, besides their own misfortune.  The police who come to remove them from the home they lawfully posses are the same police who the day before were coming to help them.  Fred never shows up.

Fred, and his bank are never seen any more, except in the paper, and only when the economy is suffering.  They talk about the greed, and the corruption in the market.  They talk about the bad weather, and the bad crops.  They talk about the bad neighbors and the bad fights over property and religion.  They talk about everything under the sun, except the tiny little problem of the redemption of notes.

Notes are held on all the properties being lost to economic hardship, but not the cause of the hardship.  The reason is clear, we don’t want to accept the blame ourselves.

Not long after Fred started his scheme a professor of sorts wrote a brilliant book describing the economy and how beneficial notes were to the economy.  He outlined an entire theory of economics that explained every aspect of it, except for one tiny little detail; that chicken notes are not chickens and that Govern notes are not lawful Governs.

Professor Julius Spendmoore III was well connected socially, financially, and now, because of his theory, politically as well.  Spendmoore justified the status quo.  

By ignoring Fred’s culpability in the law, the natural law, he built a theoretical framework with everything else, and glorified and justified Fred’s scheme and justified Mori’s and the Councils efforts to spend.  His theory never touches on any physical limits to it’s spending, because, theoretically, the money is unlimited by virtue of it being intangible.  Tangible needs in the economy can always be met with a purchase.  Tangible transfer always occurs in the economy, helped along by the passing of the notes in the other direction.  What could be more simple and mundane than that?  So it was never questioned.

But more people have to work more, and more often to keep up with the rising prices, Spendmoore’s mild inflation that is his indicator of healthy economic activity.  Never mind that the numbers go up because Fred issued more notes.  The notes had to come from somewhere.  Spendmoore equates note production to the Treasury Mint and says there is no difference, practically speaking, to the economy.

No one suspected that the economy was being driven down, not up, by the whole thing because the facts printed and published by all the appropriate agencies appeared to be true, and the grand theory of everything economic concurred, and the numbers were getting bigger.  The recipe for making things better is to spend more on more things,  Just what Fred and Mori and I have always done.  

Our Town is one of many on a large island.  There is another island nearby, but it’s very hard and expensive and dangerous to reach, and it’s a rock mostly, and of no interest to anyone except Mori and the Council’s scientific institution.  All of the tangible wealth of our town is below our feet, and beyond that, some other town owns.  But as Fred accumulates notes of deed and title, his assets, he begins to realize that he basically owns everything already, legally, and that the only way to increase his wealth is to acquire more territory and resources from somewhere.

Mori has the answer.  War.  A military spends more than everybody else combined.  A military adventure increases local employment and decreases the population, either by temporary assignments to foreign service, or permanent assignment to death.

A military built large is also useful when disaster strikes at home.  When there were floods, and bad weather, the military was employed.  When the coyotes were raiding the farms, the military called for the fence, and then assigned guards to guard it.

Spendmoore’s theory never predicted any of this.  It never predicted that houses would someday sell for more “Governs” than their parent’s had made in a year of labor.  It did not predict that the economy would work twice as hard for half as many chickens.  It predicted only wealth and prosperity, so long as the bank, Fred’s bank, the Central Bank, did it’s best to control it.  But Spendmoore had to account for failure.  Life is unpredictable, and the bank can’t see any of the bad coming.  That bad is the unpredictability of the economy itself.

Mori has an answer to that too.  Equality by law.  If all people are limited by law, then the outcome of every day things is more predictable.  As long as Mori focuses on only the good outcome of the good intent of the legislation passed, he can ignore the slow decline of wealth in the economy, and still be re-elected.  That is, until the physical tangible limits of the island are reached...

Revolution and Remediation

The first major indicator that something was wrong with the money, was when the number of notes in circulation, which in our town was reported as a measure of economic “growth”, exceeded the capacity of the island to produce tangible lawful Governs in silver.  It was not in the news papers.  It was not spoken of at the bank.  But Fred saw it happen.   There came a time when all of the known silver in all the known world would not produce enough Governs to meet even just Fred’s reserve ratio of 1000:1 notes to Governs, let alone the other banks.  What Fred needs at this point is more tangible value to exchange for notes, or more people paying on loans, which for Fred, is the multiplier.  The same tangible home or factory can continue to be owned legally by Fred, while at the same time, allowing for the creation, and re-creation of notes over and over again.  As long as the loan is being paid, notes are circulating.  If it’s not being paid, then Fred takes the home or factory and loans it again to someone else, who assumes lawful ownership.  For Fred, because the note on the property always remains within his banking system, the property is a gift that keeps on giving, no matter what happens to the economy.  For Fred, and Mori, the   buyers are simply indentured servants, allowed to be there so long as they keep it up and keep paying for it.   Or so they thought.

Spendmoore’s theory never covered this circumstance of the reserve being impossible.  For years it had been just a legal technicality that nobody ever seriously challenged.  Everyone was happy to have Governs that were notes instead of Governs that were Governs.  But for Fred, the notes are worthless.  He only wants to push them out of the bank, not pull them in.  But when notes started to build up within the bank, instead of staying in circulation, Fred knew something was wrong.  His agents, the other private banks that are legally tied to his bank, are failing.  Their balance sheets are beginning to show more notes on properties that are not providing those banks with income.  And because the markets for property are in a slump, the people are not buying properties.  Where are they living?

Many are moving in with each other and sharing the same property.  Others are not so lucky, and are living in their cars or on the streets.  They can’t find work, and they can’t afford the enormous burden of indentured servitude required to have a home.  Mori can spend more on these people, but their numbers keep growing.  Why is this happening?

What happened is that the reserve was tied to the tangible properties through the devices of notes, legally, and so property ownership was only a rent, a loan from the bank so long as you could pay.  Only a very lucky few had properties and the notes on those properties.

What also happened was that savings disappeared when the Governs, the real tangible ones, disappeared.  The note production and inflation made saving in notes impossible.  So investment was the only alternative.  This meant that instead of being able to just put Governs in the bank or under the bed and let them sit there, people had to buy into risk oriented spending instead.  The return on investment would maintain the value of the deposit, instead of the stable and natural value of the tangible Governs.  But the source of the return was tangible time and material!

When disasters of one kind or another came about, investment accounts would lose value, suddenly, and the people’s savings would disappear overnight.  This would put an enormous strain on older people who had relied upon that investment income maintaining their retirement, and thus the payments on their properties and their food.

In addition, businesses who used investment vehicles to maintain cash levels for the purchase of material and labor had to downsize when the investments went bad.  People would lose jobs, or lose the annual pay increases that helped them catch up to the daily increases in prices they were experiencing.  Pay increases came once a year, became smaller, or delayed.  But Fred and Mori and the Council and me were increasing the number of notes circulating daily.  The prices did not go up only once a year and by a fixed amount.  Those values increased as the needs of the businesses increased, daily.

People were being forced into poverty or servitude without any tangible value to call their own, legally and lawfully.

Something had to give, and for many years the only element within the whole of society that was not giving anything, was Fred.  Fred knew this, and told Mori the only way to get around it, according to Spendmoore’s theory, was to spend more, somehow.  So Mori started legalizing all the businesses as Government businesses, so that investment was not possible, or at the very least, controlled by legislation.  More people would be given Government jobs, with Government businesses, and guaranteed Government paychecks.  Mori’s plan required taxes to be increased and those taxes paid the debt bonds that Mori advanced to Fred.  I was legislated to produce chickens and deliver them at fixed Government prices, and I received my compensation in subsidies that were also paid for by taxes.  I was fine.  Mori was fine.  Fred was fine.  Until the other towns on the island came up against the same problem.  The island, and it’s tangible assets, are scarce.

Domestic and Foreign

Fred’s bank has been trading with the central banks of the other towns for years.  They all have their own “money” and the exchange rates were determined by trade of tangible goods and services, as well as the money market.  Notes are traded against each other in the money market, and exchange rates for travelers and businesses are established by the relative prices of currencies.  The money markets never trade tangible monetary metals.  To do so, would reveal the absurdity of the currencies themselves.  The metals only ever rise in value relative to the currencies, so the banks limited the trade of those items to a commodities market, rather than treating them as tangible money and trading them in the money markets.  Fred called it demonetization.

But when every bank came up against the problem of the scarcity of property in general, because they all owned legally all of the properties of the scarce island, they began to realize that the only source of tangible value that could still be bought and legally owned was the time and labor of the populace and the still untapped resources that were being mined.  Trade took a turn towards outsourced labor, via trade between towns.  Labor in one town might be cheaper than in another because the legislation of the people in that town was different from the legislation in another.  Jobs and industries that once thrived in our town were now being carried out in other towns, and imported into ours.

Fred tried to maintain a lower value of Governs to other currencies, but found it to be almost impossible for him to do.  Mori’s spending was helping to keep people from getting upset, but the limits of his ability to do that were being reached, because people living in cars don’t circulate very many notes.  And Government jobs can only be paid from Government income, taxes, and again, people living without jobs, or homes are not paying taxes.

Businesses were being taxed more and more to cover the debt, and this would drive them out of town, eventually, to cheaper markets for goods and labor.  The spending mentality had limits, tangible limits.

This is when Mori declared a “State of Emergency” and at the same time started pointing fingers at the enemies of the state that were ruining the local economy.  Mori and the Council declared war on their neighbors, gambling on the possibility of victory, and more tangible value to own and lease via notes.  It was time to form a single world wide Central Bank and Mori was determined to make that bank Fred’s Bank.

But the scare tactics necessary to implement this required delicate manipulation of the people in order to get them to want it.  They had to work hard to produce the evidence that was necessary to get people to forget about how hard things had become and to be more concerned with a threat from outside the Town.  Not everyone was fooled.  Mori dealt with them in the same way he had dealt with all of the other “social problems”.  He built jails and passed legislation making anything those people did or said, illegal.

He nationalized everything he could, so that he would have full control, and could blame anything and everyone who was not part of his systems of bureaucracy for the failures, thus perpetuating the ruse of the need for more Government.  And he scapegoated everyone within his system of bureaucracy for doing what they had to do any way, so that Mori could avoid direct blame for any failing of the bureaucratic system.

But Fred had a bigger problem,  the other Central banks.  They had the exact same power of note creation and control he did, and some of them could not be influenced by Fred’s holding of notes or his ability to spend.  Those towns had banks that were trying to do the same thing he was doing, and they knew his notes weren’t any more valuable than theirs.  The real trouble for Fred came when the other banks began insisting on trade in silver and gold and tangible trade items instead of bonds.

This caused a drop in investments for a large part of the population.  Local markets became strained by the need to redeem inter-town in money that was in scarce supply, and in amounts of scarcity that were falling further and further away from the rising number of notes that represent the value.

Then the unthinkable happened.  People began demanding real Governs.  Some cranky old men started talking about the old days before modern money and money systems.  They started to point out how real Governs never had the inflation problems or investment problems that the notes have.  Revolution was beginning to pass the lips of too many people.  

Mori needed to start a world war or a world bank, or both.  But he realized this too late.  When the reserve ratio surpassed the capacity of the island to support, it happened that way for every central bank.  They all knew what was coming.  They all had the same solution to the same problem.  They all believed in Spendmoore’s theory.

So they formed an inter-town Committee, and tried to establish a new Central bank, with a new currency, the Central.  The problem was that they all refused to join, because they knew if they did, they would be in the same boat relative to the Central, that their agents were in now.  Their own agent banks were the ones taking the heat when the markets failed locally.  If they were all agents to a grand central bank, they would have to take that heat themselves, and risk a takeover by the the Grand Central bank, and that would mean ruin for Fred, and Mori, and me.

My subsidized monopoly on chicken production could be wrenched away from me if Mori and Fred are displaced by the Grand Central bank.  It would seem, that Spendmoore’s theory was great for us when we did not legally own everything.  It was fast becoming a disaster to us now that we did legally own everything.  Talk about irony.

But the truth is that we can only live in one house at a time.  We can only personally utilize a small portion of everything we own.  We have to have someone else trying to purchase the other things we own, on credit, for the things to be of any value to us.  We need those people working, and paying, and buying goods and services, in order to continue the expansion of notes.

Fred’s Reserve Notes are not silver, or gold.  They are servitude and the promise of greater value.

Legislation is not law.  It’s a dream and the promise of better living.

Chicken Notes are not chickens.  They are starvation and the promise of dinner.

A bird in the hand is worth a whole planet of birds, in the bush.