Money As Debt

There is an excellent video you can watch for free online that explains our money system pretty well. It is a cartoon and it will help you understand a little better why we are in the situation we are as far as the economy goes. Basically our money is not backed up by anything substantive like gold, and the way we get more money is not through working first and then getting paid, it is by taking out loans. The loan money we get from the banks is not actual money they have, it is money that we promise to pay in the future and therefore DEBT!!! Our Money today is DEBT!!! So when people forclose on their homes and stop making payments, the loan money they received and used is essentially gone - disappeared- no longer there. So that causes the bank to scramble because they've been using that promise to pay to lend out more Debt money. It is a huge mess!!! This video does a great job of explaining banking and how this system of money as debt works. Their idea for how to fix it is interesting, but I think we would be better off to just move to a gold standard and have our money have intrinsic value. I think that would fix this mess. In a lot of ways, I hope the whole system does come down because it is so messed up. The fear is that we could end up with something worse though since most people just don't understand basic economics and money. But if that is you, then this video will help!!

Here's the link : http://video.google.com/videoplay?docid=-9050474362583451279

The Wealth of Nations by Adam Smith Book 1 and the introduction

Adam Smith is considered the father of economics and now I know why. I read chapter one and the introduction of Adam Smith's, The Wealth of Nations. If we as Americans read and understood what Adam Smith was telling us in 1776, maybe we wouldn't be in the economic situation we are in now. The aspects I will discuss in this essay are the devaluation of currency, price of commodities and price of labour and wages.

Smith gives an excellent history and lesson on money and how metals were first chosen as a means of exchange because of their portablility and stability. Then he talks about how rulers would issue coins that actually contained less gold or silver than they did previous and how this devalued the money which would lead to inflation. I wish we understood this concept today. The dollar isn't even backed by anything, all it is is a piece of paper and in many cases today it's not even a piece of paper; it's just a number in a computer somewhere. No wonder we are experiencing massive inflation now. We don't have a stable means of exchange. It's unfortunate we left the gold standard, we are paying the price now.

Another very interesting and applicable point Smith makes in this first book is that prices are almost always measured by the amount of corn or wheat that can be bought. In times of plenty the price of food is lowered and price of luxuries are increased, but in times of scarcity, the price of food will rise and luxuries may no longer even be exchanged. People will not care for extras, just the necessities in times of scarcity. Food is always necessary and is a good measure of the economy. He also discussed the interesting idea that laborers earn more money in times of plenty and are more independent than in times of scarcity. He says the opposite is also true:

"Masters of all sorts, therefore frequently make better bargains with their servants in dear that in cheap years, and find them more humble and dependent in the former than in the latter. They naturally therefore, commend the former as more favourable to industy." (towards the end of Chapter VIII Of the Wages of Labour)

He also points out that the masters, landlords and farmers, often make a better profit in dear years because the price of labour is less. Another interesting point he brought up earlier in this chapter is that wages for laborers are the highest when the economy is growing rapidly. He says:

"It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordinigly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest."

This was an excellent read and very thought provoking. I highly recommend this book especially if you want to learn more about Economics. So many things begin to make sense under this new light. Adam Smith is very exact and uses many case studies from history to illustrate his points. If you are willing to take the time to really delve in and understand his points, then you can certainly draw parallels to the present. Good luck, thanks for reading!!

Red Badge of Courage

This is a male novel. The youth/ soldier/ main character, Henry Fleming is excited to fight in the Civil War and to be a war hero. He runs off in his first battle when he thinks they are losing only to find that they won that battle and he should have stayed. He was extremely disappointed in himself but tried to justify his action and eventually found his way back to his regiment and in the following battles fought bravely and eventually died in battle to gain his Red Badge of Courage and was at last a man.

My moms' book club was unimpressed and spent only about 15 min. on the whole thing( I unfortuantely had to miss it this month). Moms don't like war. Henry Fleming should have listened to his mother and stayed home where it was safe. War is stupid. I suppose there are times when we have to defend ourselves, but the Civil War was just a great slaughterhouse. No other country fought a war to defeat slavery, they just slowly outlawed it as Great Britain did. What a shame we could not do the same. There are better ways of dealing with things, but I guess that if you can't work it out, then you have to kill each other and hopefully the good guys win.

We were going to read War and Peace next, but decided we have had enough of war stuff so we will be reading Portrait of a Lady and Wuthering Heights next and then we'll start War and Peace.

Is Harry Potter good or bad?

There is a great article on this subject on the Memoria Press website.

The idea basically is that all literature can be dangerous if it is the only literature a person has read, the only ideas they have come across. Literature becomes less dangerous the more one reads. By being exposed to many ideas one learns to discern when they are reading something bad, good or great. Great literature is literature that teaches truth and inspires a person to do good.

Harry Potter is only dangerous if it is the only thing read. Otherwise, it is a good book with a good story, but not a great book.

Read the article here http://www.memoriapress.com/articles/08/potter.html and check out some of their other articles here: http://www.memoriapress.com/articles/index.html

Classics I am now Reading ( or listening to)

I found a fabulous website from a list given in the UHEA convention handout. It is www.librivox.org . They have lots of audio books for download for free. I listened to part of the Wealth of Nations by Adam Smith for my Great Books of the Western World Book Club and I am listening to The Red Badge of Courage by Stephen Crane for my Well Educated Mind Book Club. I used to read while I nursed the baby, but he’s all grown up now and I was falling behind on my reading, but this has solved my problem.

My thoughts on the Wealth of Nations so far: It is a great review of the Economic 101 class I took in college. It is actually quite interesting to think about how the “invisible hand” works to allocate resources where they need to go and the way prices are set according to supply and demand. The section on the Division of Labor was very interesting to me on how much more can be produced when people specialize because they don’t switch mindsets or spend time moving from one aspect to another. He gives the example of the safety pin, where a single man can make lie 100 pins on his own in a day, but if you divide the labor of the pin into 20 different parts, then 20 men can make like 100,000 pins (I’m not remembering the exact numbers) which is many times more than they could make individually. I wonder if there is a point where things can become too specialized though and where is the human aspect to all this. Is there a point where even though a person could make thousands of pins more in a day with a specialized group than by himself, maybe he would like to customize his pins or just make the whole thing himself?

My thoughts on The Red Badge of Courage so Far: First of all, the youth is excited to join the Union side of the Civil War only to find that he spends a lot of time waiting around and not fighting although he wonders if he would actually be as brave as he fantasizes he would be. They eventually fight and he runs off in the middle and eventually gets hungry enough to go back to his regiment. Isn’t this so like human nature? -- not wanting to get caught or punished for doing something wrong and trying to justify our actions even though we know we’re wrong. He almost wishes the Union army would lose so that he could say he was right for running!! Also, it’s hard to wait for things to happen. That would be rotten!!