DURABILITY: WHAT PRODUCTION
In one's prime of life, one should produce more than he actually consumes. The excess production should be saved for those later "golden" years when one's productive capacity has fallen below his consumptive needs. This is a pragmatic realization that past producers recognized. However, the farmer or the hunter knew that grain or meat could not be preserved or "cured" to last decades. Consequently, the producers throughout history have constantly sought a common intermediate product that would retain its product worth over the years. More basically, one's savings represent a conservation of production time for the years when one is unable to converts his remaining lifehours* into the production of needed goods and services. One must always view his savings, whether in stocks, bonds, or currency as a storehouse of his excess, disposable production time.
The productive person seeks some investment in which to convert his excess disposable income (excess production time). The desired investment is something that will retain or gain product worth (buying power) over the years. In better words, the investment must be durable. At this point, it is important to recognize that all investments are like all currencies. Are not all investments not some human product? Can you name any investment which does not involve human production, does not involve human time at production? You can't.
The durability of product worth, or buying power, depends on more than the mere physical characteristics of the product "chosen" by the producer. Clearly, in days gone by, converting one's excess disposable production into a precious metal was more durable than storing grain which could rot or be attacked by rodents. However, in one's later golden years, one's consumptive needs require the grain moreso than the precious metals.
Gold Is Not Always Best for the Golden Years
If one has tons of gold, but grain is not being grown or food is not being processed, one's gold has not essential product worth. (People who are putting money into precious metals should take heed when the farmers and food processors are reducing or closing production because of cash-flow problems. You can't eat gold, can you?)
The inflationary lack of essential production in one's old age can result from the politicians or economists mismanaging a system of production. The politicians can directly divert human resources into non-productive, maintenance social programs, the necronomists can indirectly cause people to tie up currency in non-productive activity. Or, the lack of essential products--and massive sinflation--can occur if the retiring generation did not bridge the generation gap so as to make producers of the following generation. Or, the erosion of savings due to skyrocketing cost of essential goods and services can occur if the oldsters wanted the youngsters to be sports heroes instead of engineers, scientists, or teachers. Instead of inexpensive food, distracting sports statistics will have to do.
Durability: Physical Hardness or Timely Abstraction?
In confusing physical durability with product worth durability, producers have continually suffered from choosing a common intermediate product that lost product worth over the years. The common intermediate products were official and unofficial, public or private. Private investments into products that do not hold their production worth are foolish, destructive currency transactions on the part of the producers. Many times, including today, producers have suffered from choosing products of human production--currencies or investments--that were not durable as common intermediate products. They were not durable in the quantifiable quality that counts, namely, time ... which is the commodity of which all life is composed.
Producers have suffered over the years because they did not regulate the use of the common intermediate products so as to maintain the product worth durability. Examples of this naivete or blissfulness are not merely measured by the inflation of the official public currency--dollars. Another example is stocks that are increase in dollar value while the product worth, the production behind the stocks, is recessing. Something is wrong when people invest in stocks that have less production behind them. Restated, something is wrong when the businesses that handled the symbols of capital and production are booming while the production of actual capital is declining. At face value, the symbols have to be worth less real capital. What is wrong? The intellectual framework of descriptions and concepts formulated by the necronomists, legisflated by the modern politicians, and accepted by the citizens, naively or ignorantly.
The Gold and Silver of the 1600s
Historically, in the 1600s, the infusion of gold and silver from the New World caused a reduction in the product worth of each ounce of metal. The politicians back then, the king and his policy makers, did not maintain the product worth of the common intermediate product, namely, of gold and silver. The producers of goods and services suffered as a result. It was not in the interest of the royal politicians to maintain the production time content of precious metals relative to the amount of lower amounts of time now needed to acquire the gold and silver, e.g, stealing it from the New World. By transacting the New World gold and silver as if it had the production time content of the old world, the policy makers who had a monopoly on the official currency made a killing.
The same divorcing of production time from the current symbols of production time is happening today. The modern politicians do not recognize, let alone maintain, the product worth of any product including gold and silver. In fact, and the reader will agree, sooner or later, the politicians and the economists are constantly grasping at new products with which to assure the producers that a sound investment can now be had. Look at the growth of new financial instruments: money markets, certificates of deposit, Eurobonds, etc. None will hold production value any better than the basic official public currency. If the politicians and necronomists cannot maintain the production time content of any of the existing products, will their record be any better with new scribbled-on paper products? These necronomic machinations merely waste a lot of human time, energy, and matter.
The historical trend of currencies has been the pursuit of a common intermediate product that retains its product worth over the years, that has been durable in its buying power. Traditionally, this durability has been in the form of the physical properties of rare metals. Rare metals, compared to paper money, are relatively immune to the abuse of nature and human beings, abuses that erode the buying power or product worth over time. However, as has been repeatedly shown, the productive elements of civilization have not been able to rely upon the policy makers to maintain the product worth durability of any currency.
Repeatedly, past and present politicians have managed to de-base or counterfeit any currency for their own benefit. Who benefitted foremost from the infusion of stolen precious metals in 1600s? The infusion eroded the buying power of the producers who had their savings in precious metals. In addition, the infusion destabilized the economy as the royal politicians lubricated non-production enterprises, e.g., the Spanish Armada.
The Debased and the Debasers
Who officiated and benefitted from "stepping-on" precious metal currencies with alloys, a debasement that affected all currencies? The politicians of past economies. Who today benefits foremost from the money presses and the treasury-bill presses (which fund deficit-spending)? The politicians of America. Their benefits are not without losses on the part of people holding U.S. Dollars. Every additional dollar of deficit cheapens the product worth of existing dollars. Like their predecessors in the 1600s, the modern politicians are using the debased currency to lubricate the shift of human resources away from essential goods and services. Today, as during the great inflation of the 1600s, the greatest price rises are in the essential goods and services because of shortage inflation--sinflation.
The historical cycle of productive individuals losing buying power, as a result of the top policy makers manipulating and debasing the common intermediate products, will not stop itself. The debasement, or erosion of product worth, will only stop when the producers wake up and productively convert their excess disposable income into currencies or investments that retain or gain production time content.
Producers do not need to wait for politicians and economists to become competent and incorrupt. Producers cannot afford to wait. Producers do not need to await either a durable official currency or a durable official democracy which are respectively kept constant and current to the level of production and problems within a system of production. They can do it by themselves. The means to a durable democracy are discussed elsewhere. The means to a durable common intermediate product are discussed herein.
What Products, What Production with Human Resources
If one's daily spending habits cause one's long-term spending habits (investments) to lose production time content, then one should alter his daily shopping. The primary way in which currencies or investments lose their production time content comes from the nature of people's short-term and long-term spending habits. Invariably, with their shopping or their investments, people catalyze the shifting of human resources away from essential production into non-essential production. Consequently, essential production time decreases, essential products are in short-supply, and sinflation of essential goods and services haunts all people.
The ways in which people catalyze the shift of production time away from essential to non-essential time are numerous. If one has one's savings in a bank that channels the pooled funds into old production acquisition rather than new production capitalization, one should not expect productivity gains to lower the human cost of production. If one speculates on the stock market, on old stale stocks issued long ago to capitalize plants that are now out-dated, one should not expect to have cheap products. If one overpays someone to distract or entertain oneself, one should not be surprised when the overpaid entertainer diverts workers to gratify his weekly whims. An example of displace production time is the hangers-on and groupies that circle the "economic stars" in sports and entertainment. Economic stars are monetary blackholes which counterproductively suck up and divert the wealth of those who cannot or will not entertain themselves in more economic ways.
The gist of the previous example reaffirms the relationship of how the quality of currency transactions today determines its future worth. If people counterproductively uses money to divert workers from production, people should expect the future product worth of currency to be less. In other words, people should expect shortage inflation (sinflation) to plague their existence. The sinflation will, of course, be greatest in those busynesses that have had the greatest displacement. How people shop and invest determines the future product worth of all of their products, not just recognized currencies and investments, but all other products. The ratio of any one product to another product depends on the quantity of each product. If crop production is reduced by people's short-term and long-term spending habits, then the crop worth of all other products is reduced. This is happening today as people give their money to bankers, financiers, and brokers who do not invest so as to first maintain and improve essential production before stimulating non-essential goods and services. Rather, these necronomic money-changers merely want more money today regardless of the future consequences.
How About Zero Interest, Inflation, & Unemployment?
Do people realize that their acquisition of stocks, certificate of deposit, and savings bonds do not capitalize new production? No. Consequently, the production time content of their investments is negative. The people may be having record rates of return in terms of dollars, but the inflation rate due to the counter-productive spending exceeds the interest or dividend rate. In other words, people are not investing for productivity gains--more production time--but for dollar gains. Consequently, they are naively or blissfully losing production time. They have confused gains in the symbols of time, production, and capital with the real substance.
Which is a more durable investment?
If you want the latter, keep reading. Not only is the latter a possibility, but it could happen over a weekend. A replacement of necronomic monetarism with productive monetarism--discussed in a later chapter--shows how it is possible to refinance every debt and eliminate inflationary returns.
As a consequence of this plan, people would not blindly put money into pools that channeled capital away from production. Rather, people would have to look for investments that offered productivity gains in the commodity that counts: namely, production time. Rather than seeking wealth or anti-inflationary relief from producing more symbols of production, people would have to concentrate their human resources on real production gains rather than delusional, symbolic gains. Consequently, the much needed productivity gains would shortly follow and the production time worth of all products would increase. Wouldn't this also mean an elimination of unemployment as jobs in the private sector boom?
The durability of any product in production time worth, its product worth, over the long-run depends on what production people stimulate in the meantime. How people vote on a daily basis with dollars is more important than votes in a ballot booth. If the stimulation is counter-productive, then the product worth or durability of any product will fall. This is true regardless of whether the human product is an official public currency or any private investment. How production is managed, policed, or finessed determines whether existing products suffer inflation, a cheapening in their product worth over time. Is it that difficult to understand? If people buy products, especially scribbled-on paper products, that cause production to decrease, the bought products will buy less because there will be less production.
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