The Great Debate: Fiat? or Shenanigans?

You.  Whimpering in the corner.  Suck it up and get back on your feet.  You knew the US money system was a wreck or you wouldn't be reading this debate in the first place.  So Vox and I conspire through competition to show you precisely how wrecked it is... and at the first glimpse you curl up in a little ball.

Man up.  Its not going up hill from here.

Setting aside the obvious difference of opinion that we have (he's wrong by the way which I will presently demonstrate with no little amusement), our view of where we stand in the grand scheme of things is profoundly similar.   If you look carefully... you'll see that I was the one that dropped the bomb... not Vox.  Vox just stepped back and said.. "did you see that bomb he dropped? Say boys... That's a big freaking bomb.  I doubt even he knows how big a bomb he just dropped."  Then, being the cruelty artist he is, he explained the bomb. Then you realized...  "Oh damn.  There's a bomb."

You see why this debate is important?  Its the format.  The format itself allows you to accept things that you would otherwise refuse to believe.  That's why... in spite of the enormous time investment it requires... I cannot simply quit.  That...  well...  and the fact that every once in a while I'll get to do this...

Remember I said our money was fiat money... with characteristics of credit money.  Right?  Vox says I am wrong about that.  And... while I considered rushing off to donate some money to an unrelated charity in his name and make a video about it...  instead... I just decided I would address his well made point like an adult...  mostly...

Vox said:

"Nate's first mistake is the identification of credit money as fiat money, even though he clearly has his suspicions concerning the problematic nature of the distinction as it applies to the US monetary system.  That this distinction is false can be demonstrated in two ways, first with a legitimate appeal to authority and history, and second by the money creation process."

He then provides a quote from Mises, that I agree, does indeed say that fiat money doesn't yet exist and probably hasn't existed.  Vox appeals to Mises who appeals to history.   And Nate points out... well shit...  this book was written in 1912...  it appears we have some more history to investigate before that holds water doesn't it?  Well lets look at this new history then... especially... recent history.

Say what does our buddy Murray have to say about fiat money?

"Under a fiat money standard, governments (or their central banks) may obligate themselves to bail out, with increased issues of standard money, any bank or any major bank in distress. In the late nineteenth century, the principle became accepted that the central bank must act as the "lender of last resort", which will lend money freely to banks threatened with failure. Another recent American device to abolish the confidence limitation on bank credit is "deposit insurance", whereby the government guar­antees to furnish paper money to redeem the banks’ demand li­abilities. These and similar devices remove the market brakes on rampant credit expansion."[4]

Are we done?

No... no no no... we're along way from done.   Remember.. Mises characterized fiat money by legal privilege.  Legal Privilege?   Consult the MisesWiki!

According to Hülsmann[5], there are four groups of legal privileges granted by the state (usually more than one is granted):
legalized counterfeiting - the promises of banks are allowed to be more "elastic". For example, a coin marked "an ounce of gold" will be allowed to have any amount of gold or none, and can have any meaning. Banknotes were named "promises to pay", but were obscure on the details.
monopoly - only some monetary products may be produced by law, like a specific metal; or only the banknotes or coins of a certain bank. This limits the freedom of choice of users of money and benefits the producers and first recipients at the detriment of others.
legal tender is a money, that must be accepted in exchanges under a predefined price. Some monies may be driven out of the market due to Gresham's Law.
legalized suspension of payments allows banks to avoid paying their obligations, while receiving payments from their debtors. If a bank is freed from contractual obligations to redeem its money and it is also legal tender, its banknotes become genuine paper money.
With legal privileges are the banks allowed to behave more irresponsibly, which increases moral hazard.

Now are we done?

Well... not really.  Because what I've done here isn't intellectually honest, in the sense that I have not represented the whole of Vox's point.

The reason I hated Chapter three is not because of confusing terms like fiduciary media.  Its because Credit Money itself is a category error.

Credit money is a description of leverage. But...  Leverage can be applied to all types of money....  Thus... Credit Money... is a subcategory.  Credit Money is what happens when you take money of any other type.. and then leverage it up for lending purposes.

I am going to be as clear as I can be...  you may need to go back and re-read my last post on this... but I will  try to explain again.


Leverage is something that happens to Money Types.  It isn't a money type itself.  Its like including cancer cells in a discussion of  human  cells because they form in the human body.  Cancer cells aren't human cells.

We must always go back to competition.

Money is money because of the constant commodity competition   Every day the competition is on going... and every day one commodity is winning.  that one commodity that is winning... is the money.   The money types... are explanations of WHY the competition is being won.  Fiat money is fiat money because the government helped it win artificially and it wouldn't have won otherwise.  Take away the government advantage... and its not the money anymore. Commodity money types?  Well they have no artificial government advantage.

That is the true definition of sound money.

Its money that wins the competition... every minute of every day...  the on going competition... not some past competition .. on its own without aid of the government.

All modern paper currencies are fiat money.

The bits that are loaned into creation from thin air?  Those are credit money too... but it is dishonest to ignore the fact that it is fiat money as well.  Loans may have created the individual dollar bills... but those dollar bills wouldn't be money... if it wasn't Fiat.

May God have Mercy on my soul...   Ludwig Von Mises... was wrong.  You cannot disregard the fiat nature of the original money... just because most of it was created through leverage.

So Fiat?  Shenanigans?

The answer is both.  Not one.  Not the other.   Both.  To fail to grasp that... will totally blind you to the inherit problems of our current economic system.  The money is fiat money and credit money.. because much of which was created via leverage... but also much of it was created through counterfeiting.   This is why I created the word "clusterfutastrophe" while attempting to parse the US money supply.

Its not that there is no money.   I already explained that there is always money.  Money...is like energy.  It cannot ever be destroyed.  It can change forms... its velocity can change.  But it cannot be destroyed.  The problem is... our system is so screwed up through fiat and leverage... that we can't even measure the money supply any more.


Come Vox... be sensible... you're absolutely right to point out that the leverage can't be ignored... but you were wrong to suggest that the fiat aspects can.

Now tell us Vox...

What IS the best way to measure the abomination posing as the US money supply?  He asked knowingly...


*** PUBLIC SERVICE ANNOUNCEMENT***  I want to apologize for using Credit Money as a type of money in my last post.  I knew full well I didn't believe it to be an actual money type while writing the post... but because the way Vox asked the question... and because we are debating on Mises' turf... I felt I had to.  I do not believe anyone would've taken me seriously if I didn't.  First I had to demonstrate that i did understand the Misean terminology... otherwise I wouldn't have any credibility on the matter.  Regardless it may cause confusion.   If Vox chooses to score some points by saying, "hey wait.. first you said credit money was a type of money then you didn't" I concede those points willingly.

Gross Incompetence

Today I've taken some guff from folks that are a bit upset about my skepticism about the Fed's estimates of the money supply.  Its not that big a deal some said... banks know what they have on deposit.. say others.

oh...  oh well that's comforting.  Well then I shouldn't be bothered by the fact... that the FED steals ideas on estimation... from freaking biologists.

What follows... comes directly from a fed white paper on currency over-seas.  The first crazy thing we learn when reading this paper... is that the Fed has no damned clue how much US currency is actually out there... or where it is.  Are you getting this?  They don't know where the damned money is... or how much is gone... and apparently... they think this is one good way to try to take a guess at it.  I give you... The Fish Method:

"The biometric method, also known as the “fish” method, applies a method developed by 
Petersen (1893) to estimate fish populations to cash processing data to obtain estimates of the 
“populations” of notes in the United States and the rest of the world. In the biological 
application, populations are estimated by capturing some animals, tagging them, releasing them, 
and then recapturing another sample of animals later. Assuming that both samples are 
representative, the share of tagged animals in the general population should be the same as the 
share of tagged animals in the second sample, and the population can thus be estimated. More 
formally, suppose M animals out of N total are captured and tagged. Next, suppose that in the 
second sample, m tagged animals are found out of n captured. Assuming that both samples were 
representative, the share of tagged animals in the second sample, m/n, should be equal to share of 
all tagged animals, M, in the general population, N, or m/n = M/N. Since M, m, and n are known, 
N can be estimated as N=(n/m)*M"



Whiskey.

Tango.

Foxtrot.


Seriously... these people are supposed to be traders.  They are supposed to have degrees in  economics... which... oh look... is a science.  That means... they should've gone to school... with other science majors... where they should've learned... that biologist suck at math.  People!  You're better off getting help with your differential equations assignment from hungover elementary ed majors.

But hey.. that's ok... they have another method... which they call the seasonal method... which apparently works great... as long as you assume there isn't much US currency in Canada.   No... no I am not making this up... and I did not rip it out of Python skit...  this is actually in the white paper... which from what I can tell is not actually a parody.

Modern economists are so bad at modeling... they are actually stealing ideas from biologists.

That should be the punchline of a nerd joke.  Not reality.

I want to close by quoting the paper directly again...  from the conclusions...

"In sum, much as in earlier work, the currently available data do not allow for precise 
estimates of foreign holdings of U.S. currency, and the available estimates are somewhat 
disparate.''

The Great Debate: Mount Chapter 3

So...  a trap unsprung...   well...  if you recall there was another word in that title.  The word was mostly.  The fact is I knew that by choosing misean ground to fight on, I would be forced to deal with Chapter 3.   I hate Chapter 3.

Oh... I'm sorry.  I'm talking about Mises' Theory of Money and Credit.  Its in Chapter 3 of that epic work that he lays out four different types of money and describes them in detail.   Commodity money...  that's gold or silver or platinum coins.  Its money literally made out of a commercial commodity.  Its not paper money based on gold.  It is gold.  Fiat money is money that gets its subjective value from some legal standing or another.  In terms of descriptions... Credit money is where things get dicey.    You know they are going to get dicey... because apparently I have to start using terms like...fiduciary media.

Before things get dicey... I want to remind you of subjective value theory... and I want to clarify something.  Just because a given value is subjective... does not mean that there is no reason for it.   Subjective value can be manipulated via monopoly... marketing... shortage...  all kinds of things.  The point is... subjective... does not mean... "without cause".  We clear on that?  Subjective reasons are still reasons.

Well ok now lets get back to what Mises actually did say about Credit Money.  Page 61...  He writes...
" A third category may be called credit money, this being that sort of money which constitutes a claim against any physical or legal person. But these claims must not be both payable on demand and absolutely secure; if they were, there could be no difference between their value and that of the sum of money to which they referred, and they could not be subjected to an independent process of valuation on the part of those who dealt with them. In some way or other the maturity of these claims must be postponed to some future time."

Holy crap.  Looks like Mises just said debt is money. Hell... He created a whole category and set out specific terms and everything.

That's actually not true.  What  Mises is doing here is talking about money that is created through leverage.  In Human Action Mises calls money that is backed up by 100% reserves as a money certificate.  Here he deliberately makes the distinction that credit money is not a money certificate.  Money certificates are payable on demand... and secure.  Credit money is not backed up 100%... so if everyone wants to make their claims all at once... there will not be enough to go around.

Now...  pay attention because this is important.  Credit money... still being classified as money... must therefore meet all of the criteria for being money in the first place.

A dollar bill you have in your hand may have been created by leverage... but its still a dollar bill and it will still function as money and meet all of the qualifications Vox and I have hither to agreed on.

This is what I meant when, a few days ago, even an IOU can be money.  But a debt of IOUs... is not money.

Money is payment.  Money is not a promise to pay.

I am going to say that again.

Money is payment.  Money is NOT a promise to pay.

Money is defined by characteristics and behavior.  It is, first and foremost, a commodity.  Always money is a commodity   The question with the types of money is...  how did it become the dominant commodity in a given economic zone?  Because again...  that is a characteristic of money.

Are we gonna have to back up again?  y'all got that?   Jesus we're gonna have to back up again.

Ok where does money come from?  Government? Kings?  No.  Money comes from the market and exists either inside, or outside, any system created by men.  In any economic zone a group of commodities will compete... and the one that is the absolute dominant commodity... will be the money.  It will be the thing that everyone will accept to aid in exchanges and everyone wants.  Rather than letting the market pick its own money... governments monopolize the matter universally.  There is just to much power to be had.  They have to.  This is where we get into trouble.

OK so what is with the 4 categories?  I think the best way to explain it is to show that there are circumstances in each case that either aid their subjective value, or account for it almost entirely... and explain how they became the dominant commodity in a given economic zone.

Commodity Money: Coins made from commercial commodities.  Gold and Silver coins... platinum coins..  Their subjective value comes from the fact that they are freakin' gold and silver and people subjectively value the shit out of some gold and silver... because of that historically these two have battled it out for top spot on the commodity food chain.

Fiat Money: Useless paper that has subjective value only because some government said, "this is legal tender and you will use it as such."  This creates the monopoly that makes the fiat money the dominant commodity.  This is never a permanent solution.  Its a bad.. bad idea...

Money Certificates:  Mises covers this in Human Action... this is money that backed up by 100% reserve deposits.  So...  fiat money... exchangeable to some commodity with a direct 1 to 1 ratio... payable on demand.  So a government may have a bunch of paper certificates backed up by gold coins...  as long as the ratio is 1 to 1... and they are immediately exchangeable... this isn't to bad.

Credit Money:  Lets start with a quote from the man himself.  "If the money reserve kept by the debtor against the money-substitute issued is less than the total amount of such substitutes, we call the amount of substitutes which exceeds the reserve fiduciary media. As a rule it is not possible to ascertain whether a concrete specimen of money-substitutes is a money-certificate or a fiduciary medium."  Got that? Money that gets its subjective value from a promise to pay... but the ability to pay is extremely conditional.  That is to say... it may be redeemable for.. 1 gold coin... but they printed up 2 billion certificates and only have about 100 million gold coins.  For this I like to use the technical economic term "shenanigans".  They do things like.. move gold coins around from place to place to hide the fact that they don't actually have enough to redeem all the certificates.  But... people think they are redeemable.  That is what matters.

So... the point is the different categories can be described by the different sources of their subjective value, and or the mechanism that allowed them to become the dominant commodity in a given region... and therefore... the money of that economic region.

It is critical to keep in mind though... all four of these types of money... regardless of their type still function as money.  Gold coins? money.  dollar bills? money. Euros? money.  Because of their nature some are more subject to manipulation than others.  In fact... one may say they are outright insane.  Blame Law.  He had the bad idea first.

So... now here we sit happily atop Mount Chapter Three.  Ain't the view grand?  Now... with all of this as a basis of monetary understanding... we can address Vox's traps... I mean... questions.

1. Are gold and silver commodity money?  All gold and silver?  Money is a condition that can be deferentially diagnosed by behavior.  Are they functioning like money?  Then they are money.  Its the behavior that makes them money.  It is the commercial commodity that lends subjective value and thus allows us to categorize them in LVM's terms.

2. Are the Federal Reserve Notes, in both cash and deposit form, commodity money or fiat money?  The standard answer is fiat.  But in reality FRN's have characteristics of both credit money and fiat money.

3.Does TMS2 represent your definition of the money supply? No.  like M2  it is only a useful tool for estimation.  It is flawed... but it serves for watching trends.  I am agnostic on the claim that money supply can even be measured  accurately.  But I lean toward it being a pure impossibility.  Its like watching ants at a huge ant mound.  You have no idea how many ants are actually there...  guessing is pointless... but you can stand back and watch them and tell if the swarm is growing or shrinking.

4. What are the various components of TMS2, commodity money, fiat money, or some combination therein?  Given the nature of my explanation of Chapter 3's 4 types of money... its abundantly clear that all categories in TMS2 are fiat money.  Many are credit money as well... but its impossible to parse in our banking system due to the various banking shenanigans... AND...

 if you listen to Ludwig... well...

"As a rule it is not possible to ascertain whether a concrete specimen of money-substitutes is a money-certificate or a fiduciary medium" - Human Action( p. 433)


With apologies to Vox, he has taken a large list of money substitutes and asked me to literally do what Mises says cannot be done.

See what I am dealing with here?


 I will say that this is the reason I do not believe it is possible to get an accurate measure on the money supply... and instead why we must look at only broad picture trends.

But why am I bothering? Why does this all matter?

 I assert that the mechanism by which the money of an economic zone became the dominant commodity is critical to understanding how that money will behave...  and I want to make clear that money is not the product of any economic system.  The Fed may tell the Treasury how much money to print... but I stand here today telling you if that monopoly didn't exist... you would still have money to use in some form.  .22 long rifle ammo is a good option for example.  It could easily meet all of our criteria for money, and behave as money.  For the record... it would be commodity money.

And much sounder than what we have today.

 I know the tactically smart thing to do would be to pepper Vox with questions and put him on the defensive rather than allowing him to sit back and take shots at the monetary theory dump I just dropped.  I'm not going to do that though.  I am fairly fond of what I've just done and I want to see how Vox goes about dismantling it... assuming he decides its necessary to even do so.  Its entirely possible that I have just made his case significantly easier to explain.  Never the less...   I want to make it clear that I am not just regurgitating Mises.  Much of this is monetary theory according to Nate.  Or if you are less charitable... at the minimum... its Nate's take on Mises.   I am asking you to accept it, not on the authority of Mises... but on the merits of the argument itself.  This wasn't written to score points in the debate.  It was written to make some monetary theory more accessible.

Our Finest President

Friends.  The United States known damned few good presidents.  The men that have held the position have uniformly been power hungry scoundrels or outright barbarians.  But... tonight I want to write about the Greatest of the US Presidents.

Grover Cleveland

To back up that claim... I'm going to offer you a quote from the man.

I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that, though the people support the government, the government should not support the people. The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.


Understand... the man that said this was elected twice... and won the popular vote 3 times.  He was the tip of the spear in a political group that actually called themselves Bourbon Democrats.  He is said to have vetoed more bills than any other president.

Now... if a politician said something like that today... how do you suppose the public would react?

Friends... we were born in the wrong century.

ATF... Well Earned

Well shit...  here we are.  Is it Friday?  I don't even know.  I have this clock that doesn't actually have numbers on it... it is divided into seven equal parts...  and each one has a different day of the week on it.  Outside of football season I don't have a damned clue what day it is.

Yep.

I think it could be Friday...

Shit...  ok then.   I'd like to say that means I am drinking and smokin'..  fact is I drink and smoke on Tuesday to...  I really don't give a shit.

Oh look... I just checked..  Clock on the wall says Friday.  Ok then.

A:  Woodford Reserve.  I have no idea why.  Probably because it smells so damned good.  I have no idea what the deal is.  WR smells as good as any bourbon I have ever sniffed.  Taste doesn't quite live up to it..  but.. to carry a theme forward...  I don't give a shit.

T: Y'all ever seen a Sosa 60?  Fat little bastard...  all wood and cream and spice.  Smells like... shit it smells like tobacco.  No.. I don't mean tobacco...  I mean..  it smells like what you, in your head, imagine tobacco to smell like.  You have no idea what to expect when you sniff the thing.. then after you sniff you're like...  duh.  What else could it have smelled like?  Obviously its 4 X 60...  you know.. because its named.. 60.  Its a much better smoke than you would expect.  I highly recommend it.  If you're wondering.. its from Honduras.

G: Have I mentioned guns are never off topic here at the Bloggerblaster?  Hell... this place was founded on gun talk.  My first carry weapon was a Taurus PT-101.  Big full sized 40.  If ya didn't shoot someone with it you could hit 'em with the damned thing and it was so heavy they may have preferred the former.  Love that handgun to this day.  For purely sentimental reasons.. it sits on my desk before me this very night.  And you?

Standard posting rules apply.  I don't wanna hear any money supply bullshit in this particular post dammit.  Figure out where that shit belongs and I'll respond.  Assuming I am moved to give a damn.

***UPDATE** I have an adendum here...  a question of all important protocol.  I submit it to the gallery...  if a man has a glass of bourbon... not empty... and he seeks to refill it prematurely...  can he opt to choose a different form of bourbon?  I mean if I have a sip of Makers in my glass... can I pour Wild Turkey on top of it and mix the two?  Is such behavior Profane?  Merely uncivilized?  Or acceptable?  I will provide my own answer later.

The Great Inflation Debate: The Trap Unsprung... Mostly

Money is the general medium of exchange, the thing that all other goods and services are traded for, the final payment for such goods and services on the market. – Rothbard

It becomes readily apparently that Vox has decided to very politely insult me.  Curious.. Cruelty artists are not often known for their subtlety.  Regardless... insult it is. That is what you call it when a skilled opponent opens up a chess match by going for a 3 move check mate.  The insinuation is you may fall for it. 

Well thanks mate... Why didn't ya just accuse me of licking the window of the short bus all the way to the Midvail Academy of the Mentally Challenged?

You may be wondering what all of this maneuvering is about.  If you’ve read Return of the Great Depression (and you should dammit) you know that Vox’s depressionist case is based on debt disappearing.   All is not totally lost for him if debt doesn’t count as money… but it complicates matters for him considerably.  If he can just show that debt is money and debt is disappearing… then he is in very good shape indeed.  If he can’t show debt is money… he can still make an effective case… it is just harder.

Ever the war gamer… Vox is trying to take the high ground.  He knows it doesn’t win him the battle… but this amounts to Getting There First with the Most.

I hope it does not surprise the reader when I wholly reject Vox’s proposed question… as he has deliberately chosen two descriptions of money, both of which allow him to demonstrate that debt can be money in those terms.   No matter which I choose… Vox can make a very logically sound case that debt meets all the qualifications…. And thus… is money.  Heads Vox wins.  Tails I lose. 

No thanks.

Now I’m going to tell you what Vox left out…  and I suspect he did so deliberately.  I mean… honestly we’re talking about Vox Day here.  The man has been known to walk around with a Mises Institute hat over his Mohawk.  I wouldn't be surprised to learn that Rothbard quotes occasionally appear in his stool.  Do you really believe he doesn’t know what everyone from Bastiat to Hayek said about money?  Vox knows damned well that the definition I used for money was straight from Mises.  I can throw Rothbard and Mises quotes at you all day that back up my insistence that money completes a transaction...  and so can Vox.

Making matters somewhat more frustrating… Vox quotes Salerno.   Let’s see what Mr Salerno said about credit that Vox has conveniently omitted.

Credit cards [should] not [be] counted as part of the [money supply] because use of a credit card in the purchase of a good does not fully discharge the debt created in the transaction. Instead, it gives rise to a second credit transaction that involves present and future monetary payments. Thus the issuer of the credit card or lender is now bound to pay the seller of the good immediately with money on behalf of the card-holder or borrower. The latter, in turn, is obliged to make a monetary repayment of the loan to the issuer at the end of the month or at a later date, at which time the transaction is finally completed.

I'm just gonna let that sink in for a bit here...

Ya got it?  I can wait...    read it again if you have to.

Note that no where in either of Vox’s proposed definitions do we find this critical factor.  Turgot omits it.  Law omits it.  Mises, Rothbard, Salerno.. and pretty much every other Austrian has agreed that the key factor of money is the fact that it completes a transaction.  Completing a transaction is the one thing that money does, that nothing else does.

In the interest of charity and goodwill… I will suggest that Turgot’s characteristics of money are all fine with me… provided that we remember that the value supposedly stored by the money is subjective, and, we add the requirement that I have hither-to beaten into the ground.  It must serve to complete the transaction.  Law on the other hand can pucker up and kiss my whole ass. 

So given my Austrian definition of money… what IS the bloody money supply?  Ludwig Von Mises said it was “Money + Money Substitutes”.    HA HA! Says you.  Vox has you!  Money Substitutes!  That’s credit!

No.

Since we’re talking Austrian Economics we must look at what characteristics Austrians use to determine what is or is not a money substitute.  Here are the characteristics…  Per…  Well… Everyone that matters:

       Immediately Convertible.

       It must have recognizable par value claims with standard money

So… given those once again… I can see the wheels turning from here… you’re thinking Vox has me.  Credit Cards are money substitutes!  Right?  After all one could argue that they are even more readily convertible than money in checking and savings accounts.  They are certainly recognized as par value claims with standard money.

Mr Salerno already explained why we shouldn’t count them… and I would add a couple of points…  One… I don’t think Vox wants to go down this road given that average credit card debt is up 5% from November of 2011 to December of 2012. (credit to josh for pointing out that I left out the word "average" in the first post.  Total credit card debt is down due to default.) That doesn’t much help his case.  On top of that…The point is that credit card money didn’t exist before that purchase, or it only existed in some form that isn’t even remotely related to actual money and had to be converted into money in order to become available for use.  That is to say, some bank had to sell something to get the money.  Hell if we're going down that road we may as well call cars money, because you can sell them, get money, then use the money to buy something. If we do this... we've basically just mentally masturbated ourselves into oblivion. That's never good.  Ask Friedrich Nietzsche.

Now... Compare money available on the credit card to money in a savings account… which at some point… was either actual cash, or was in some checking account somewhere.  The depositor still owns the money and has effectively unlimited access to the money.  Legally there are things banks can do to limit the access but in practical terms it doesn't actually happen.  Still because of those limits at least one Austrian economist, Frank Shostak, argues that even money in savings accounts isn't in the money supply.

Look...  Given that we can debate the merit of money in savings accounts don’t you suppose it’s a bit daft to ask us then if we think a derivative is money?  We can't agree that cash you stick in a savings account is money... but you want to ask us if the money someone may think your house may be worth if you maybe possibly sold it... is?  

So once the credit card is used… the money for the purchase price then goes into a checking account of some seller somewhere… and that money is now in the money supply.  Before that it was not.  I want to make sure we're clear on this.  The principle of loan...  the money the bank uses for the purchase... or the proceeds the bank gives the borrower...  that money counts in the money supply.  The corresponding debt does not.  That debt is nothing more than a banker's bet that he will get paid.  Its accounts receivable .. no different than the accounts receivable of any other business.

Beyond all of this I will attempt to take one tiny baby step forward.  What is in the money supply?  M2 is close but it negates some very important factors.  Instead I personally prefer Micheal Pollaro’s TMS1 and TMS2 metrics.

 

These metrics can be tracked here.   I should note that none of these are perfect... and we can debate at length about what should or should not be included in them.  I prefer TMS2... but if you want to go with M2... that's fine with me.

M3 however... is right out.  After all... M3's additions are entirely credit transactions.  Its like a giant banker circle jerk at The Casino of the Damned.  No way.

I do believe when you view the various charts provided you will agree that deflation would look quite a bit different.  What we see here is a massive increase of supply across the board. 

As such… I suppose I will pose a question to Vox.

True of False:  Lots of things store value.  Lots of things can be used to estimate value. Lots of things can be employed to aid in an exchange.   Money does all of those things.  But money is the only thing that does all of those things, and completes an exchange without creating a need for another transaction.

10-8

Repeat.

Bloggerblaster is 10-8.  Good to be back... and good to see things are pretty much exactly the way I left them.

We Are 10-7

Sitreps when possible.

Bloggerblaster out.

The Great Debate

Well...

Ok then.   So the previous post generated a rather enormous amount of questions and accusations.  Some of them very legitimate... others so amazingly stupid that the author should be banned from the internet forever.  I will do my best to address the ones that I feel were the most important so as to shed as much light on my position as possible.

Raggededge: Owning 3 cars does not allow you to lend out 30 cars. This is what banks do with fractional reserve lending. In the banker world, if you filled one of the cars with tannerite and blew it to kingdom come, the bank would then only be able to lend out 20 cars. If we accept the premise that credit = money, we have just seen the money supply reduced

No.  if we accept that credit is money in your scenario... money is growing slower.  Not decreasing.  Growing slower only equals a cut if you're a democrat... or you went to Harvard Business School and are therefore functionally retarded.

From Josh: Nate, would you define inflation solely as the increase in the supply of money? Or would you define it as an increase in the supply of money and credit?

Only money.  Credit is not money until its spent.  Its a mechanism for introducing money into a system.  Its like saying a door is a crowd... because the crowd walked through the doors.   No.


ODG says: I thought that your view was that debt != money? How then can lending (ie debt) deliver money to the system?

Because it becomes money when it is spent.  Fed creates an FRN from thin air... gives it to bank...  its not money yet... bank gives it to you...  its not money yet...   you by a car with it...   now its money.  Now its in M2.


Athor Pel: In a debt backed fiat money supply, can all debt ever be paid back?

No.


Joshua_D : Aside from the technical aspects of transferring a CD, I don't see why a CD could not be used as money. I have a car, you have a $3,000 CD, you sign the CD over to me, I sign the car over to you. Done deal.

Yes.  You could also give me a my little pony that you said was worth $3,000 and it would be money too.  But if I intend to sell the my little pony to get the money for it... that's an additional transaction.. so its not money.  Just like the CD.  It could be money... or it could be an IOU.

Joshua_D: Also, your gambling analogy falls short. While the little ball is spinning, there is $40,000 of your money on the table and the whatever the house plans to pay if you win. You money and the house's money is in the money supply, you are just wagering over who gets to keep the money.

Mate...   if the casino wins the chips do you get to count them in your money supply?  No.  You didn't understand the analogy.  I suspect most folks missed it.  In the Analogy your wallet is the money supply, and the Casino is an international banking cartel.

again... from Joshua_D : I mean, you claim that debt isn't money, but we all know that our current money system is a debt-based system, and our money has to be borrowed into existence.

This is important folks so pay attention.  What our current money system is based on literally means nothing.  What money is based on... also means nothing.  All that matters is that people  accept that it can be used as an exchange medium.  Anything can be money.   Anything.   until you grok that... you're never going to be able to follow this debate.

Jack Amok says: Money is nothing more than a voucher for future goods and services. 

Wrong.  I love Say.  The man was among the biggest of the big hitters.  But he missed a very important point about what makes money money.   I can write all kinds of vouchers...  monopoly money for example... is a voucher for goods and services.  So why isn't it money?  Well it could be... if someone accepted it as money. But people don't.   Why?  there is no why.  It goes back to subjective value.  Ultimately you're not arguing what is or isn't money... you're arguing what is better to use as money and what isn't good to use as money.   I'm just pointing out... it can all be money.  Unless in a transaction an additional transaction takes place to complete the transaction.   I will now blow your mind.   There is a case where even cash isn't money.  If I want Gold... and you give me in stead... 2oz worth of gold... in CASH...  and then I go buy gold with the cash...   in that transaction... Cash wasn't money.   now do you understand?

THERE IS NO MACRO.   THERE IS ONLY MICRO.

TZ writes:  Note you did not provide an example of something that IS money, and specifically you didn't say that the now virtually entirely virtual currencies - many are based on debt - is money, but by your definitions they cannot be. Even a physical $20 bill is a zero-maturity treasury bill. You cannot exchange it for anything useful.

come on TZ...  I gave all kinds of examples of something that is money.  I flatly said ANYTHING could be money. What something is or isn't based on means NOTHING.  As for virtual currencies...  Of course they can be money.  NFC is great for this.  you put your phone next to mine...  a bunch of bit coins get deposited in my account...  I give you a cow.    POOF.  Bit coins are money.  See how that works?  Bit coins are money.  PHONES are not money.   Phones are like hands moving gold coins around.   Dig?

BobofBobland demonstrates that he doesn't read or type to well: This is some bullshit. If a bank issues unbacked loans, then it increases the total amount spendable money, which is what, in practice prices, respond. The "realness" of the money that is created is irrelevant. You could very easily argue that dollar bills aren't real money either, as they are also unbacked, but then FTS. Do you really think that if a bank were to issue a loan for twice the current money supply, prices would be unaffected?  And is not our concern over the money supply based derived from our concern over prices and weatlh transfer?





Ciphra Summam asks:  I go to the bank and borrow 250K to build a home. The bank makes me the loan, I use that to fund the construction. Is that money?


Yes.  It becomes money the second you spend it.  What is not money.. is the debt you owe to the bank.


OK.

As best I can tell... I am all caught up... and I suspect many of you now realize what I said wasn't quite what you thought I said. Except Bob... who no doubt thinks his comment nailed me to a wall.

The Money Supply

It appears to me that there seems to be a bit of confusion out there about what the money supply is doing.  Is it growing?  is it shrinking?  Inflation?  Deflation?  Stagflation?   Obviously I am a hyper-inflationist...   Our buddy Vox is a deflationist.  So what gives?  Does it matter?

Well... if we're going to talk about this we're going to have to establish some kind of basic vocabulary.  For example... what is money?  I know... you're thinking dollar bills and coins.  Yes and no.  Money is an exchange medium that is used to complete a transaction.  The critical characteristic of money is that it does not require any additional transactions to satisfy the terms of the exchange.  You got your money... and that's good enough.  Lets look at gold for example.  Gold is money.  It always has been money.  You want some of my cattle... you give me a small amount of gold... and we're done.  Modern cash is similar.  You give me cash.. I give you a cow or two... we're done.  Cash is money.

What about debit cards?  I swipe your debit card... I give you cows...  we're not done.  Your bank has to send money to my bank.  That's an additional transaction.  Debit cards aren't money.   Same for checks.  Checks aren't money either.  They are IOUs for money.

Diamonds.. Silver... Paper... Copper... all of these things can be money... if they are employed to complete an exchange.

Are we good here?   Questions?   No?     Ok then.

Now that we know what money is...  what do we mean by money supply?  Ok well now things get tricky.  Obviously money supply means... the amount of money out there.  And we know what money is.  But how do we go about measuring it?   Well... if we're being honest... the professional economists term would be for the process would be a "Wild Ass Guess".  There are all kinds of problems in this sort of business... and most of them stem from the process of figuring out what to consider money and what not to count as money.  Obviously we count all the hard cash...  and hey lets count all the money in savings and checking accounts too.  What about other things though?

CDs for example.   Are CDs money?   Well no..  I mean if I say I want 500 bucks for a cow... and you offer me a CD for 500 bucks... is that CD money?  Well I have to go cash that CD in for the 500 bucks.  So no... its not money.   But Nate!  Its just a certificate of deposit!   No.  Its an investment.  Its gambling.  You're asking me to accept a voucher for a bet as money.   Nope.  Not happening.

So... test time.

You pay 200,000 dollars for a house. 2 years later a real estate agent tells you that your house is worth 250,000 dollars.   Another year later... an appraiser tells you your house is worth 300,000 dollars.

Has the money supply increased by 100,000 dollars in the last 3 years because of your good fortune?

No.  It hasn't.  That's not money. Its what I call potential money.  It doesn't exist.  It could exist under the right circumstances... but as of right now... it doesn't exist.

And... conversely... when that value goes down...  that isn't the money supply shrinking either.  Because you can't lose something that never existed in the first place.  Savvy?

I'm going to offer an analogy.  You're at a roulette table.  You have 1000 dollars in chips on the line.  You win... and you just add your winnings to your bet.  You do this till you are betting 40,000k.

While the little ball is dancing on the wheel... deciding where it will land...    how much money do you have?The answer is none.  You don't have any money at all.  Your money is on the line in a gambling venture.

That's investment.  That's why investments aren't money.  They are just gambling with varying degrees of risks.  And what is debt?  Debt is investment... or gambling....  its one party gambling that another party will pay back more than was originally lent.

Now that we know all this...  can you start to see why Deflation is not in fact happening?  Because Z1 measures debt... and...

Debt is not money.

 No amount of debt disappearing can ever be considered deflation.  If inflation and deflation are respectively the number of horses going up or coming down... then an increase in horses cannot be offset by a decrease in cows.  Cows aren't relevant to the measurement.

What we are seeing is inflation.  The money supply is exploding.  Yes... debt is disappearing...  yes... that is painful to an economy...   its just not deflation.

***UPDATE***   Bloody hell!!!!   Look I didn't expect this and its a rather piss poor time for me... what with the fact that I am leaving on some grand adventure in less than 24 hours and I will be gone for several days.   Pile up your questions in the comments.  I will address as many as possible tonight...   in the ATF post?  oh dear God...

If the allegations against Oscar Pistorius are true, he won't have a leg to stand on in court.


Hey... if they hang Oscar Pistorius for his crimes... will be start calling out letters?


What do you do with an elephant with three balls?   Walk him and pitch to the Rhino.


What do you call a Norwegian car?   ...    A Fjord.
 vb

A Texan was once regailing a yankee from boston with tales from the Alamo.  The Texan eventually asked, "Don't you have any heros where you're from?  The yankee said, "Ever hear of Paul Revere?"  The Texan thought a second and saId, "Ain't he the guy that ran for help?"

Remember... when they tell you Saint Patrick chased all the snakes out of Ireland... they always forget to mention that he was the only one that ever actually saw any snakes.


You know... one good thing about a female president...   we wouldn't have to pay her as much.

VOLBEAT - Wacken 2012 - 16 Dollars

Ok... bear with me... I know I just posted a Volbeat video.  But see... Its a little infuriating when... the most american band in music... is a danish band.

Watch this video.  They bring out a stand up bass and dude just beats the crap out of it.  He rocks some classic old school 50's rock moves... and no one in the crowd has a clue.

Anyway...  I am working a couple serious posts.. but I am just not in the mood to finish them right now.  Instead... we rock.

ATF: XX... and Volbeat - Heaven Nor Hell

I have to confess...  I love Volbeat.  I mean... I think this is the most badass band to break through in literally decades.  Freaking awesome.

Oh wait?

What are we doing again?   Right...  on with it then...

A; title says Dos Equis.  Why argue with the title?  I love Dos Equis.  I even loved it before the commercials.  I'll probly move on to something else later... and if I keep rocking Volbeat... its gonna be Bookers.

T:  Honestly... how many of you have had a cigar so good you seriously considered putting the thing out and just eating it?  I've had my share of smokes like that.  The Ghurka spec ops that have become my go to staple...  did you catch that?  I'll repeat... The GHURKA SPEC OPS that have become my go to staple everyday smoker...  are like that.  I just want to eat the things.

F:  So I got a Leatherman MUT for Valentines Day.  How freaking awesome is that?  Have you seen these things?  Yes... they are expensive as far as multi-tools go.  They are also pretty specialized... with things like bronze scrapers... threads for a cleaning brush... pin punch... even a bolt clearing device.  I've only had it for a bit... so I can't review it.  What i can say... is its a tank.  Its heavy... its well built...  and all of the wearable parts are easily replaceable.

Ok kids...

Standard rules apply.  Whatcha drinking? Whatcha smoking?  Whatcha shooting or lusting after?  And what did you think of Volbeat?

Bad Joke Wednesday

Say...  did you hear about the blind man that picked up a hammer and saw?


Shouldn't there be a shorter word for "monosyllabic"?


Do Roman nurses refer to IVs as "4"s?


Never say anything bad about a man until you've walked a mile in his shoes.  Because then... he's a mile away... and you have his shoes.  What's he gonna do?


Corn oil comes from corn....   baby oil comes from....


Xerox and Wurlitzer are merging...  apparently they're going to produce a reproductive organ...


What's Mary short for?

I dunno she's got small legs I guess...


Why didn't Noah fish very often?

He only had to worms.


What did the tie say to the hat?

You go on a head.  I'll just hang around.


What has four legs and one arm?

A rottweiler.


Why does Piglet smell bad?

Because he always plays with Pooh.

UPDATE:  Thanks to DJ for this one.

So...  The Pope is being a good Catholic... and pulling out.

Heresy, Blasphemy, and Bourbon

TransplantedTexan has asked about Old Rip Van Winkle Bourbons...  well... buckle up kids... because we're about to leave the reservation.

Now... as a Makers guy... many rightly conclude that I am therefore a fan of wheat bourbon.  This isn't actually true.  Or at least... its not true in the sense that it is universally consistent.  Makers is a wheat bourbon and I do like Makers better than many non-wheat bourbons.  But that doesn't mean I favor wheat bourbons over Rye bourbons all the time.  For example... does anyone think that I really prefer Makers Mark to Bookers?  Madness.  So... its more than just the theological differences of wheat vs rye.

I say all of that... to say...

I just don't believe the hype.  I know... I know...  I am supposed to be waving the Pappy Van Winkle Flag around... and gesticulating like a hillbilly preacher that lost his snake.  I just can't.  Look I know what the guys at Wild Turkey have to go through to age a bourbon 15 years and get a good product out of it.  I also know what happens when you don't take that much care.  The result is utter swill.  See Eligah Craig for details.

Some of you probably know about the Sour Mash Manifesto.  I'm not having a pissing contest with the guy here.  I'm just saying... if you agree with him that Elijah Craig is excellent... well then you an I just live on different planets.  We'll keep the good bourbon over here... and y'all can lick the windows of the short bus on the way to Canada... or some other place where they put pesticide in whiskey bottles.

So... because I just don't believe the hype... I've never bothered to buy any Van Winkle anything.  Kentucky is not Scotland folks.  Kentucky is 103 degrees in the summer and - 5 degrees in the winter.  Bourbon ages more in 1 year in Kentucky than it does in 5 years in Scotland or Canada.  A 20 year old bourbon is something a kin to a 100 year old scotch.  But because so much is going on in that aging... it is extremely labor intensive and a minor screw up ends up in a pretty epic clusterfutastrophe.  Though I don't suppose there are many non-epic clusterfutastrophes...  in fact I am fairly certain I coined the term so I could stop using the word epic so much...

...

That said... Wild Turkey has proven that you can... with an insane amount of work and OCD levels of dedication make a 15 or even 20 year bourbon work.  So...  I suppose I will have to give Old Rip a chance.

I am gonna try old rip 15 and Pappy... which is 20... and I'm going to be stacking them up against Bookers, and Kentucky Spirit.

I'll be honest.  I wouldn't bet on Old Rip.

We'll see.  It should make a helluva ATF post anyway.

Happy Fat Tuesday Y'all

UPDATE:

It occurs to me that there is another bit of psychology going on here that has also made me a little prejudiced against Old Rip.  Ever had a cuban cigar?  Everyone says cuban cigars are the best.  Well I've had plenty and honestly... they aren't on average better Dominican or Nicaraguan cigars.  In fact plenty of them really suck.  But see... they're cuban and we can't have them.  So there is a built in mysticism about them created by the unquenched demand.  Same deal with Old Rip.  Supply is extremely low.  You can't go into a liquor store and buy Van Winkle products.  They just aren't there.  Consequently...  people start imagining how good it must be if you can never get your hands on it.  So... I reckon that's the other reason I don't believe the hype.  As for the tasting?  Probably gonna have to wait till April.  That's when the stores around here say they will get their one annual shipment.

The Makers Mark Contraversy

By now you all know that Makers has announced its effectively watering down its bourbon to meet demand. Now granted... its certainly not watering it down much... but never the less... the No Compromise Distillery certainly appears to have compromised.

I though I would share Bill Samuel's explanation.  The following came from an email sent from Rob Samuels. Rob's personal response may be shared here at some later point.... it may not.  no promises.

Anyway.... here's Bill's message:


Thank you for taking the time to share your thoughts regarding our recent announcement. We always appreciate open and honest conversation about Maker’s Mark, and we’ve gotten plenty of feedback, both supportive and otherwise. In order to respond to everybody quickly, please allow me to offer several thoughts that might answer most of the questions we’re hearing.

 And by the way, I asked Rob if I could write this response since many people have wondered if I’m on board with the decision to lower the alcohol-by-volume (ABV) level. I am, and here’s why.

 First, it’s important to understand that our primary focus now and for the past 50 years hasn’t changed. It’s product quality and consistency, batch-to-batch, year-to-year, with the primary measure of that consistency being the unique Maker’s Mark taste profile. That’s all that truly matters in the end.

Since we’re a one-brand company that’s never purchased bourbon from other distillers when supplies are short, forecasting is very difficult. Over the years, our one variable that helps us avoid market shortages has been the age of the whisky in the Maker’s bottle. That range is between five years nine months and seven years. Because Maker’s Mark is aged to taste, Dad never put a specific age statement on the bottle. It wasn’t the age that mattered; it was the taste, the quality and the consistency.

 Some people are asking why we didn’t just raise the price if demand is an issue. We don’t want to price Maker’s Mark out of reach. Dad’s intention when he created this brand was to make good-tasting bourbon accessible and to bring more fans into the fold, not to make it exclusive. And, with regard to the price, the value of Maker’s Mark isn’t set by alcohol volume.  It’s about the quality of the recipe and ingredients that go into it, all the handcrafting that goes into the production and how it tastes.

 Some of you have questioned how we reduce the alcohol content.  The fact is, other than barrel-strength bourbons, all bourbons are cut with water to achieve the desired proof for bottling.  This is a natural step in the bourbon-making process.  Maker’s Mark has always been made this way and will continue to be made this way.

As we looked at potential solutions to address the shortage, we agreed again that the most important thing was whether it tastes the same. The distillery made up different batches that Rob and I tested every evening over the course of a month. Every batch at 42% ABV had the same taste profile that we’ve always had. Then, we validated our own tastings with structured consumer research and the Tasting Panel at the distillery, who all agreed: there’s no difference in the taste.

 For those of you who have questioned if the supply problem is real, I can assure you that it is. While not every part of the country has seen shortages yet, many have, and the demand is continuing to grow at a pace we’ve never before experienced. While we are investing today to expand capacity for the future, by producing 42% ABV Maker’s Mark we’ll be able to better meet our ongoing supply issues without compromising the taste.

 Ultimately, all I can ask is that you reserve judgment until you actually taste the whisky, like I did. If you can make it down to the distillery, we’re doing tastings every day with the 42% ABV whisky to give you a first-hand opportunity to try it for yourself. If you can’t make it to the distillery, please give it a try when it gets to your city. And please write me back at that point. I want to hear what you think.

 In the meantime, I can’t thank you enough for taking the time to write. It shows that you care about Maker’s Mark, and that’s what we’ve been striving for over the past 50 years. I hope you’ll give us the chance to continue earning that devotion and allow us to prove that we didn’t screw up your whisky. All the best.

Sincerely,
  
Bill Samuels
Chairman Emeritus,
Ambassador-at-Large

UPDATE:  Just spoke to WhiskeyGirl who happens to be playing snow bunny out in Wyoming.  She reports there is no Makers Mark to be found out there... the stores can't keep it on the shelves.  The shortage is real folks.

So God Made A Liberal...

You're welcome.

10-7

I'm out for a few days.  Operations to take me to places with little or no net access.  I expect to be 10-8 Sunday night.  Until then... consider this your ATF post.

Out.

Bad Joke Wednesday: For Reelzes.

A dog walks into a bar...  sits down... and notices the bartender is just staring at him.

The dog says, "What's the problem?" The bartender replies, "I didn't expect to see a dog walk in here and order a martini.  That doesn't happen often.

The dog says, "At these prices I'm not surprised."


Did you hear NASA has launched a bunch of holsteins into orbit?   It was the herd shot around the world.


What did one DNA strand say to another DNA strand?  Do these genes make me look fat?


Why is bra singular and panties plural?


Why are architects afraid of floor thirteen, but pulishers aren't scared of Chapter 11?


And this.... is for Spacebunny...

Four brewery presidents walk into a bar.  The president of Corona says, "Bartender... I will have a corona!  The finest beer in the world."  The president from Sam Adams says, "Bartender... bring the best money can buy... Sam Adams."  The president of Budweiser speaks up... "The King of Beers.  Bring me a Bud."  Lastly... Arthur Guinness says, "I'll have a coke."  There is a gasp from around the bar.. and the fella with a corona in his hand says, "Sir... why do you not order Guinness?"

Arthur says, "Well...  y'all aren't drinking beer... I figured I wouldn't either."

And the Strong Shall Inherit the Earth

I can here the howls of heresy now.   Spare me.  Not only is the statement true... its also Biblical.  We're gonna pause here for a minute while the squishy amongst us struggle to unwad their panties enough to pay attention.

Done yet?  Good.  Now shut up and pay attention.  God forbid... you may actually learn something.

When Jesus was struck in the face and turned the other cheek... did He display weakness?  Was Jesus weak or was He strong?  The plain truth of the matter is Jesus was strong.  He couldn't laid waste to those that insulted Him.  But He did not.  He was meek.

But this is the critical part...  He had the power.  He was strong.  One cannot be weak... and display meekness.  Meekness and weakness are actually mutually exclusive because biblically speaking meekness literally means power restrained.  If there is no power... then there is nothing to restrain.  You're just weak.  You're not meek.

The world will not be inherited by weak people.  The world will be inherited by powerful people who have mastered that power an restrain it.  This is precisely the opposite of what the modern church teaches.  It raises up weakness and celebrates it.  It charges men to strive to be weak... then deliberately labels that weakness strength.  

Power.  Restrained.

Let that sink in.

AC / DC Day!

Today... is officially AC/DC day here at the ol' blog.  I will be posting awesome stuff from the band throughout the day.  So check back and enjoy.  I am aiming to post the stuff you may not have heard in a while...rather than the standard classics.  Sit back and enjoy y'all.

ok kids... let's hear your AC/DC stories... favorite songs... favorite albums...  concerts...  everything.

Go.

Time for another clip...  how about... the closest thing to a ballad AC/DC ever did...

Ok... so how about an instrumental?   Yes... AC/DC has done instrumentals.  This is called DT... from Who Made Who... and the Maximum Overdrive Soundtrack.

ok..  time to start thinking about closing up shop...  how about...

ATF: Beowulf Edition

Welcome home boys.  I do hope you enjoy your evening...   Standard rules apply.

A: Wild Turkey Kentucky Spirit.  pity me.

T: Ghurka.  If I am in a rut... its a mighty GOOD rut.  Perhaps its a groove.

F:  Well...  I suppose I've been teasing you folks with this long enough.

On with it then...

I seriously doubt any man ever got up after being hit with a 45/70.  I don't give a damn how big a man is.  That big a bullet... arriving with that much kinetic energy... just ends your day.  Them What Knows have long said that when it came to putting men down... accurately fired big heavy slower bullets did the trick.

So... while others sing the praises of the lightening fast .223 and its varmint sized projectile...  I'll side with the old timers.  Enter...  the Alexander Arms .50 beowulf.  Boar?  Elk?  Moose?  Boys outside of a pissed off Cape Buffalo I just don't know what is out there that is going to stand up to the thing.

But how does it shoot?

Well first off let me say that folks that complain about the recoil must not actually spend any time shooting real rifles.  This thing weighs... farkles and all... about 10 pounds.  Now it takes a lot to make 10 pounds of rifle kick enough to hurt... and this little round just aint enough.  Maybe it kicks a lot compared to the .223... but certainly not a lot compared to a shotty or a .300 win mag.

Accuracy?   half inch at 50 yards.  which... in .50 cal... is one hole.   Granted... its a big hole.

Oh...  and the sound?  Its not really a crack like most rifles.  This is...  sort of a BOOM.  I would think it would be terribly demoralizing to hear that coming from the other side of a confrontation.

Two last things...  Someone asked what its for.  As best I can tell you... its for shooting pigs.  Lots of pigs.  And by pigs.. I mean actual wild boar.  Don't be smart asses people.  Alternatively... if you ever have to bring down a herd of angry Brinks trucks... this is great option.  And the last thing... is the cool factor.  If the object is to get something really fun.. that all your buddies will hate you for owning...  then this also is a very very good option.

A very special package arrived...

Today.


From Alexander Arms.


More on this... tomorrow.

Reflex and Holo Sights 101

Ok...  we have all of these sight options now.  But do we know how to use them?  Judging by what I've been seeing and reading... no.  no we do not.

So lets fix that shall we?

These sights are not scopes folks.  And they aren't even red dot sights.  As odd is it seems... they are actually more akin in use to laser sights than they are to scopes.

If you've ever used one... you know that the retical dances around in the sight with disturbing regularity.  Depending on the position of your head... the retical may be may be anywhere in that box.   So where does the bullet go?

Well the bullet goes where ever the retical is.... regardless of where the retical is in the sight picture.  I know.... you're thinking "bullshit."  Its the truth.  I'll even tell ya how to test it.

Get a boresight laser...  you know the ones.. laser... goes in the chamber of your rifle.  The the rifle in a vise and put that laser on some stationary object... like a door knob or something.  Then sight your reflex sight on to that laser.   Now turn the laser off... and turn the reflex sight on.  with the weapon in the vise on in the same position... you should note that the retical is on the door knob.

Now look through the sight and move your head around.  You'll see the retical moves all over the place inside the sight... but it stays right on the door knob.

So... this is how you use a reflex sight.  Both eyes open... focus on your target.  Bring your weapon up to the shooting position... still focusing on your target with both eyes open.  A retical will appear in your vision.  When its over your target... pull the trigger.

Its that simple.

Public Service Announcement

You may have dropped the mag... but Mr Firearm may still have one in the chamber.

Don't be stupid.


Thank you for your time and attention.

Come and Take Them

While I am Springfield guy... I confess... I want one of these.  Real bad.

ATF: The Triumphant Return

Bloody Blue Hell it has been a long.. long time.  Its not that I gave up the tradition you see... I just stopped writing about it.  Regardless... its that time... and its that place.  So...  crack one open, light one up, and join the fun.

A: Amber Bock for now... later I'm going to get into the Kentucky Spirit.  JAC is handsome man of honor and integrity.  And I'm not just saying that because he bought me the bottle.

T:  Markers Mark infused cigar.  Hey.  Its not gay if its bourbon.  I smoked my first one from this batch (a gift from a future brother-in-law... yep.. WhiskeyGirl is just about off the market.) when we ran down to Destin to meet DJ and her new gentleman caller.  Honestly these are fantastic... but I still felt a little weird smoking a flavored cigar... even if it was Makers.

F:  So you saw the green laser on the MSAR in the Gun Porn post...  you know what normally sits there?  2Gen night vision.  For reelz yo.  I suppose I could put pictures up... but honestly this isn't my first Amber Bock... so ummm... no.  Y'all got any experience with this stuff?  Freakin' amazing.  If there is something more fun than night vision... I don't know what it is.  Maybe night vision with titties...

Well there it is boys...  enjoy.  Since this is the return I'll refresh the rules for ya... Your comments should start with this...

A: what you're drinking, what you wish you were drinking, or why you're not.
T: what you're smoking, chewing, or what you'd like to be
F: what you're carrying, fondling, and or lusting over.

Welcome back y'all.  Give'em hell.

Why You Need 30 Round Magazines

Well...  because you never know when some naked psycho is going to jump off your roof, run into your house, tear the 72-inch tv off the wall, rub your son's clothes on his face while he masturbates... and shit all over the floor.  ...    Seriously.  This isn't some... made up hyperbole for humor bit... this actually happened.

30 rounds sounds just about right.

We could go on and on about all the things wrong here.  Starting with the male yelling to his wife, "Get the gun!"   What?  Why aren't you wearing one already?  And why are you telling her to get the gun?  Why aren't you getting the gun?  and why is the gun somewhere hard to get in the first place?  On top of that... the poor woman actually does get the gun... then she misses three times.   For crying out loud.  how hard can it be to hit a dude laying on the floor jacking off?    And of course...  naked-roof-jumping-house-defecating-masturbation is probably a sign of societal decline.

And why wasn't there a 150 pound Dogo eating this psycho's face?

I'll say one thing... this certainly puts a whole knew spin on "shit happens".

Why Should You Listen to Nate?

Well... this is why.

On December 7th... of 2005...  I wrote this... noting that in 2004 gold had dropped to 387... and I had told everyone to buy... not to sell.  Note the prediction at the bottom.

Now.. for those of you who're paying attention... Gold hit 514.00 today and is still climbing. I sincerely hope you listened back then. If you did you made over 100 bucks per ounce... and well.. that fricken rocks.

You would all do well to also note that Vox's predictions are neither this specific, nor this right.

I am very pleased with this... as everything seems to be going along as I predicted... as the feds raise rates... the price of gold goes up. The Crash Protection Team is busy at work... performing miracles and keeping the zombie walking.. but the Real Estate Market that they are using for crutches is having the rug pulled out from under it.

$500 bucks is a nice turn over... but my advice???

Buy more.

$1200 per ounce is coming.

Now...  Today gold is at 1668.00.  I seem to recall some folks calling me crazy for making that prediction back then.  So remember... when you start wondering if you should be listening to ol' Nate on economics...  Nate's got a pretty good track record.

Dammit.

PSA

Ok... after a few complaints... I have changed the commenting settings to be less restrictive.  If anonymous posts and spam get to be a problem though... we're going back.

10-4?

Bad Joke Wednesday

Unfortunately...  the bad joke... is the economy.

Folks...  economically speaking... the US Federal Government is already bankrupt... but it literally all comes to a head sometime in 2015.  I know some of you have heard me say this before.  When questioned... I've simply said, "that's when the money runs out" or, "its a math thing."   Well... for this first BJW... I thought I would actually explain the math.  That's about as bad as any joke gets ain't it?

So here goes...

See... the US currently spends about 200% of its income.  Meaning for every dollar that comes in... we spend $2.00.  Every day the ratio gets worse... as the spending continues to rise.  We continually borrow more money... so the servicing cost (think minimum payment on a credit card) rises.  Not to mention all of the enormous new spending bills that seem to pop up annually.   But lets not get ahead of ourselves.  Lets start with income.

US income in trillions:

2010: 2.1 trillion
2011: 2.3 trillion
2012: 2.4 trillion

So total direct revenue from taxation and fees and such is going up slightly, but it should be noted its still down considerably compared to the highs of 2006 and 2007.  Not to mention that inflation has eaten away at the value of those dollar far more than meager growth...  but I digress.

Now... lets look at total debt...  only the current number matters... and its close enough to 16.5 trillion that we may as well go ahead and use it as a round number.  Now again... we're already spending a big chunk of our income on just making the minimum payment on this debt. 360 billion it turns out in fiscal 2012.

Here's what we do know...  the historical average debt yield is 5%.  So using that number... at 20 trillion... its going to cost the US Fedgov about 1.02 trillion dollars just to service the debt.  Are you paying attention?  We're talking 40% of all income... being used to make the minimum credit card payment.  That only leaves 60% of the income left to pay for.... everything.  Remember.. we're already spending about 200% of what we bring in.

Now... what is important about 40%?   Well 40% is the debt to income ratio where bankers buttholes start to pucker.  They start refusing to lend money right about there.

We call that a tipping point.  The money it takes to service the debt, takes up so much of the income, that the rate of borrowing must increase so fast, that the lenders are no longer willing to take the risk.

So... if 20 trillion is the tipping point...  and we're at 16.5 now...  at the current rate...  when do we hit 20 trillion in federal debt?

Barring any new enormous entitlement spending... or some epic foreign adventure.. we hit 20.5 trillion sometime in 2015.  Of course its almost certain that we will have both of those... so we'll probably hit it before 2015... but I have wiggle room because debt yield may not be all the way up to 5% by then.  So if it stays a little lower then the total debt can be a little higher... and thus we have a little longer.

So there you have it.

Some time in 2015... we can't afford to keep the lights on.


Sweet dreams.

Road Trip

Hey y'all we are loading up for a road trip.  I will stand by my commitment though.  I will be blogging today... just probably not till after we get back.

In the mean time...

Taurus Poly Protector Wheel guns.  Heresy?  or Awesome?

Discuss.

The Future Past

The plain truth is folks... the stock on a rifle is a damned waste of space.  It adds precious length to the weapon that could otherwise be used on a longer barrel.  And so... it is the sole failing of John Browning Moses that he did not see this... and therefore failed to invent the weapon configuration that is only just now beginning to dominate the military world.... the bullpup.

But lets backup.  The bullpup design goes way back to 1918 to Lt. Col. Armand-Frédéric Faucon.  Honestly... other than the fact that he invented a rifle with the action in the stock...  we know basically nothing about this man. We do know that another froggy type... Henri Delacre patented a bullpup type submachine gun in 1936.  Wikipedia mistakenly calls this a pistol.

 
Not really a pistol.  That's a submachine gun.  Unfortunately we don't know any more about Henri than we do about the Colonel...  which is infuriating.   Thankfully..  we do know something about the next designers.

A Polish firearm designer fled to England during WWII and went to work for the Enfield at the Royal Small Arms Factory.  After the Sturmgewehr 44 had made such an impact on the battlefield... the assault rifle race was on... and that polish designer...  having assumed the name Sefan Janson would be leading the charge for the UK.  The result as was the EM-2... the next bullpup.  It fired a .280 round and was accurate out to about 800 yards.

 
Now.. you've probably never seen this weapon before... because it never got adopted.  See at the time NATO was going through its standardization.  The US had introduced a .308 and was pushing hard for it.  The brits felt the .308 was to powerful for controlled fully automatic operation... and obviously favored their .280 design.  FN-Hestal had also come with a .280... but in a different design.  The .308 won out in the end...though in the long run it turns out the limp wristed brits were right... because the .223 we use now is a step down considerably from even the .280.

And from here you know the rest...  The FAMAs... the Steyr AUG...  all the way to the present object of lust and praise... the Kel-Tec RFB.

But here's what you may not know.  Today... worldwide... more military rifles are being ordered in the bullpup configuration than in the standard configuration.  China... Canada... Australia... the UK... all use bullpups.   A bullpup with 16 inch barrel handles like a sub machine gun...  it literally saves 20% on the length of the weapon... and in close quarters and urban combat... that length means everything.

The moral to the story?   This is the future boys.  If you don't have a bullpup... you're living in the past.

And Then He Returned...

So its been a long long time.  Upon much thought... and no small amount of torment from former readers and friends... I have decided to once again revive the old blog.  I cannot promise you I will be blogging multiple times a day... but I will commit to once a day.  ATF and BJW will of course be returning as well.

As always... the content is almost certainly going to center on  guns, booze, tobacco, economics, and  perhaps the coming zombie apocalypse.  Sports... Boobs and General Mayhem will also appear randomly as well.   So light 'em if ya got 'em kids.  Maybe sip a little Makers and sit back and enjoy the ride.

I can't promise you're going to like everything... but I promise it shouldn't be boring.