A strong society takes care of its weakest members

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Re: A strong society takes care of its weakest members

"Takes care of"?   Well, maybe "takes responsibility for" is a better way to put it.   There is a balance between the interests of the group and the interests of the individual.   I would say it is the balance that is moral.  It is the imbalance that is immoral.  The greater good is what we should be after, and I think kindness and survival are always on the same side of that effort.   "Kindness" which weakens the greater good is limited and, perhaps, not kindness at all.  

Intention is everything.  Is the hand outstretched to be pulled up or to pull you down?   The same could be said of the strong, who have the potential to lift many or crush many, by action and inaction.  The strong have a far greater responsibility than the weak and those who don't embrace it don't seem to remain strong for very long.  It is not always easy to see if one is being asked for a hand up, or to be pulled down.   Though today's news media can make cynics of the most gracious among us, it is usually not the latter.   When the helper fails to help - and we all do - it is incumbent upon him or her not to simply disparage the helpee (person, family, school, neighborhood, environment, city, whatever)!   That's the easy way out. Swallow the exasperation, realize the failure was yours, and give it another shot.   If the hand is there to pull you down, you'll know soon enough.  Like the song says, "He ain't heavy, he's my brother".  True enough.  Just keep in mind that if you carry him too much his muscles will atrophy, and so will his soul.   You'd better do everyone a favor at that point and walk away.

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Re: Game Theory and Poverty

switters wrote:

JAG wrote:

My interpretation of the original post in this thread, was that it is in everyone's best interest to do not only what is best for them, but also what is best for society as a whole. Reason suggests, that to do one without the other is counterproductive and ineffective. This is the essence of the Nash Equilibrium or Game Theory, as described in this clip from the movie  A Beautiful Mind :

So in reality, both the socialistic viewpoint and the "survival of the fittest" viewpoint are ineffective in isolation. You cannot have a strong society composed of only self-interested citizens, and you cannot have a strong citizen in a self-interested society. Each of these viewpoints must take in consideration the other viewpoint to be effective.

Bottomline: Its in everyone one's best interest to fortify their own personal position in this game of survival AND help those in need.

Excellent post, Jeff.  That's exactly the point Ilgari made in his post, and I couldn't agree more.  It's not about politics or dogma, although it often gets portrayed that way.

Did you know that Professor Nash does not even beleive in the viability of Game Theory being applied to the real world anymore? He stated that it does not work because he expected people to behave as rationally as he did, but he is schizophrenic, and his hyperrationality was part of his disorder.

People do not behave rationally. They should because it is the most skillful way to live, but they do not. This is why a "free market" will not work  and why capitalism needs to be buffered with socialism.

Nash's failure to factor in unpredictable human behavior is one factor that helped cause the current bubble and crash, in my opinion.

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Re: A strong society takes care of its weakest members

I cannot understand how anyone could watch Chris's videos and not see that capitalism creates the poor.

The entire monetary system is founded on debt. A debt is only as valuable to society as its return on investment. We are always assuming there will be an equal or greater return on the investment of a debt. But that is silly! No prediction of the return of a loan is 100% correct. All that has to happen is for a holder of a debt to die before he can pay it back and the seed of the fall of the system is planted. Government programs are the insurance of that risk.

And be sure of this. The governmnet is in debt because the populace went into debt. Economically it is silly to separate the two. The luxurious life we live is based on past debt that we are now being forced to realize.

http://www.peakprosperity.com/crashcourse/chapter-12-debt

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Re: Game Theory and Poverty

overtheillusion wrote:

He stated that it does not work because he expected people to behave as rationally as he did, but he is schizophrenic, and his hyperrationality was part of his disorder.

People do not behave rationally. 

Neither do animals, but they exhibit an observable adherence to game theory, as does everything else in nature.

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Re: A strong society takes care of its weakest members

overtheillusion wrote:

I cannot understand how anyone could watch Chris's videos and not see that capitalism creates the poor.

I need this explained to me.  Maybe I missed something in my economics classes.

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Re: A strong society takes care of its weakest members

I cannot understand why you equate a debt-based monetary system with capitalism.  It's actually incongruous with capitalism as the entire point of capital is to provide a way to save current production for future use.  A devaluating currency, which one based on debt must be by definition, is diametrically opposed to the purposes and goals of capitalism.  Capitalism is just a system whereby individuals are free to save their excess production for future use.  What's so wrong with that?  I think you are confusing our debt-based monetary system, which is only a ploy to allow bankers and government to win power and/or money, with actual capitalism, which would turn white and run through the nearest wall at the mere sight of debt-based fiat money.

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Re: A strong society takes care of its weakest members

Farmer Brown wrote:

I cannot understand why you equate a debt-based monetary system with capitalism.  It's actually incongruous with capitalism as the entire point of capital is to provide a way to save current production for future use.  A devaluating currency, which one based on debt must be by definition, is diametrically opposed to the purposes and goals of capitalism.  Capitalism is just a system whereby individuals are free to save their excess production for future use.  What's so wrong with that?  I think you are confusing our debt-based monetary system, which is only a ploy to allow bankers and government to win power and/or money, with actual capitalism, which would turn white and run through the nearest wall at the mere sight of debt-based fiat money.

Agreed.  We should call it "debtism"...or something.  Not capitalism.  I think it takes away all respect for true capital and brings on the illusion of something for nothing.

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Debt-Based Currency and Devaluation

Farmer Brown wrote:

A devaluating currency, which one based on debt must be by definition....

I understand your point FB, but it made me ponder something. If debt is ultimately deflationary, and if deflation strengthens a currency, then can we assume that a debt-based currency will not, by definition, end in permanent devaluation? Perhaps when a debt-based currency comes full circle in the inflation/deflation cycle, its valuation returns to baseline.

Is there any history of a debt-based (credit market derived) fiat currency that ended in the currency being fatally devalued? Perhaps you know, I have no idea.

Again, not trying to nick-pick your statement, just wanted to throw that out there....

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Re: Debt-Based Currency and Devaluation

I guess I should have just left it at "all fiat currencies" devalue in order to avoid this confusion.

A debt-based fiat currency devalues because debt-creation must continue ad infinitum in order to create enough money to pay principle and interest.  This is especially so if the debt is used to purchase non-productive things (that don't add any further capacity to produce goods and services) such as war, oversized houses, fancy cars, and consumer items.  

The dollar, as you know, has lost 95% of it's value in less than 100 years, even though our debt has increased many thousands-fold.  So yes, debt is deflationary, but in our system, it is constantly counter-acted by further money printing (and debt creation), and often exacerbated by spending on war, social programs, and non-productive assets.  

It is only now, the second time in 100 years, that market-created debt has apparently exceeded even the Fed/Treasury's ability to create and inject more liquidity into the system, and we find ourselves in deflation, but that is the exception rather than the rule.

As for examples, all fiat currencies that have ever been tried have failed.  The current incarnations are all very close or below the average fiat life expectancy of about 35 years.  

All fiat currencies are debt based in the sense that the paper represents a future claim, not capital (like gold or silver), so I do not really know what you mean by the qualification in your question.  A dollar is worth nothing intrinsically.  It's value is derived solely from the law that forces others to accept it as payment.  Without the possibility of that future claim, it is worth nothing.  The law and any fiat currency go hand in hand.  Every note is essentially a contract between the holder and those he might wish to pay, so all notes are someone else's debt.  Capital money on the other hand, represents past labor and capital, that was already put to use to produce and create it.  I know of no capital money that's ever failed, and no fiat-money that's ever succeeded.  

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Re: A strong society takes care of its weakest members

Perhaps the following quote from Debt, Inflation, & Deflation by Steve Puetz will clarify my point:

Throughout the world’s financial history, there has never been a case of hyperinflation in a country using a monetary-system based on credit.  Hyperinflations only occur in countries that use currency for money.  That’s an important distinction that cannot be overlooked.

I assume hyperinflation is the fate of the majority of fiat currencies. Perhaps this is not the fate of the US monetary system as it based on debt/credit.

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Re: A strong society takes care of its weakest members

Also, by valuation, I'm referring to assigned or relative value, not inherit value. Even gold has a value assigned to it by society. Because it does not rust or otherwise decay, gold was a logical choice to serve as a long-term vehicle (or store of) for assigned value. But without a societal context, gold has no more inherit value than paper.

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Re: A strong society takes care of its weakest members

Farmer Brown wrote:
I cannot understand why you equate a debt-based monetary system with capitalism.

Could you kindly provide one present-day capitalist country, as you define it?  If you can't provide one, could you explain why not?  There must be something wrong with it if it doesn't exist. 

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Re: A strong society takes care of its weakest members

r wrote:

Farmer Brown wrote:
I cannot understand why you equate a debt-based monetary system with capitalism.

Could you kindly provide one present-day capitalist country, as you define it?  If you can't provide one, could you explain why not?  There must be something wrong with it if it doesn't exist. 

All present-day countries use fiat money, so no, there are no examples of pure capitalism present day.  That you equate that with there being something wrong with it is your belief, which I cannot do anything about.  The reason there aren't any is because the Statists have largely succeeded in making enough people believe that the State can provide for man's needs, including what he uses to store wealth, and in so doing have provided a vehicle for wealth storage that is actually a vehicle for wealth confiscation for use by the State as it sees fit.

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Re: Game Theory and Poverty

JAG wrote:

overtheillusion wrote:

He stated that it does not work because he expected people to behave as rationally as he did, but he is schizophrenic, and his hyperrationality was part of his disorder.

People do not behave rationally. 

Neither do animals, but they exhibit an observable adherence to game theory, as does everything else in nature.

Animals do not carry the same cognitive load that we do. Their behavior is more predictable because they are not as intelligent nor emotional.They behave a bit more rationally.

But I am just passing along what Nash said.

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Re: A strong society takes care of its weakest members

ao wrote:

overtheillusion wrote:

I cannot understand how anyone could watch Chris's videos and not see that capitalism creates the poor.

I need this explained to me.  Maybe I missed something in my economics classes.

Yes, they did not teach this to me when I was getting my economic degree. That is why we are in the cluster junk we are in now.

If you have a limited resourse, like gold, if it is not divided equally, some will have more, some will have less. Some will be richer, some will be poorer. It does not matter how hard one person works, he will always have to take gold from another making them poorer. The best we cold hope for is a constant battle that puts everyone at equilibrim. I thing that is the impossible state that the Libertarians dream about.

When they took the dollar off the gold standard they tried to do away the the idea of money being a limited resource.

No matter how much money they print, it will always be a limited resource and so their will alway be the have nots.

I am not saying it is bad that there are poor people or that capitalism is bad. It is just a reality of limited resources. When oil is limited we go to war, when money is limited, we have class wars.

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Re: A strong society takes care of its weakest members

Farmer Brown wrote:

I cannot understand why you equate a debt-based monetary system with capitalism.  It's actually incongruous with capitalism as the entire point of capital is to provide a way to save current production for future use.  A devaluating currency, which one based on debt must be by definition, is diametrically opposed to the purposes and goals of capitalism.  Capitalism is just a system whereby individuals are free to save their excess production for future use.  What's so wrong with that?  I think you are confusing our debt-based monetary system, which is only a ploy to allow bankers and government to win power and/or money, with actual capitalism, which would turn white and run through the nearest wall at the mere sight of debt-based fiat money.

By delaying payment untill a future time we are creating debt.

By hoarding production until a future time you are delaying payment to yourself. AND you are making a guess on the return of your investment of time. By creating capital you hope will give you a greater return in the future you are acting as your own loan agent.

You can go into debt with product as well as with money.

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Re: Debt-Based Currency and Devaluation

Farmer Brown wrote:

I guess I should have just left it at "all fiat currencies" devalue in order to avoid this confusion.

A debt-based fiat currency devalues because debt-creation must continue ad infinitum in order to create enough money to pay principle and interest.

ALL currency is debt based! If I make the investment of digging up gold I have created a debt until I sell that gold. Time=money. If I do not pay myself while I am digging up the gold I am making a loan to myself. But then, even still, I might not gt the current value out if the gold when it comes to market because my neighbor cold have found a ton of gold that devauled the price of gold.

So you see this problem arises gold as well. Because Gold, if we try to "print" more of it by FINDING more of it, gets devalued as well.

So ALL money is fiat money, gold or the dollar. Gold is just harder to print. But we can go into debt with gold as well.

Debt is not limited to fiat currencies. But now that I say that it sounds silly, because what is a fiat currency? A money declared by the government to be legal tender, so gold can be the fiat currency as well as seashells.

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Re: A strong society takes care of its weakest members

Farmer Brown wrote:

r wrote:

Farmer Brown wrote:
I cannot understand why you equate a debt-based monetary system with capitalism.

Could you kindly provide one present-day capitalist country, as you define it?  If you can't provide one, could you explain why not?  There must be something wrong with it if it doesn't exist. 

All present-day countries use fiat money, so no, there are no examples of pure capitalism present day.  That you equate that with there being something wrong with it is your belief, which I cannot do anything about.  The reason there aren't any is because the Statists have largely succeeded in making enough people believe that the State can provide for man's needs, including what he uses to store wealth, and in so doing have provided a vehicle for wealth storage that is actually a vehicle for wealth confiscation for use by the State as it sees fit.

His questioning is one often used by capitalists to denegrate an Anarchist system. They ask to name an Anarchist system that works and the answers come out the same as yours. "There are not any because someone always ruins it."

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Re: Debt-Based Currency and Devaluation

overtheillusion wrote:

Farmer Brown wrote:

I guess I should have just left it at "all fiat currencies" devalue in order to avoid this confusion.

A debt-based fiat currency devalues because debt-creation must continue ad infinitum in order to create enough money to pay principle and interest.

ALL currency is debt based! If I make the investment of digging up gold I have created a debt until I sell that gold. Time=money. If I do not pay myself while I am digging up the gold I am making a loan to myself. But then, even still, I might not gt the current value out if the gold when it comes to market because my neighbor cold have found a ton of gold that devauled the price of gold.

So you see this problem arises gold as well. Because Gold, if we try to "print" more of it by FINDING more of it, gets devalued as well.

So ALL money is fiat money, gold or the dollar. Gold is just harder to print. But we can go into debt with gold as well.

Debt is not limited to fiat currencies. But now that I say that it sounds silly, because what is a fiat currency? A money declared by the government to be legal tender, so gold can be the fiat currency as well as seashells.

Ahhh, but your neighbor cannot print fiat money, only the government can.  Fiat moneys are used to employ state control over the population and to confiscate wealth at will for purposes that they see fit. 

Government is the key word here and is what would keep me from classifying gold or seashells as fiat.  If people agree on a means of exchange, that, to me, is different than a state imposed means of exchange.

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Re: Debt-Based Currency and Devaluation

MarkM wrote:

overtheillusion wrote:

Farmer Brown wrote:

I guess I should have just left it at "all fiat currencies" devalue in order to avoid this confusion.

A debt-based fiat currency devalues because debt-creation must continue ad infinitum in order to create enough money to pay principle and interest.

ALL currency is debt based! If I make the investment of digging up gold I have created a debt until I sell that gold. Time=money. If I do not pay myself while I am digging up the gold I am making a loan to myself. But then, even still, I might not gt the current value out if the gold when it comes to market because my neighbor cold have found a ton of gold that devauled the price of gold.

So you see this problem arises gold as well. Because Gold, if we try to "print" more of it by FINDING more of it, gets devalued as well.

So ALL money is fiat money, gold or the dollar. Gold is just harder to print. But we can go into debt with gold as well.

Debt is not limited to fiat currencies. But now that I say that it sounds silly, because what is a fiat currency? A money declared by the government to be legal tender, so gold can be the fiat currency as well as seashells.

Ahhh, but your neighbor cannot print fiat money, only the government can.  Fiat moneys are used to employ state control over the population and to confiscate wealth at will for purposes that they see fit. 

Government is the key word here and is what would keep me from classifying gold or seashells as fiat.  If people agree on a means of exchange, that, to me, is different than a state imposed means of exchange.

Yes, thanks for revealing that to me, adds some more for me to think about. Like if my neighbor was Bernanke...? Laughing

Maybe this just leads to a more normalized economy, more predictable, not that I feel it is any better, just delaying the pain.

And a funny side note here, in 1764 the Brits made fiat paper money illegal in the colonies. So american revolution was fought for the independance to create fiat money!  And the printing of money for the american revolutionary war made the continental worthless.

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Re: Debt-Based Currency and Devaluation

overtheillusion wrote:

Farmer Brown wrote:

I guess I should have just left it at "all fiat currencies" devalue in order to avoid this confusion.

A debt-based fiat currency devalues because debt-creation must continue ad infinitum in order to create enough money to pay principle and interest.

ALL currency is debt based! If I make the investment of digging up gold I have created a debt until I sell that gold. Time=money. If I do not pay myself while I am digging up the gold I am making a loan to myself. But then, even still, I might not gt the current value out if the gold when it comes to market because my neighbor cold have found a ton of gold that devauled the price of gold.

So you see this problem arises gold as well. Because Gold, if we try to "print" more of it by FINDING more of it, gets devalued as well.

So ALL money is fiat money, gold or the dollar. Gold is just harder to print. But we can go into debt with gold as well.

Debt is not limited to fiat currencies. But now that I say that it sounds silly, because what is a fiat currency? A money declared by the government to be legal tender, so gold can be the fiat currency as well as seashells.

In order to dig up gold, capital has to be spent.  Therefore, more gold cannot be produced without at the same time introducing new money (gold if we're on a gold standard) into the economy.  Therefore, it would be unprofitable to produce more gold unless the cost of production fell below the market value, something which could only occur temporarily until enough new gold was produced to bring the costs of production back up (through inflation) to the market value, at which point it would become pointless to mine any more.

You cannot owe yourself anything.  If you expend labor and resources to produce anything for yourself, and you keep it, you have paid yourself with savings.   Under a paper money regime however, the government will confiscate those savings from you by repeatedly and constantly devaluing the currency.

The term "fiat" can be used to describe any currency declared legal tender by government, but generally it is used to describe currencies whose sole value comes from government decree, having no other intrinsic value. 

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Re: A strong society takes care of its weakest members

overtheillusion wrote:

Farmer Brown wrote:

I cannot understand why you equate a debt-based monetary system with capitalism.  It's actually incongruous with capitalism as the entire point of capital is to provide a way to save current production for future use.  A devaluating currency, which one based on debt must be by definition, is diametrically opposed to the purposes and goals of capitalism.  Capitalism is just a system whereby individuals are free to save their excess production for future use.  What's so wrong with that?  I think you are confusing our debt-based monetary system, which is only a ploy to allow bankers and government to win power and/or money, with actual capitalism, which would turn white and run through the nearest wall at the mere sight of debt-based fiat money.

By delaying payment untill a future time we are creating debt.

By hoarding production until a future time you are delaying payment to yourself. AND you are making a guess on the return of your investment of time. By creating capital you hope will give you a greater return in the future you are acting as your own loan agent.

You can go into debt with product as well as with money.

If the savings are yours, how can they be debt!?  That's impossible and backwards!  Also, savings are where capital for further investment, yours or others, comes from.  In a paper money regime however, the government has sole license to bypass this requirement of utilizing society's savings for investment and instead steals from the whole of society by diluting the thing it requires society to use for money. 

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Re: Debt-Based Currency and Devaluation

overtheillusion wrote:

And a funny side note here, in 1764 the Brits made fiat paper money illegal in the colonies. So american revolution was fought for the independance to create fiat money!  And the printing of money for the american revolutionary war made the continental worthless.

I think there may be a lesson there.  My knowledge on this stuff is very limited (but my eyes are opening).  However, it seems that governments continue to resort to fiat money as that is the only way they can "afford" their desires.

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Re: A strong society takes care of its weakest members

JAG,

Thanks for that link - a most excellent read ( http://www.financialsense.com/fsu/editorials/puetz/2009/0909.html ). 

As for the money discussion, perhaps a more correct statement would be to say that fiat currency money is ultimately inflationary and fiat debt-money ultimately indebts the society to unsustainable levels.  In the second case, although the currency may appreciate, liquidity drops like a stone.  Yeah sure, the money may buy you more, and if you're one of the lucky few with no debt, you'll likely live like a king.  However for most of the society, the appreciated currency just makes it harder to pay off debt, which is where the majority of their income must go to pay before goods and services.

Again, thanks for that article!  I highly recommend it to all.

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Re: A strong society takes care of its weakest members

Farmer Brown wrote:

overtheillusion wrote:

Farmer Brown wrote:

I cannot understand why you equate a debt-based monetary system with capitalism.  It's actually incongruous with capitalism as the entire point of capital is to provide a way to save current production for future use.  A devaluating currency, which one based on debt must be by definition, is diametrically opposed to the purposes and goals of capitalism.  Capitalism is just a system whereby individuals are free to save their excess production for future use.  What's so wrong with that?  I think you are confusing our debt-based monetary system, which is only a ploy to allow bankers and government to win power and/or money, with actual capitalism, which would turn white and run through the nearest wall at the mere sight of debt-based fiat money.

By delaying payment untill a future time we are creating debt.

By hoarding production until a future time you are delaying payment to yourself. AND you are making a guess on the return of your investment of time. By creating capital you hope will give you a greater return in the future you are acting as your own loan agent.

You can go into debt with product as well as with money.

If the savings are yours, how can they be debt!?  That's impossible and backwards! 

I am not talking about savings. Investment is not savings.

Let me try it again with a Lumber Jack scenario.

I have a saw. (Capital) [When I am not using capital it is savings]

I invest my labor using my saw. (Capital Investment = labor and capital) [The use of the saw degrades the edge=depreciation=loss of capital]

I now have a pile of wood. (Value Added to the wood is my investment (Time + Capital Depreciation))

At this point for me to make a profit on the wood it has to be worth more on the market than my time + capital depreciation. [Now you have to ask yourself, how can the wood be worth more than the time and capital depreciation? Where does this extra value come from? Look up Perceived Value]

Right there you see I am in the negative because I have yet to sell the wood. The wood is now new capital (savings) but the capital has depreciated and I still have not been reimbursed for my time. Until I save or use the wood I have not realized any savings. I could guess the mark to market price but that does not put bread on the table.

If I burn the wood (consumption) for myself I would have to know how much wood cost to buy on the market to know if I saved money.

So, it is always a gamble. There is no garunteed return on my investment. I have to hope labor costs are high, the saw price is high, or wood is scarce. Or people are lazy. :^)

The governmnet rigs the game, as a lot of capitalists do by hoarding, buying up capital, etc. The game is the same no matter if the government of the private citizen plays.

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