What’s so wrong with Keynes and Fiat, anyway?
[But you don’t have to pay the tuition to hang out at the University library (in the case of most open-campus universities), and if you know how to network, you can get invited to the college parties by hanging out at the library and educating yourself. Bottom line, there is no need to pay tuition unless you’ve chosen a field where the degree is essential, and the worthwhile parts of college (good libraries and getting laid) are free to anyone who chooses to wander onto campus and check out the library.
-Erik (who spent most of high school at MIT, has no degrees and has never been enrolled in a degree program, and who retired at 33)
You is my HERO! I wish I had the cajones to have done that. Congrats on doing an end run around the system and succeeding!
You have all my respect. In the best of both worlds, Aaron would figuratively smack the prof upside the head as you discussed and then take Erik’s tack and do an end run around the system.
If I may ask, what are you studying and/or what field are you anticipating entering? You have the brains to take the path Erik did but I have to admit, the societal validation conferred by a degree or degrees carries a lot of weight.
I’m taking some mathematics for entry into a Pre-Medical Course of study starting this fall – but I’m taking Political Ideologies for a Humanities credit that will give me a degree from the Air Force, rather than just the certification/equivalence. I need the credit, but it’s entirely erroneous to my focus. It’s been almost a decade since I was last in school, so I’m trying to work out some kinks before I get into the “difficult” stuff. Develop habits and so fourth.
I’m less worried about the degree than I am being in a field that I enjoy. I’ve always been drawn to medicine and the natural sciences.
That said, retirement by 33 sounds freakin’ fantastic. 😀
I’m less worried about the degree than I am being in a field that I enjoy. I’ve always been drawn to medicine and the natural sciences.
If that’s what you want, that’s great. Medicine is a noble field. The problem is that physicians are progressively losing their autonomy to both government regulatory agencies and the insurance companies. Between CMS, HIPAA, EMRs, etc., they are increasingly being brought into line by TPTB. Many physicians are no longer recommending the field to their children for that reason. Obviously, reimbursements are steadily being cut as well. If it’s what you want though, go for it. It wouldn’t hurt to develop a mentor or two as well to help guide you through the process. I don’t want to hijack your thread but it might be interesting to hear the comments from physicians on this board related to these issues, perhaps on another thread.
Medicine is a noble field. The problem is that physicians are progressively losing their autonomy to both government regulatory agencies and the insurance companies. Between CMS, HIPAA, EMRs, etc., they are increasingly being brought into line by TPTB. Many physicians are no longer recommending the field to their children for that reason. Obviously, reimbursements are steadily being cut as well. If it’s what you want though, go for it. It wouldn’t hurt to develop a mentor or two as well to help guide you through the process. I don’t want to hijack your thread but it might be interesting to hear the comments from physicians on this board related to these issues, perhaps on another thread.
You are entirely correct in your assessment regarding the medical profession. The hours in study and training are daunting, but they are almost nothing compared to the challenges that are faced upon entering the practice of medicine as a profession. In addition, with further government involvement, currency debasement, and peak energy, the medical field will be even more challenging. That said, I love what I do, and for those that have such an interest, and are up for the struggle, I think it is still a good career choice. The knowledge and skills physicians possess cannot be replaced, so we will still be needed. The interesting evolution in medicine will be how to reconcile the current practice of medicine, which is based upon the perpetual growth of resources and capital, to the reality of future limitations. I am currently trying to figure out how to balance those realities, and think (hope) that I am making some good choices in that regard, but it undoubtedly will be a rocky road.
Again agreeing with AO, I don’t want to hijack this thread, so I won’t say more. Aaron and I have had some of these discussions offline, but if there is an interest among the general CM readers to hear more, I’d be happy to respond further.
this made me smile …
Confident to the point of narcissistic.
He relies almost entirely on the “argument from point of Authority” and a very “obnoxious” approach to addressing questions or comments.
The approach is really demeaning and I’m about the only person in the class that still volunteers an opinion because of his habit of trying to just pound people into the ground with unanswerable questions.
Quite frankly, I’m convinced that subjectivity is the rule in all things and Objectivity is just our human attempt to make sense of it all.
2+2=5 and all that other double think just wears me down.
… because I can privately speak of the exasperation I have felt when people have placed themselve’s in equally undeserving position’s, that cause no less damage. Fortunate that, in it at least some cases, the party in question are seen for what they truly represent.
Here’s a piece of work by a well respected teacher and mentor of thirty years experience who had his tenior in the main pages of CM.com revoked. I’m quite sure that Eric Townsend will be in full agreement in reading an article by John Taylor Gatto from the September 2003 edition of Harper’s Magazine forum, when I can quote him writing such things as this: –
-Erik (who spent most of high school at MIT, has no degrees and has never been enrolled in a degree program, and who retired at 33)
I feel the desperate need for a total change in the process by which education has played its part in sculpturing generations to date. It is vitally important that ‘critical thinking’ be brought back to the mainstream with all of its dimension’s; but not from an assumption of its valued stature, or by removing its meaning by foolish over use.
How Public Education Cripples Our Kids, And Why
By John Taylor Gatto
John Taylor Gatto is a former New York State and New York City Teacher of the Year and the author, most recently, of The Underground History of American Education. He was a participant in the Harper’s Magazine forum “School on a Hill,” which appeared in the September 2003 issue.
I taught for thirty years in some of the worst schools in Manhattan, and in some of the best, and during that time I became an expert in boredom. Boredom was everywhere in my world, and if you asked the kids, as I often did, why they felt so bored, they always gave the same answers: They said the work was stupid, that it made no sense, that they already knew it. They said they wanted to be doing something real, not just sitting around. They said teachers didn’t seem to know much about their subjects and clearly weren’t interested in learning more. And the kids were right: their teachers were every bit as bored as they were.
Boredom is the common condition of schoolteachers, and anyone who has spent time in a teachers’ lounge can vouch for the low energy, the whining, the dispirited attitudes, to be found there. When asked why they feel bored, the teachers tend to blame the kids, as you might expect. Who wouldn’t get bored teaching students who are rude and interested only in grades? If even that. Of course, teachers are themselves products of the same twelve-year compulsory school programs that so thoroughly bore their students, and as school personnel they are trapped inside structures even more rigid than those imposed upon the children. Who, then, is to blame?
We all are. My grandfather taught me that. One afternoon when I was seven I complained to him of boredom, and he batted me hard on the head. He told me that I was never to use that term in his presence again, that if I was bored it was my fault and no one else’s. The obligation to amuse and instruct myself was entirely my own, and people who didn’t know that were childish people, to be avoided if possible. Certainty not to be trusted. That episode cured me of boredom forever, and here and there over the years I was able to pass on the lesson to some remarkable student. For the most part, however, I found it futile to challenge the official notion that boredom and childishness were the natural state of affairs in the classroom. Often I had to defy custom, and even bend the law, to help kids break out of this trap.
The empire struck back, of course; childish adults regularly conflate opposition with disloyalty. I once returned from a medical leave to discover t~at all evidence of my having been granted the leave had been purposely destroyed, that my job had been terminated, and that I no longer possessed even a teaching license. After nine months of tormented effort I was able to retrieve the license when a school secretary testified to witnessing the plot unfold. In the meantime my family suffered more than I care to remember. By the time I finally retired in 1991, 1 had more than enough reason to think of our schools-with their long-term, cell-block-style, forced confinement of both students and teachers-as virtual factories of childishness. Yet I honestly could not see why they had to be that way. My own experience had revealed to me what many other teachers must learn along the way, too, yet keep to themselves for fear of reprisal: if we wanted to we could easily and inexpensively jettison the old, stupid structures and help kids take an education rather than merely receive a schooling. We could encourage the best qualities of youthfulness-curiosity, adventure, resilience, the capacity for surprising insightsimply by being more flexible about time, texts, and tests, by introducing kids to truly competent adults, and by giving each student what autonomy he or she needs in order to take a risk every now and then.
But we don’t do that. And the more I asked why not, and persisted in thinking about the “problem” of schooling as an engineer might, the more I missed the point: What if there is no “problem” with our schools? What if they are the way they are, so expensively flying in the face of common sense and long experience in how children learn things, not because they are doing something wrong but because they are doing something right? Is it possible that George W. Bush accidentally spoke the truth when he said we would “leave no child behind”? Could it be that our schools are designed to make sure not one of them ever really grows up?
Do we really need school? I don’t mean education, just forced schooling: six classes a day, five days a week, nine months a year, for twelve years. Is this deadly routine really necessary? And if so, for what? Don’t hide behind reading, writing, and arithmetic as a rationale, because 2 million happy homeschoolers have surely put that banal justification to rest. Even if they hadn’t, a considerable number of well-known Americans never went through the twelve-year wringer our kids currently go through, and they turned out all right. George Washington, Benjamin Franklin, Thomas Jefferson, Abraham Lincoln? Someone taught them, to be sure, but they were not products of a school system, and not one of them was ever “graduated” from a secondary school. Throughout most of American history, kids generally didn’t go to high school, yet the unschooled rose to be admirals, like Farragut; inventors, like Edison; captains of industry like Carnegie and Rockefeller; writers, like Melville and Twain and Conrad; and even scholars, like Margaret Mead. In fact, until pretty recently people who reached the age of thirteen weren’t looked upon as children at all. Ariel Durant, who co-wrote an enormous, and very good, multivolume history of the world with her husband, Will, was happily married at fifteen, and who could reasonably claim that Ariel Durant was an uneducated person? Unschooled, perhaps, but not uneducated.
We have been taught (that is, schooled) in this country to think of “success” as synonymous with, or at least dependent upon, “schooling,” but historically that isn’t true in either an intellectual or a financial sense. And plenty of people throughout the world today find a way to educate themselves without resorting to a system of compulsory secondary schools that all too often resemble prisons. Why, then, do Americans confuse education with just such a system? What exactly is the purpose of our public schools?
Mass schooling of a compulsory nature really got its teeth into the United States between 1905 and 1915, though it was conceived of much earlier and pushed for throughout most of the nineteenth century. The reason given for this enormous upheaval of family life and cultural traditions was, roughly speaking, threefold:
1) To make good people. 2) To make good citizens. 3) To make each person his or her personal best. These goals are still trotted out today on a regular basis, and most of us accept them in one form or another as a decent definition of public education’s mission, however short schools actually fall in achieving them. But we are dead wrong. Compounding our error is the fact that the national literature holds numerous and surprisingly consistent statements of compulsory schooling’s true purpose. We have, for example, the great H. L. Mencken, who wrote in The American Mercury for April 1924 that the aim of public education is not
to fill the young of the species with knowledge and awaken their intelligence. … Nothing could be further from the truth. The aim … is simply to reduce as many individuals as possible to the same safe level, to breed and train a standardized citizenry, to put down dissent and originality. That is its aim in the United States… and that is its aim everywhere else.
Because of Mencken’s reputation as a satirist, we might be tempted to dismiss this passage as a bit of hyperbolic sarcasm. His article, however, goes on to trace the template for our own educational system back to the now vanished, though never to be forgotten, military state of Prussia. And although he was certainly aware of the irony that we had recently been at war with Germany, the heir to Prussian thought and culture, Mencken was being perfectly serious here. Our educational system really is Prussian in origin, and that really is cause for concern.
The odd fact of a Prussian provenance for our schools pops up again and again once you know to look for it. William James alluded to it many times at the turn of the century. Orestes Brownson, the hero of Christopher Lasch’s 1991 book, The True and Only Heaven, was publicly denouncing the Prussianization of American schools back in the 1840s. Horace Mann’s “Seventh Annual Report” to the Massachusetts State Board of Education in 1843 is essentially a paean to the land of Frederick the Great and a call for its schooling to be brought here. That Prussian culture loomed large in America is hardly surprising, given our early association with that utopian state. A Prussian served as Washington’s aide during the Revolutionary War, and so many German-speaking people had settled here by 1795 that Congress considered publishing a German-language edition of the federal laws. But what shocks is that we should so eagerly have adopted one of the very worst aspects of Prussian culture: an educational system deliberately designed to produce mediocre intellects, to hamstring the inner life, to deny students appreciable leadership skills, and to ensure docile and incomplete citizens 11 in order to render the populace “manageable.”
It was from James Bryant Conant-president of Harvard for twenty years, WWI poison-gas specialist, WWII executive on the atomic-bomb project, high commissioner of the American zone in Germany after WWII, and truly one of the most influential figures of the twentieth century-that I first got wind of the real purposes of American schooling. Without Conant, we would probably not have the same style and degree of standardized testing that we enjoy today, nor would we be blessed with gargantuan high schools that warehouse 2,000 to 4,000 students at a time, like the famous Columbine High in Littleton, Colorado. Shortly after I retired from teaching I picked up Conant’s 1959 book-length essay, The Child the Parent and the State, and was more than a little intrigued to see him mention in passing that the modem schools we attend were the result of a “revolution” engineered between 1905 and 1930. A revolution? He declines to elaborate, but he does direct the curious and the uninformed to Alexander Inglis’s 1918 book, Principles of Secondary Education, in which “one saw this revolution through the eyes of a revolutionary.”
Inglis, for whom a lecture in education at Harvard is named, makes it perfectly clear that compulsory schooling on this continent was intended to be just what it had been for Prussia in the 1820s: a fifth column into the burgeoning democratic movement that threatened to give the peasants and the proletarians a voice at the bargaining table. Modern, industrialized, compulsory schooling was to make a sort of surgical incision into the prospective unity of these underclasses. Divide children by subject, by age-grading, by constant rankings on tests, and by many other more subtle means, and it was unlikely that the ignorant mass of mankind, separated in childhood, would ever re-integrate into a dangerous whole.
Inglis breaks down the purpose – the actual purpose – of modem schooling into six basic functions, any one of which is enough to curl the hair of those innocent enough to believe the three traditional goals listed earlier:
1) The adjustive or adaptive function. Schools are to establish fixed habits of reaction to authority. This, of course, precludes critical judgment completely. It also pretty much destroys the idea that useful or interesting material should be taught, because you can’t test for reflexive obedience until you know whether you can make kids learn, and do, foolish and boring things.
2) The integrating function. This might well be called “the conformity function,” because its intention is to make children as alike as possible. People who conform are predictable, and this is of great use to those who wish to harness and manipulate a large labor force.
3) The diagnostic and directive function. School is meant to determine each student’s proper social role. This is done by logging evidence mathematically and anecdotally on cumulative records. As in “your permanent record.” Yes, you do have one.
4) The differentiating function. Once their social role has been “diagnosed,” children are to be sorted by role and trained only so far as their destination in the social machine merits – and not one step further. So much for making kids their personal best.
5) The selective function. This refers not to human choice at all but to Darwin’s theory of natural selection as applied to what he called “the favored races.” In short, the idea is to help things along by consciously attempting to improve the breeding stock. Schools are meant to tag the unfit – with poor grades, remedial placement, and other punishments – clearly enough that their peers will accept them as inferior and effectively bar them from the reproductive sweepstakes. That’s what all those little humiliations from first grade onward were intended to do: wash the dirt down the drain.
6) The propaedeutic function. The societal system implied by these rules will require an elite group of caretakers. To that end, a small fraction of the kids will quietly be taught how to manage this continuing project, how to watch over and control a population deliberately dumbed down and declawed in order that government might proceed unchallenged and corporations might never want for obedient labor.
That, unfortunately, is the purpose of mandatory public education in this country. And lest you take Inglis for an isolated crank with a rather too cynical take on the educational enterprise, you should know that he was hardly alone in championing these ideas. Conant himself, building on the ideas of Horace Mann and others, campaigned tirelessly for an American school system designed along the same lines. Men like George Peabody, who funded the cause of mandatory schooling throughout the South, surely understood that the Prussian system was useful in creating not only a harmless electorate and a servile labor force but also a virtual herd of mindless consumers. In time a great number of industrial titans came to recognize the enormous profits to be had by cultivating and tending just such a herd via public education, among them Andrew Carnegie and John D. Rockefeller.
There you have it. Now you know. We don’t need Karl Marx’s conception of a grand warfare between the classes to see that it is in the interest of complex management, economic or political, to dumb people down, to demoralize them, to divide them from one another, and to discard them if they don’t conform. Class may frame the proposition, as when Woodrow Wilson, then president of Princeton University, said the following to the New York City School Teachers Association in 1909: “We want one class of persons to have a liberal education, and we want another class of persons, a very much larger class, of necessity, in every society, to forgo the privileges of a liberal education and fit themselves to perform specific difficult manual tasks.” But the motives behind the disgusting decisions that bring about these ends need not be class-based at all. They can stem purely from fear, or from the by now familiar belief that “efficiency” is the paramount virtue, rather than love, lib, erty, laughter, or hope. Above all, they can stem from simple greed.
There were vast fortunes to be made, after all, in an economy based on mass production and organized to favor the large corporation rather than the small business or the family farm. But mass production required mass consumption, and at the turn of the twentieth century most Americans considered it both unnatural and unwise to buy things they didn’t actually need. Mandatory schooling was a godsend on that count. School didn’t have to train kids in any direct sense to think they should consume nonstop, because it did something even better: it encouraged them not to think at all. And that left them sitting ducks for another great invention of the modem era – marketing.
Now, you needn’t have studied marketing to know that there are two groups of people who can always be convinced to consume more than they need to: addicts and children. School has done a pretty good job of turning our children into addicts, but it has done a spectacular job of turning our children into children. Again, this is no accident. Theorists from Plato to Rousseau to our own Dr. Inglis knew that if children could be cloistered with other children, stripped of responsibility and independence, encouraged to develop only the trivializing emotions of greed, envy, jealousy, and fear, they would grow older but never truly grow up. In the 1934 edition of his once well-known book Public Education in the United States, Ellwood P. Cubberley detailed and praised the way the strategy of successive school enlargements had extended childhood by two to six years, and forced schooling was at that point still quite new. This same Cubberley – who was dean of Stanford’s School of Education, a textbook editor at Houghton Mifflin, and Conant’s friend and correspondent at Harvard – had written the following in the 1922 edition of his book Public School Administration: “Our schools are … factories in which the raw products (children) are to be shaped and fashioned …. And it is the business of the school to build its pupils according to the specifications laid down.”
It’s perfectly obvious from our society today what those specifications were. Maturity has by now been banished from nearly every aspect of our lives. Easy divorce laws have removed the need to work at relationships; easy credit has removed the need for fiscal self-control; easy entertainment has removed the need to learn to entertain oneself; easy answers have removed the need to ask questions. We have become a nation of children, happy to surrender our judgments and our wills to political exhortations and commercial blandishments that would insult actual adults. We buy televisions, and then we buy the things we see on the television. We buy computers, and then we buy the things we see on the computer. We buy $150 sneakers whether we need them or not, and when they fall apart too soon we buy another pair. We drive SUVs and believe the lie that they constitute a kind of life insurance, even when we’re upside-down in them. And, worst of all, we don’t bat an eye when Ari Fleischer tells us to “be careful what you say,” even if we remember having been told somewhere back in school that America is the land of the free. We simply buy that one too. Our schooling, as intended, has seen to it.
Now for the good news. Once you understand the logic behind modern schooling, its tricks and traps are fairly easy to avoid. School trains children to be employees and consumers; teach your own to be leaders and adventurers. School trains children to obey reflexively; teach your own to think critically and independently. Well-schooled kids have a low threshold for boredom; help your own to develop an inner life so that they’ll never be bored. Urge them to take on the serious material, the grown-up material, in history, literature, philosophy, music, art, economics, theology – all the stuff schoolteachers know well enough to avoid. Challenge your kids with plenty of solitude so that they can learn to enjoy their own company, to conduct inner dialogues. Well-schooled people are conditioned to dread being alone, and they seek constant companionship through the TV, the computer, the cell phone, and through shallow friendships quickly acquired and quickly abandoned. Your children should have a more meaningful life, and they can.
First, though, we must wake up to what our schools really are: laboratories of experimentation on young minds, drill centers for the habits and attitudes that corporate society demands. Mandatory education serves children only incidentally; its real purpose is to turn them into servants. Don’t let your own have their childhoods extended, not even for a day. If David Farragut could take command of a captured British warship as a pre-teen, if Thomas Edison could publish a broadsheet at the age of twelve, if Ben Franklin could apprentice himself to a printer at the same age (then put himself through a course of study that would choke a Yale senior today), there’s no telling what your own kids could do. After a long life, and thirty years in the public school trenches, I’ve concluded that genius is as common as dirt. We suppress our genius only because we haven’t yet figured out how to manage a population of educated men and women. The solution, I think, is simple and glorious. Let them manage themselves.
BLUF: As a non-monetary commodity, the gold price fluctuates. Coins that are still used in general circulation have a purchase power “floor” of their face value, with potential upside of their metal value. As of FEB 2010 circulating coins have a metal to face value of:
Copper cents – 212.87%
Zinc cents – 57.66%
Nickels – 103.27%
Clad Coins – 18.52%
As of 1933 the price per ounce of metals in our coins was:
Gold – $20.00
Silver – $0.35
Nickel – $0.021875
Copper – $0.00455
A dollar’s worth of above in coins would have had the scrap value of:
(A $20 gold coin contained just under one ounce (.9675) of gold.
(.715 ounces of silver in a silver dollar x $.35)
(Twenty nickels weigh 3.524 ounces, an alloy of 74% nickel, 25% copper)
(100 pennies weigh about .68 pound, with 95% being copper)
Until the FDR administration, gold and silver coins circulated alongside paper receipts for gold and silver. The wealth represented by paper money belonged to the citizens, with the government acting as trusted caretaker. People voluntarily deposited gold or silver with the government in exchange for easier to handle paper money, which was a receipt for either gold or silver. When you accepted a dollar, you were accepting a guarantee by the government that the document represented your ownership of 1/20 ounce of gold, the gold being held in a secure government facility.
In 1933 FDR in an executive order purporting to make private holding of gold a criminal offense. After collecting gold for paper at the existing exchange rate, he then raised the exchange rate (gold only able to be gotten by foreign nationals and governments) to $35 per ounce, reducing the value of all paper currency and dollar denominated accounts by 69%.
By 1964, inflation had taken the price of an ounce of silver from $0.35 to $1.29, a 266% increase. It meant the scrap value of the silver in a silver dollar was about $0.9288, essentially where gold was when it was taken out of circulation.
By 1981, inflation had driven the price of copper up from a 1933 price of $0.00455 to $0.0526 cents per ounce, a 1,056% increase. It meant the scrap value of the copper in each penny was about $0.0057. From 1982 forward, a penny was made of zinc with a copper coating. As of FEB 2010, the copper cents are worth about over 2 cents each, and even the zinc cents are worth about 1/2 cent as scrap zinc.
Printing of dollars has driven the price of nickel from a 1933 price of $.061828 to $0.5680 cents per ounce. As of FEB 2010 each five cent piece has a scrap value of $0.0516.
While “clad coins” are still at about 1/10% of scrap to face value, how long until cents made of zinc, and five cent coins of nickel will be phased out?
NOTE: It’s not that there is anything “wrong” with metal coins, it’s that metal has some inherent value in the economy, vs the amount of paper or account entry “dollars” that can be created out of nothing.
In 1971, Nixon officially ended any gold backing of the dollar. Since then, even for dealing with other nations, the dollar has only been “backed” by the “full faith and credit” of the government. Meaning physical government assets that could be sold or bartered to repay debt (such as gold), physical assets that the government could confiscate from citizens, the ability to take in the form of taxes some portion of the productive activity of the citizens, or the ability to use military threat/force to cause acceptance of unsecured dollars.
Current dollars in circulation represent the on the books debt.
The creation of dollars via the folks in D.C. is accelerating… With in essence nothing behind the dollar except federal debt, increase in on the books debt means “printing” more dollars, and eventually inflation as the “new” money works its way into the economy…Want a number for federal debt, tax, private debt, etc?
Federal on the books debt, a 22.85% increase in essentially one year. :
JAN 09 $10.5 trillion
FEB 10 $12.4 trillion
Bailout laws have been passed, MOST of which have not yet started to be paid out…
“The total potential federal government support could reach up to $23.7 trillion,” says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a report released today on the government’s efforts to fix the financial system…”
All of the “on the books” debt completely ignores the OFF the books items, such as promised but not yet paid Social Security, military and civilian pensions and retirement benefits, medicare / Medicaid………
Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas, in a presentation on 23 FEB 2009… regarding “off the books” obligations such as Social Security, Medicare & Medicaid that are being ignored by politicians, said..
“… they must begin, now, to dig us out of the very deep hole they themselves have dug in incurring unfunded liabilities of retirement and health care obligations-programs that are already on the books but have not yet been paid… [which] we at the Dallas Fed believe total over $99 trillion. If you do
the numbers, you will find that some 85 percent of those unfunded liabilities is due to Medicare; a budgetary Heimlich maneuver is urgently needed to keep Medicare from choking off our economic prosperity.”
Federal spending can be argued to already exceeds the net productive activity of citizens (domestic product less domestic borrowing).
Even during what was supposedly a good economy, not only was there no attempt to pay down any portion of the on the books debt, it increased.
To use easier numbers, call the “on the books” debt as of AUG 2009 $12 trillion. Call the coming on the books obligations under the already signed bailouts another $24 trillion. (200% inflation). Call the existing off the books debt another $96 trillion (800% more inflation).
Even if the House, which initiates spending plans, were to immediately cut ongoing federal operations to not exceed reasonably expected tax revenue, we are looking at a 10 times increase in outstanding currency.
Fort Knox is reported to hold 147.3 million ounces of gold. “Reported” in that it apparent has not been inventoried in decades, and there have been ongoing programs to “loan” out the physical gold.
If the creditors of the U.S. lose trust and want our $132 trillion
backed by the 147.3 million ounces of gold, the price of gold would be:
$896,130 per ounce.
If the reported gold “only” had to back the current outstanding on the books debt, gold would be $84,181 per ounce.
Even if there was NO new government program in the coming decades, to pay the already promised amounts (WITHOUT indexing any of them for inflation) we’re looking at inflationary price increases of somewhere between 84x and 850x.
In other terms, expect your dollars to be able to purchase anywhere between 1/10% and 1% of what they do now…
I respectfully disagree with the several members who recommended that you cease and desist, as debating your professor would be a lose-lose situation. Yes, by openly questioning his argument (and intelligence) you may be putting yourself at risk for a public verbal beatdown, and potentially biased grading.
BUT maybe, just maybe, there will be a classmate or two that see how you are thinking, questioning, independently studying, and challenging the standard party line (at your own personal risk) and somehow wake up from their slumber. Someone, or something, was the catalyst that helped you overcome your societally induced inertia and start down your path of critical thought. Maybe you can be that someone for one of your classmates. Just my two cents.
On Keynes – where to start!
There is a wealth of information on the Mises Institute site, including The Failure of the “New Economics” (1959) is a book by Henry Hazlitt offering a detailed critique of John Maynard Keynes’ work The General Theory of Employment, Interest and Money (1936).
And of course there is this:
Fiat has become an ambiguous term that is defined in many ways. I think the root definition, is that it is decreed to be. Under this definition, our (U.S.) first national “fiat” money was decreed in 1792 when gold and silver were specified as “weighted” money.
Fiat is also defined as money that has no redeemable value, it is just paper deemed to be money. Under this definition, we’ve never used fiat money. In our debt based system, all money is backed by collateral and a promissory note. For example, if money is created by a mortgage loan, if it is not repaid the house is siezed and if needed, other assets will also be seized. This is redeemable value.
Many use the term “fiat” to distinguish between money backed by gold versus paper money rolled off a printing press. Our “fiat” money doesn’t really come from a printing press, it comes from debt. One major problem with gold backed money is that we don’t have any gold. If we switched over, we would have no money and the economy would cease to exist.
The science of economics has been largely replaced by belief systems. Austrian, Keynesian, Neoclassical, etc., economic theories share two omissions that I think render them less than useful.
1) None discuss or explore the difference between sovereign and privately issued money
All are based on the assumption that private banks should issue all new money as debt. This is a fundamental part of any economy and should be discussed. Sovereign nations have “credit” which empowers them to create money. We decided to give private banks a monopoly to use our credit in the creation of debt money. The fact is that sovereign states may issue their own money, free from debt, which acts as the engine to drive the economy.
We’ve issued our own money in the U.S. before and China is doing it now. BTW, this is a big reason why China is emerging as a financial superpower. Their money system establishes them as a “creditor” while ours is a “debtor” nation.
2) All are terminally flawed, as can be proven with mathematical logic, they cannot be sustained
I think it is safe to say that we, Crash Course graduates, are all aware of the exponential growth of debt. The economic theories were established without any reference to the mathematical science of numbers. If you’re interested in more details, please see my post Austrian & Keynesian Theories Vs. Mathematical Facts
Does your portfolio have any bonds, by chance?
The main thing that wrong with Keynes and fiat currency is that Keynes, himself, repudiated Keynesianism.