Havilah, where there is gold : a post-Sinaitic theology of gold

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The name of the first is Pishon; it is the one which flows around the whole land of Havilah, where there is gold; and the gold of that land is good; bdellium and onyx stone are there. Genesis 2:11-12

Economist Nouriel Roubini says that gold has no intrinsic value.  He like many others, including Warren Buffet, take a utilitarian approach whereby the value of something is only what the market will bear at any given moment.  So in a Black Swan event, such as when all are dying of famine, a bag of gold could potentially buy a loaf of bread to stave off starvation.  In such cases, gold is only worth what people are willing to trade for it–so the thinking goes.

Others argue that silver is a better investment because at least silver has an industrial use.  But the gaping hole in this entire utilitarian argument is it misses an important aspect of gold: its aesthetic value.  Now, aesthetics is about an appreciation of beauty.  The gold-has-no-intrinsic-value cult thus downplays the ornamental and the artistic value of gold in jewelry, in works of art, and in religious artifacts. But since the dawn of history, these qualities have made gold one of the most desired elements in creation.  I would argue further, that God actually created gold to have this aesthetic value.  But let’s not make the opposite mistake as Roubini et al. and downplay the utilitarian value of gold.  Genesis 2.11-12, the first mention of gold in the Bible is making an implicit statement about why God created gold.

My very first undergraduate class in Bible was on the Pentateuch.  Prof. Darrel Hobson at Northwest College taught that the theology of the entire Pentateuch was post-Sinaitic.  If Moses is the essential author of first five books of the Bible–a traditional view–then he wrote everything from the vantage point which occurs after the Exodus and after his experience of God’s presence at Mt. Sinai.  The Creation narrative tells us that God made the heaven and the earth and everything which is in them.  He thus made the gold of Havillah and that gold was good–like everything else he created (see Gen 1).

This says something implicit about the function of gold in Moses’ time.  In those days, gold had its obvious aesthetic value to make beautiful things.  But it was also used as money.  Therefore, Genesis 2.11-12 implies that the utilitarian function of gold as a intermediary of exchange and a store of value, i.e., the monetary use of gold was good and an aspect of the creational purpose that God had for gold.

Anarcho-Socialism vs. Anarcho-Capitalism

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[This is cross-posted at City of God]

In the wake of the emerging church movement, new attempts to grapple with a Christian approach to economics have become more intensely discussed and put into practice. One of the most popular “third-way” economics, at least in theory, seems to be anarcho-socialism. While, as with most things intellectual, there are variations on this position, there seems to be one or two positions that these variations all hold in common: (1) a labour theory of value, and (2) a dislike of economization and the price-system.

Lurking within many of these positions is a deep suspicion of “private property”. Of course, as with general view of anarcho-socialism, so in the case of private property, there are variations on how it is opposed. Nevertheless, if any sense is to be made of the “socialism” part of anarcho-socialism, some degree of opposition to private property must be present.

Part of the suspicion of private property comes from (1) above. That is, a labour theory of value, most fundamentally, believes that the value of any product must be the same as the value of the input of labour that produced it. By implication, this means if a labourer is paid less by an employer for the production of a good than the employer will make by selling it, so that the employer makes a profit off of the labourer, the labourer is actually being defrauded by the amount that the employer makes in profit. For, as was explained, if the object is worth however much the labour was worth, then there is no room left for an employer to make a profit, unless the employer is simply underpaying the labourer, or else is defrauding the customer.

Austrian economists, the consummate free-marketeers, in response, developed what is called the subjective theory of value (otherwise known as marginal utility theory). The subjective theory of value argues that the value of any product is determined by individual according to their preferences, and that market prices therefore are simply what the buyer and seller can agree on as a mutually beneficial compromise between their two value schemes, leading both to agree that economic exchange is more worthwhile than not exchanging. This fundamental view of value has many implications. It implies that wealth is not a zero-sum game. In any voluntary exchange, in fact, both parties believe they are actually increasing their wealth, simultaneously. It is a win-win situation, because both are getting something they prefer in exchange for something they prefer less. This means that real wealth is created every time a voluntary exchange occurs. It also means that the labour theory’s criticisms of profit are misguided.

The fact is, the existence of profit-making by an employer does not imply that the labourer has been stolen from, because it is entirely possible for a labourer to voluntarily prefer a fixed wage lower than the market price of a product rather than the chance of making the higher profit along with the attendant risks of being an entrepreneur. The labourer prefers a guaranteed wage now to a possible profits in the future, whereas the employer prefers potential higher profits in the future to a more secure income in the present. In the end, some people voluntarily prefer to be employees and have a more reliable source of income, and some people prefer to be their own employers and take on higher risk for the chance of a higher income. In situations like this, employers and employees have a mutually beneficial relationship; no one is being stolen from. Rather, the employer’s profit margin is higher than wage rates because the employer is the one risking his or her own capital; the labourer is not.

Some socialists have also issued criticisms of the principle of economy and of the price system. The former principle basically means just this: it is just a fact of existence that resources are scarce, and so rational agents will act to meet their ends with the least amount of waste possible. Waste, the destruction of wealth, is ultimately a harmful thing in a world where we do not have infinite goods to meet our needs. Rational people perceive this, and so act to avoid unnecessary waste. The converse of this point is that they act in the way they believe is the most efficient to achieve their ends. The price system is simply the social outworking of this principle. As was explained above, prices are just agents communicating to other agents what they think the value of a product is. When a price is agreed upon between a buyer and seller, both are convinced that the product has been appropriately valued, and they believe that they will be benefitted more by what they are receiving than what they are giving away. Socialists (again, as far as I know, some, though perhaps all) have criticized these principles as inhuman. Murray Rothbard, in a 1970 article, “The Death Wish of the Anarcho-Communists”, quotes one socialist making this point:

The anti-rational spirit of anarcho-communism was expressed by Norman O. Brown, one of the gurus of the new “counter-culture”:

The great economist von Mises tried to refute socialism by demonstrating that, in abolishing exchange, socialism made economic calculation, and hence economic rationality, impossible … But if von Mises is right, then what he discovered is not a refutation but a psychoanalytical justification of socialism … It is one of the sad ironies of contemporary intellectual life that the reply of socialist economists to von Mises’ arguments was to attempt to show that socialism was not incompatible with “rational economic calculation” — that is to say, that it could retain the inhuman principle of economizing. (Life Against Death, Random House, paperback, 1959, pp. 238-39.)

But, in response, Rothbard argues that it is in fact the denial of this system that is inhuman:

The fact that the abandonment of rationality and economics in behalf of “freedom” and whim will lead to the scrapping of modern production and civilization and return us to barbarism does not faze our anarcho-communists and other exponents of the new “counter-culture.” But what they do not seem to realize is that the result of this return to primitivism would be starvation and death for nearly all of mankind and a grinding subsistence for the ones remaining.

And it seems hard to deny this counter-argument. For, if an agent did not act in a way that attempted to be efficient with the use of scarce resources, they would lose those scarce resources through continual waste. And if a community of agents could not, or would not, signal to each other what they thought would be the most valuable/efficient use of a particular object would be through a price system, they would have no way of collectively acting in a way that would economize their scarce resources. And eventually, the continual waste of scarce resources would indeed lead straight into “starvation and death for nearly all of mankind and a grinding subsistence for the ones remaining.”

Thus, in the end, it seems that a capitalist understanding of wealth and property is necessary to prevent poverty and death; the principle of scarcity and the need to plan accordingly can be ignored only at our own peril.

With these criticisms made of socialist versions of anarchism, though, there is one valid criticism to be made of some forms of anarcho-capitalism. It seems (at least in my limited forays into their literature) many anarcho-capitalists (usually of the atheistic variety), believe strongly that there exists only one moral wrong: aggression. This means that letting another person starve to death, when you could prevent such an end, and there was no reason not to prevent it, would be perfectly morally licit. Obviously, this sits in stark contrast to the Bible’s command to “love your neighbour as yourself”, especially when it is seen in light of Jesus’ interpretation of it in the story of the Good Samaritan. It is quite clear that our Lord interpreted this fundamental axiom of the Law to require compassion and charity. This does not mean that everyone is required to share their goods in an absolutely equal fashion. In a situation where two people are both well off enough not to need charity, but one is richer and the other is poorer, there is no moral obligation for the richer person to share with absolute equality all of his goods with the poorer person. Absolute economic equality is not a requirement of natural justice. But, that said, human beings have a moral obligation to help our truly needy neighbour, insofar as it is possible for us to help them; this is matter of justice, of the Creator’s moral law, not subjective preference. God will not accept the rationalizations of the atheistic anarcho-capitalists on judgment day.

And so, one could perhaps argue that the only morally permissible type of anarchism is one which affirms two counterbalancing propositions: (1) the ultimate choice over what to do with property should lie with its private owner, not with a community acting coercively, but (2) private owners of property are still morally obligated to help their neighbours when it is possible for them to do so. The decision should ultimately be left with the individual (in the sense that the community should not use violence against them or their property), but the individual is obligated by God to show charity.

So, what does one call this kind of anarchism? Is it capitalistic, because it opposes coercion in exchange, supports the principle of private property, and denies an absolute moral imperative to voluntarily create total economic equality? Or is it socialistic, because it opposes an inhuman disregard for the suffering of others in affirming a moral obligation to show love to our neighbour? I tend to think that, because of the possibilities available for the meaning of the term “capitalist”, it is in fact capitalist. That is, because not all capitalisms deny there are moral obligations to help our neighbour, this “socialistic” principle does not rule out the appropriateness of the term. But maybe others will disagree. I think, however, in the end, this is just a semantic disagreement.

Weimar America: II. O Happy Day, a compromise has been reached (rev.)

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Update:  I learn from Rick Moran that the $38.5 billion in cuts weren’t from the quarterly deficit but of the annual budget.  I revised the post to reflect that.

I am as delighted about the compromise arrangement between Obama and Congress as anyone.  You see, my portfolio is 125% hedged against hyperinflation.  Congress has cut 38.5 billion.  That’s seems like a lot of money doesn’t it?  Let’s just all proclaim the victory.  You see, when the US Federal government is spending 1,600 billion per year more than what it brings in, $38.5 billion cuts less than 2.4% of the deficit.

Let’s try to get some perspective on this.  The Federal Reserve Bank is buying most of debt now since Japan is rebuilding in the aftermath of the Tsunami and the earthquake, and the Chinese are rebalancing their portfolios away from US debt while buying into the Canadian resource sector, among other things.  When Ben Bernanke buys the debt, it is called monetization; i.e., the money is created out of nothing and put into circulation via government spending.  This is creating hyperinflation–just look at commodities: gold is at $1475, oil at $113, silver over $40.  Now $38.5 billion savings will mean that the US will only borrow 97.6% of what they were planning to borrow before the compromise.  That’s a big deal.

Imagine your family had too much debt and expenses.  Every year you bring in $100,000, and borrow $50,000 while spending $150,000.  Now, you have a growing debt base, but you are not making a penny of payments on it to reduce its principle, and balance is now at $500,000.  Your payments are 2% interest, and so you are paying $10,000 of that $150,000 just to service the debt.  You’ve got a problem, because in one year that debt could cost you 5%, in which case your debt payments would become $27,500, and so you would have to borrow another $17,500 that next year just to cover the extra interest, so now instead of  borrowing $50,000, you are borrowing $67,500.  This is called a debt death spiral.  So lets say you and your wife compromise, and you decide to reduce your overspending by 2%, i.e., now instead of borrowing $50,000 you only add $49,000 to your $500,000 debt.  So in year two, your interest at 5% is only $27,450, meaning that you will only have to borrow $67,450 in year two.  Wow.  You’ve really made a difference by cutting your deficit by 2%!  Congratulations.

Thanks to the Tea Party we have a cost cutting Congress.  So I am now predicting that hyperinflation will be slowed down by a day or two.

Great job guys!  It makes my job as an investor easy:

Long: Canadian oil & gas sector; long Canadian gold mining companies, physical gold and silver (Sprott Physical Gold and Silver Trusts)

Short: US dollar.

Stuck on stupid I: More education bubble stuff

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I saw a young man, whose mother is from Boston, at the US Consulate General in Toronto; the consulate refused to acknowledge his US citizenship and issue him a passport yesterday.  He blamed the Tea Party movement’s influence on Congress.  He is by all counts a East coast liberal, 18-year old brain full of mush, wanting to emigrate to the US, get involved in the Democrat Party and the support the unions.  But is it his fault?  When the smartest people in the world are also stuck on stupid.

Look at Dr. Benjamin Bernanke, PhD.  He says the current inflation is low but caused really by a spike in commodity prices (from Reuters):

A recent increase in U.S. inflation is driven primarily by rising commodity prices globally, and is unlikely to persist, Federal Reserve Chairman Ben Bernanke said on Monday. …

Along the same lines, Bernanke argued that supply and demand factors are driving energy and commodity costs higher, but that these should eventually stabilize, allowing the United States to avoid any inflation troubles.

“I think the increase in inflation will be transitory,” Bernanke said in response to questions after a speech. “Our expectation at this point is that in the medium term inflation, if anything, will be a bit low. We will monitor inflation and inflation expectations very closely.”

Let me see if I understand Bernanke’s logic.  He believes that he can triple the money base in two years, but that commodity inflation is transitory.  Huh???  Get real.  If you want commodities to decrease you have to shrink the money supply.

Formerly with the Obama administration’s brain trust but now back in academia, Dr. Christine Romer, PhD, fears that there will be no QE III, for QE II worked so handsomely to get things going again.  Be careful with this video interview of Dr. Romer with my favorite Yahoo personality, Aaron Task: it can cause brain freeze, incredulity and a desire to throw things at your computer monitor.  Dr. Romer believes the best way to solve unemployment is through debauching the currency.  Of course, for the last two years, that’s exactly what the Fed has done, and the employment rate is pretty pathetic.  So what do you do when a policy doesn’t work?  Well it is obvious that you didn’t do enough of it.  So QE II is faltering because Bernanke hasn’t yet promised QE III.  Amazing.

My April 7 visit to the US consulate

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Today I visited the US Consulate in Toronto to inform them that I had committed an act which had caused me to relinquish my US citizenship.  They made me fill out seven pages of paperwork (which I had done in advance–DS-4079 and DS 4081), swear with my right hand raised that I had read and understood the consequences of my actions, and then I signed the paperwork in front of a consular officer, who then put the seal of the Consulate General of the United States on each signature page.

How I was treated

The main person that I dealt with Mrs. A. was very polite; she too is Canadian, and so there was zero recrimination for the act I had committed–but she did her job, and made sure that I knew what I was doing.  The consular officer, a certain Ms. J.H.F., also was polite.  At first Mrs. A. suggested that I must come in for a second visit, but when I insisted that I had already committed an expatriating act, she agreed that I was only at the consulate to inform them of that fait accompli and that there would be no need to return.  The expatriating act took place on 28th of February, and she recognized that I was no longer an American citizen according to USC 1481 .

$450 renunciation fee [UPDATE: Please note, I did in fact receive my CLN without paying $450]

I can’t yet say, as I suggested in an earlier post, that the $450 fee would not apply to someone who had committed a prior relinquishing act.  It is clear however that “renunciation” and “relinquishment” are two completely different acts in the understanding of the United States Department of the State and their US Consulates General around the world.  Mrs. A. explained that my paperwork would be sent to Washington for examination.  This could take a great deal of time.  Meanwhile, she provided me with sealed copies of all the paperwork.  She said that when the Certificate of Loss of Nationality (CLN) would be approved, she would contact me and I could pick it up after it arrives but I would have to pay any fee that might apply.  She didn’t think that the $450 fee would apply but she wasn’t sure.  So I am not in the clear.  However, the Toronto US Consulate General says that fee is applicable at the time of taking the oath of renuciation.  Singapore too.  The Hamilton Consulate General says the fee is applicable at the time of picking up the CLN, and renuciationguide.com says that fee technically applies to the processing of the necessary paperwork.  In any case, if I’ve made the relinquishing act, owning a Certificate of Loss of Citizenship may not be necessary, provided the State Department recognizes my loss of citizenship.  I’d be like Scarecrow, brains but no diploma.

My written statement

I provided a written statement which I signed in front of the consular officer and which she stamped and sealed.  The text of that statement is as follows:

I have lived in Canada most of my adult life.  I have married a Canadian.  After so many years in Canada it became clear that I have a great attachment to Canada, to my Canadian friends, to my Canadian wife and her family, and to my church community in Canada.  I felt that it was therefore necessary to become a Canadian citizen so that I may become a full member of this great and wonderful country and its people.  Therefore, I applied for Canadian citizenship in 2010, and I also had, even at that time, the intention of relinquishing my US citizenship.  For in taking my pledge to the Queen of Canada, Elizabeth II, on February 28, 2011, I realized that it would be absurd for me to be of divided loyalty.  My duty to the Queen and to the Dominion of Canada precludes me from maintaining citizenship in the United States of America, since when one country calls me to serve, dual citizenship could potentially create a conflict of interest.  To avoid all such conflicts, I have decided with my full volition and all my heart, to relinquish my United States citizenship once and for all, realizing that it is an irrevocable act.