They Saw It Coming

February 15th, 2009

Iain Levison, a working man who is also an excellent writer, has a thoughtful column in The Washington Post today.  He writes about real people who have (or have lost) real jobs.  His conclusion:

The people I work with have an arcane belief that money comes from somewhere, that value is added when things are made, and that the only real way to acquire money is to work.

To them, the term “economy” means only one thing: jobs. Most people here believe that the new stimulus package will create them, but the question is, what kind? Will these be more of the jobs that Robert is being forced to apply for, the minimum-wage, part-time, day-labor kind of jobs? Or will they be actual jobs, work that stays around for decades and provides a chance for a steady, decent life? … 

They have a right to be cynical. It turns out, the people who understand money the best are the ones who don’t have it. 

(This article was also posted at Centerfield.)


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7 Responses to “They Saw It Coming”



  1. Brian |

    Tom, I must stridently disagree. Precious few understand money at all. Ask 1000 Americans the difference between fiat money and lawful money as demanded by the constitution. I bet you couldn’t find 5 that would do anything besides give you a dumb look. Our so-called money is worthless, as evidenced by the ignoramuses in DC slathering over injecting nearly $1 trillion cash into the economy over the next couple of years. Take a drive to Budapest and ask some of the old-timers about what happened to the Pengoe after WWII.

    In 1792, congress, as directed by Article I Sec 8, defined the dollar as “471.25 grains of fine (pure) silver.” The $10 gold coin contained, if memory serves, 275.5 grains of gold, by LEGAL definition. Contrast that with today where the dollar is defined by what it looks like, not what it is.

    The longest-lasting fiat currency economy in the history of the world was the one established by Kubla Khan in China nearly a thousand years ago. It lasted right at 200 years.


  2. Tom |

    I understand what you’re saying. But I think the people the author discussed would say the same thing regardless of the kind of money we’re talking about. To them (to all of us, really) the economy looks different than it does to politicians, Wall Streeters, and economists. A good, steady job with a reasonable income to support a family is what’s important.


  3. Brian |

    Just finished working 7 out of 9 days and didn’t finish my thought before I fell asleep sitting here.

    Most fiat currency economies don’t last more than about 30 years. We’re sitting at about 75 years. This discussion wouldn’t even be happening if we were still on gold and silver.

    I’ll give a good example of what it is I mean. In 1920, you could walk into any hardware store, plunk down a $20 gold double eagle and buy a Colt 1911 model .45 ACP with several boxes of ammo. Today, 18 Feb 09, with that same coin, you could walk into ANY gun show in the country and buy the latest rev of that pistol (the model 1991) with the exact same $20 gold double eagle. Or, if you chose to use federal reserve notes (or a credit card or check), it will cost you about $900. The value of gold has not changed, the value of raw materials hasn’t changed, the value of labor to turn those raw materials into an end product hasn’t changed. The only thing that has changed is the value of the green back. By my calculation on this example, we’ve had about a 4000% devaluation of our fiat currency since that time.

    As a final thought, it is the job of NOBODY to provide gainful employment to anyone. Jobs are not a social service. They exist because the boss or share holders see a way to make more money by hiring more people. If they make less money by hiring more people, or if the make less money by keeping employment status quo ante, then they let people go.

    The Big Three would probably turn around nearly overnight if the idiotic CAFE standards were repealed. CAFE forces them to produce cars that nobody wants to buy at a price that would actually be profitable for the auto manufacturers. Consequently, they have to ask more for the cars that people want (trucks, SUVs, etc) to make up for the LOSS they incur on every matchbox car they are forced to sell.


  4. Tom |

    Hmmm…the value of gold coins today is based on the gold content, not the face value. The coin you might use to buy your M1911 is worth probably $800-$900. In other words, about the same as you would pay in fiat currency, n’est-ce pas?


  5. Brian |

    IF we were still on a metal standard, that double eagle would be worth it’s face value of $20, which is precisely my point. If we were still on a precious metal standard, you could walk into any bank with a $20 green back and demand the gold. You used to be able to do that in this country prior to the tyrant FDR.


  6. Frederick |

    Wow, Interesting article.

    The line about you can make a million, but if you make hundreds of millions you screwed some one over seems oddly true. THe MBA’s of wall street did not create real value (at least since 1987), but made money by paper games. The industries that grew up during this period and made wealth for America, at least those I am aware of and have seen first hand, largely did so with venture capital, and the process of going public at many times was like paying a robber barron to get access to mainstream funding.


  7. Tom |

    Frederick, thanks for your comment. I agree that there is an important distinction between making real products or providing real services, as opposed to shuffling paper to create wealth out of nothing. I’d like to see the emphasis of the U.S. economy return to true wealth creation.


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