As I said last week, it seems now that we have passed the high tide line for hope. In fact, in this chapter Dabny quits her job as Vice President for the railroad. It isn’t written explicitly, but it has to do with the outcome of a special council of industrialists and government have produced. I am going to talk about that today.

By Executive Order and declaring a State of Emergency, it is officially titled directive 10-289. Below is a synopsis of the contents.

  1. No wage earner is allowed to leave their job nor be terminated under penalty of jail.
  2. No business owner is allowed to fail and cease to exist or to transfer the entity in any means.
  3. All patents, trademarks or intellectual property will be surrendered to the government for the free use by all.
  4. Nothing new is to be invented or marketed or even investigated
  5. All manufacturing is to maintain the exact same output year over year.
  6. Prices will remain the same from this point forward.
  7. Wages will remain the same from this point forward.
  8. Any disputes of edge cases will be overseen by an entity called the Unification Board.

To me, this is clearly a larger than life framing of the transition from free market to communism. Not being a total expert, I assume that all of these things are an exaggeration of state controlled economic system. Will prices never change? I don’t think so, but they wouldn’t change without governmental review. Will nothing ever be invented? I doubt that is even desirable. At the very least, new military technology was invented but I think that science was highly valued in the USSR (granted it was probably state generated).

There is nothing like doubling down on failed policy to make things fail harder. If we look at our current financial system we can see the madness of it all. At a high level, this is how it works.

Banks qualify someone for a loan and they create a ledger entry. That loan then creates money into existence because they don’t actually have the cash liquid in the bank. This is the entire concept of fractional reserve banking. The US government borrows that money from the bank (also creates money), which they are charged a fee. They then raise money to cover the debts by issuing the bonds, which largely the banks purchase. So the banks make money ‘selling’ it to the government and they also make money by buying the debt. This is a Ponzi scheme.

When we have inflation, we have too much money in the system. Interest rates are raised to slow down some of the borrowing and additional creation of money. Inflation devalues the currency and while a small amount of continuous inflation is desirable (from a monetary policy standpoint), a large amount is not.

I suppose that you might be asking what does failure and our current financial system have to do with each other? Well, it hasn’t failed yet, but it will because there is no possible way that it will not. We cannot create money from loaning it to someone else and charge for it both ways as any sort of rational logic. The relative strength of the US Dollar is only backed by force.

What is the Petrodollar? Did you know that all oil transactions from everywhere in the world needs to be done with the US Dollar? This means that every country needs to convert their currency into USD to perform the transaction. That activity keeps the value of the dollar relatively high compared to most. This is the activity that requires force to maintain. Why do you think we are in the middle east in the first place? It is certainly not to promote freedom and liberty.

Bringing this all back around now. The central economic control of communism like the USSR, the move to communism in Atlas Shrugged and the US financial policy are all flavors of the same thing. They are all attempts to manipulate a systems for goals. The goals may not all be the same but the results are. There are too many variables and inputs for this to ever work in perpetuity.

End Your Programming Routine: At this point, I am not sure that there is a perfect economic system. I want to say free market is the best, but that has a lot of issues itself. You cannot predict boom/bust risk free. Who knew that Beanie Babies was going to be a thing? So, when you invest your entire retirement in those things and they become worthless on the whim of a trend, things go south in the entire economy. It is looking like an un-manipulatable currency like Bitcoin is looking like the way to go, but it still wont avoid the Beanie Baby crash. So, emulate the people doing well; make money and build wealth within the framework available but keep your eyes and options open.