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You Can Bet Your Assets
by
The Warped Woodturner
(1900 words)
In several past Countryside articles on freeloading (Nov/Dec 2005 and ?????)) I talked about strategies for mooching from both other people and government agencies. Country freeloading means creative kyping of the three Ms (money, material goods and manpower). The first article was about how you could get more food and other goodies from city visitors and the second was about how you were entitled to free government money. Both of the articles were about you getting something perhaps not for nothing but for doing little in return. In this next attempt to move the theory forward, I went back to basics to search for more ideas for readers to apply to their schemes.
First we need to look at some basics. At its extreme the basic idea of self-reliance means you do it yourself rather than give somebody else money to do it for you. Where are you are self-reliant not needing to exchange with other people and where are you other-reliant where you depend on others to meet your needs? Here are some exercises to try:
- Look at a clock. Now hold your breath for a minute if you can.
- Find someone to hold your breath for you – again for one minute if the person can. You best ask them first what they want in return.
- Now, do this thought experiment (do not really do this at home): Imagine using your computer to design and print some paper money. Next go to the city and take a walk where the panhandlers hang out and when they ask for some money give them your new money.
- Remember back to when you bought your house if you have one. Did you think in the future you would be able to sell it for more money? Why?
- Think back to when you bought your last car. Did you think you would be able to sell it for more money? Why?
- Finally, take an imaginary other-reliant trip for a hamburger after the Fall (included so fellow survivalist readers don't feel left out). Pretend people have lost their faith in the US dollar (or whatever your currency is). An innovative restaurant with golden arches then comes up with a way to keep going. They have little scales on their counters with armed guards and when those of you smart enough to have some gold want a hamburger you can shave little pieces off your gold coins on to a scale on the counter until a bell rings and you get your hamburger.
What does this all show? First, you have a big need for oxygen to stay alive. It is only one of your needs but the most basic. You can buy oxygen in bottles but you cannot get someone else to breathe for you. Some needs cannot be met with barter or money.
Second, other people need a reason to act. In a fair exchange both parties are equally happy or unhappy with the exchange. In most societies today that involves the exchange of money. Money also allows people to get rewarded now but store the stuff until later to trade to get something in return.
Third, people can project their inner thoughts on to money. How did the idea of tricking panhandlers make you feel in the exercise above? They expected something in the exchange and you cheated them.
While these exercises showed me a few things I did not think I had the whole picture so in an attempt to analyze self-reliance and other-reliance compared to exchanges of money, goods or services, I pretended I was a social scientist and created a table comparing them. Right away I learned self-reliant people did not fit into my original table since there are no exchanges when you are completely self-reliant.
Here is some of what else I learned: When you compare other-reliance and fair exchanges you get examples like:
- Buying groceries
- Buying electricity from grid
- Buying a PV system
- Buying seeds or baby animals
- Buying a chain saw
- Buying land
Unbalanced or unfair exchanges of money, goods or services include:
- People helping you with a task with no thought of getting paid back (true charity)
- Welfare (wealth transfer) payments
- Government services where you get more service than you pay taxes or pay more taxes than you get in services
- Scams and thievery
Finally, here are some examples of relying on yourself and not exchanging anything with other people:
- Generating you own solar electricity
- Growing your own food
- Cutting firewood on your land
- Catching rain water
- Gathering food on public property
These exercises also helped me remember a few more things about money.
At this point I thought I was making progress but there must be more. People take a chance when they put money into an asset. They may not get the money back again at all or the future selling price may be less. People buy cars and usually don't expect them to go up in value but buy houses or stock and think they are getting shortchanged when the selling prices drop.
At this point I realized money is more than a medium of exchange. People want their money to be fruitful and multiply. Inflation makes money shrink but what is shrinking?. The paper money does not change size. People don't know what things will cost when they go to spend money in the future. At best it is a guess what the money will buy in the future.
I had long wondered how wealth could disappear when the stock market dropped. Shares of stock have a price when bought and sold. Some people take the daily selling price and think their stock is worth that much even if they do not trade it. Other people come along and add all of these individuals stock portfolio values together and then claim it means something about wealth. When the stock prices fall dramatically you hear how the illusory wealth has then disappeared.
As I continued to compare self-reliance and other-reliance to fairness and better understand money to make sense of all this stuff only got more confused. Something was missing. I then realized money has two faces. It is both a language expressing your side of the exchange and an asset – just like light is sometimes a particle and a sometimes a wave.
An asset is something you own with value stored in it (in your mind at least) or a claim you have on something. Notice money is only one form of an asset, a hill of beans is another form of asset and what someone or something like a bank owes you is yet another. When you try to grow your money you are really trying to grow the size of an asset. Money as a medium of exchange only matters when you go to trade it. Again, money is the way you express what you value on your side of the transaction.
The basic accounting equation is the fictitious glue that holds our complicated business world together. The equation says Assets - Liabilities = Owner's equity. Owner's equity also means your net worth. When you are trying to figure out how big your pile of assets is you need to value them so the equation balances. If you cannot value an asset the equation does not work. Knowing current value is easy with money but imaginary with all other assets. Let's take a look at growing beans in your garden to see more about how valuing an asset works.
Let's say you plant some green beans. What you are really doing here is creating an asset out of thin air, sunlight and your soil. You had to get the seeds usually with money but perhaps by bartering. Let's assume you have planted beans in the past and can predict how big your crop will be and what the market price will be. You plant the seeds in the ground and watch them grow. As they grow you become a bean estimator making an assessment or prediction based on past experience of how much the potential crop will be worth at harvest time. If things work out you put on your bean counter hat and report on how the harvest meets or exceeds analyst's expectations.
But now lets look at a different scenario. There is a sudden drought during the growing season unlike any other rainfall shortage you have ever seen and on top of that green bean eating grasshoppers overwhelm your defenses and invade your garden. All of your predictions based on past performance are wrong and the size of your crop falls way short of analyst's expectations even if prices go up due to a bean shortage.
So, you put your money into something, made periodic assessments of value and when you took the crop out you learned the potential value but could not find the real value until you sold the beans at a farmer's market. The predictions of the future were all on paper and only the actual crop and selling price were real. Nobody forces you to play this game. Unless you sell your beans they don't need to have a money value. What really may matter to you is if you have enough beans for food to last until the next crop. You really don't need to assign a value to your beans or other assets unless you want to put the numbers into the basic accounting equation. Unfortunately, other people may do it for you because they want some of your assets. Take property taxes on an assessed value of your property as an example.
Money, the values given assets, and the accountant's equation are all social fictions but even without them people still need a way of assigning value to their side of a trade.
So what are the implications of what I learned in my attempt to develop a theory and principles of freeloading? First, you need to identify and court potential donors who do not know the value of their assets so when they donate to your cause the value of what they donate to their eyes is far less than the value is in your eyes. This points to government programs as a good source of donations. Second, you need to decide what you want to do about giving a money value to your assets. Above all else do not make the worth you assign to your assets part of your self-concept. Third, realize the value assigned to an asset is a social fiction until you liquidate the asset by turning it into money (itself a piece of printed social fiction). Then once you have the cash you need to realize it now is also an asset you have to deal with. Finally, the theory of country freeloading was a scam but you already knew that without anyone telling you. When you think money think scam.
Finally, you all have heard about time being money. Is time as real as money? You have just spent your time reading this piece. Was it worth a hill of beans?
1 comment:
oh man...dats too much to read man. you gotta put some pictures in with the article. gee, what do you expect from old people. my attention span is shorter than your.........hair. eiddeydaets
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