no third solution

Blogging about liberty, anarchy, economics and politics

Comments on Comments #10

March 20th, 2008

In response to my revised comment policy, David at 1955design.com counsels:

WordPress automatically adds a rel=nofollow tag to the link of all commenters.

For the most part there is absolutely no benefit to the commenters link as Google will not backlink to their site.

Does WP automatically add a rel=nofollow tag to the links contained within comments?

+++

In this edition of “Comments” I had planned to offer my rebuttal to Kip Esquire’s podcast, The Libertarian Case against Jury Nullification which is not exactly a response to my post On Jury Nullification, but topical nonetheless. But I just got around to listening to it today. My rebuttal will perhaps be a stand-alone blog post to appear at a later date, since I’m not prepared to publish the series of notes I took while listening to the podcast.

+++

The “Soviet Onion” comments about the underground network in Canada, led by conscientious objector to the Vietnam war:

Sounds like Agorist praxis to me. Finally, an anti-war strategy that emphasizes counter-economics over symbolic action.

Wishful thinking, and maybe reading too far in to my speculation about living off-the-grid, which doesn’t appear to be what most of the defectors are doing. Instead, they’re just trying to live normal lives in another country, not sure if it will accept them. I agree, though, that this unfortunate circumstance is an opportunity for agorism. By some accounts, there are 16,000 deserters, and the government has only prosecuted about 800 of them. There is probably an agorist way to insure against prosecution, the policy would pay money damages in the amount of legal fees incurred, as well as a predetermined monthly stipend to the victim or his family, if he is incarcerated as a result of desertion. It is also an opportunity (albeit, an unlikely one) to leverage activism.

+++

Regarding the people who are simply mailing the keys back to their banks (What Should You Do About Your Rising Mortgage Payments?), our friend Logan comments:

Ah yes, these homeowners are using the ol’ shirk-my-financial-obligations strategy I see…

And Francois Tremblay adds sarcastically,

Damn homeowners, how dare they want to own homes? I wish people would just be content with their low station in life.

Logan, “shirk” has such negative connotations! It is perfectly within the realm of accepted behavior to forfeit one’s collateral to the lender when one is unwilling or unable to continue servicing the debt as scheduled. The primary purpose of a mortgage is to secure the lender’s interest in the mortgaged property in the event that the borrower defaults on the underlying note.

The lender effectively says: “We will loan you money to buy this house, and you will pay us back according to the schedule. If you stop making payments, can’t make payments, or simply don’t want to make payments any more, we get the house (since you only owned it subject to our interest) which we can then sell. If the proceeds are sufficient to cover our costs, you get any surplus. If they are not, we eat the difference. In either case, you’ve destroyed your credit for the next few years.”

So, returning the keys to the bank, is not really shirking one’s obligations. It’s fundamentally not that much different than asking your bank to do a deed in lieu of foreclosure. Unfortunately, the current economic environment precludes most people from executing this sort of instrument, because the homes aren’t worth as much as the owners are indebted.

Why not?

The banks were loaning money that didn’t exist yesterday. This is pure, monetary inflation1, and this cycle can continue only so long as the banks continue loaning money tomorrow that doesn’t exist today. Eventually they start demanding to be repaid—principal plus interest. The principal was created yesterday, but the interest, well, it’s a sum of money which won’t exist tomorrow! This “interest” portion of people’s indebtedness has never come into existence, so it should come as no surprise that people are no longer able to service their debts as soon as the new money stops being created!

+++

1. I’ve previously blogged about core inflation and inflation proper, the latter being: When money is created out of thin air, inflation is the inevitable side-effect. Of this, there is no uncertainty. There is no such thing as “core” inflation; either money is being created (which causes inflation) or it is not

2. There is no 2!

no third solution

Blogging about liberty, anarchy, economics and politics