The Costs of Dragon Maintenance

The next time you:

  • Pay your mortgage, which is mostly interest;
  • Pay your outrageously large auto or student loan;
  • Pay an exorbitant amount for health insurance;
  • Pay an even larger co-pay for a minor hospital procedure;
  • Buy groceries for $100 and compare that purchase to what $100 bought in 1971;
  • Realize that a four person family’s share of the U. S. national debt is nearly one-quarter million dollars …

Consider the costs of fiat paper currencies, deficit spending, central banking and … dragon maintenance.

***

A long time ago and far, far away outlaws raided a village and stole food, gold and women. The angry villagers could do little to protect their village except pray to their gods.

A large and fearsome dragon descended into the village square answering their prayers. The dragon agreed to protect the village in return for food.

Everyone was afraid of the dragon’s sharp claws and its fiery breath which incinerated those who threatened the dragon or the village. Raiders avoided the village.

The people rejoiced in their new safety but worried the dragon ate too much food.

Problems developed after several years.

 

  • The village council went deeply into debt paying for dragon food. They also raised taxes and printed an excessive amount of paper money which increased all consumer prices. This angered the residents.
  • Farmers increased food prices even higher because of the greater demand for dragon food. Residents grumbled about higher food costs.
  • The village council hired public relations specialists to convince the people that dragon maintenance was necessary. The extra employment was helpful, but the village council went deeper into debt paying the new employees.
  • Economic activity declined because the cost of capital tripled.
  • The village grew poorer, and everyone suffered as their cost of living increased. In many respects they were worse off than before the dragon arrived.
  • After a drought and partial crop failure, prices for wheat tripled and the dragon grew hungry and cranky. He ate three village residents.

The villagers met and demanded the council banish the dragon because dragon maintenance was too costly. They ordered the Mayor to roust the dragon and send it elsewhere. The Mayor promptly resigned.

People escaped to other towns, and the village deteriorated culturally and economically as it sunk into poverty.

The village council fed mal-contents and old people to the dragon when the council could not afford other food.

Soon everyone feared the village council would declare them dragon food. Most people fled the village except for members of the council who were confident the dragon would protect, but not eat, them.

They were mistaken.

The dragon ate roasted councilmen for dinner, burned the village to the ground and flew away, searching for another village that wanted protection.

***

The village had survived for hundreds of years but it died not long after the dragon arrived.

However the village existed a long distance away from the United States and the dragon maintenance saga happened before the world developed central banking, fiat paper money, deficit spending, ever-increasing debt, High Frequency Trading, derivatives, Quantitative Easing, PhD Keynesian economists and career politicians who manage our nations … so don’t worry … about dragon maintenance.

 

Gary Christenson

The Deviant Investor

16 thoughts on “The Costs of Dragon Maintenance

  1. Here it is again:

    Definition of money: “An in-process promise to complete a trade over time and space.”

    Proof:
    Examine trade: (1) Negotiation; (2) Promise to deliver; (3) Delivery.
    With simple barter exchange, (2) and (3) happen simultaneously on-the-spot. Trade involving gold as a “stand-in” for money is such an exchange … it does not involve money. Money enables (2) and (3) to span time and space.
    Thus money is obviously (2) … an in-process promise to complete a trade.
    For a given trade, no money exists before the trade. As the trade is in progress, supply and demand for money attributed to the trade is in perfect perpetual balance … it’s the nature of every trade … and that balance means zero inflation of the money itself.
    On delivery (3), the money created by (2) is returned and destroyed. Thus, after delivery, no money pertaining to this trade exists. You are familiar with the process when you buy a house or car on time payments. It is “you the trader” who creates the money … not a bank … not a government.

    With “all” trades using money, no money exists before the trade or after the trade. And while the trade is in progress, perfect supply/demand is guaranteed by the process. Thus, no INFLATION can exist … ever or anywhere.

    A “proper” MOE process certifies the promises; monitors for delivery; and mitigates DEFAULTs immediately with INTEREST collections of like amount; thus zero INFLATION is “guaranteed”. Further, responsible traders enjoy “zero” INTEREST load because they don’t DEFAULT. All traders enjoy a zero INFLATION trading environment.

    The operative relation is: INFLATION = DEFAULT – INTEREST = zero. There is no income component in the process. Expenses are made up with INTEREST collections paid by deadbeat traders and are inconsequential.

    You should be familiar with a similar model … a mutual casualty insurance company. In that instance PREMIUMS – CLAIMS = zero. The money is made from investment income.

    If this doesn’t help, I sure would like to know why not.



  2. Would anyone know why the debt clock on this site has now passed the $20T mark but the “Debt Clock” for the US is still below this mark?


  3. “If you would like to send me an article explaining your concept of “in-process promise…” and explain it to the rest of us clueless people, I will consider it….”

    I did that several months ago to the same kind of challenge from you. You buried it … never published it and never replied. I’ll do it again if you want. I deliver a proof and I challenge you to disprove. But if you can’t, you’re going to have to abandon “everything” I’ve seen you write.
    Todd Marshall
    Plantersville, TX


    • I do remember you sending many comments several months ago. I could not make any sense from your ideas and they were all counter-productive so I saw no reason to publish them. At best they were confusing. I found them not only unhelpful but detrimental to understanding our world.

      If it makes you feel better, then continue with your assessment that I am a moron. Perhaps you should initiate your own blog and publish your ideas there.

      The Deviant Investor


  4. It’s a great story..ancient indeed…one of which appears to have no beginning nor end????? Or does it? I am not sure. Is the flavor of this story pointing at non-theism?



  5. Interesting that Gary Christenson uses the word “dragon” exactly the way my wife does, as a term for the wealth-sucking parasite the financial system has become. Catherine Austin Fitts uses the words “tapeworm” and “tapeworm economics” for the same concept. Either way, is this a hundredth-monkey meme whose day has arrived? It is still shocking how many people remain clueless about the effect the dragon has on their lives, or that they would suddenly be wealthy beyond their dreams if they could banish the dragon.


  6. Hey Gary great story, can’t wait until the Dragon comes.
    over 300 million here ! and over 7 billion in the world. No sweat the dragon will be happy.
    I’m still happy.
    silvercup


  7. Mr. Christenson. If you ever come to knowing what money really is, i.e. “an in-process promise to complete a trade over time and space”, will you revise your essay to properly discuss the issues?

    Regarding insurance: Have you ever looked at an FHA backed mortgage loan contract (but I misspeak … it’s a promise to complete a trade over time and space … created by the trader)? It dictates that you “must” maintain “replacement cost insurance” to protect the lender for the term of the loan. If you don’t, the lender can purchase it and make you pay for it. And the “lender” purchases it from his “own” insurance company (see Wells Fargo).

    Now look at the premium for that insurance. Actuarially it says there is a 30% chance your house will be destroyed completely over that 30 year period. What’s been your experience? Mine is that not a single house has been destroyed within a five mile radius of where I live over my 70+ year lifetime.

    And they’re able to run this con even though it’s provable their risk is non-existent toward the end of the so-called “loan’s” term.

    You morons who are so clueless about money seem to be clueless about everything.


    • Thanks for your comment on insurance, although I did not address insurance in my article.

      I don’t appreciate being called a moron, which I think was your intent.

      I don’t see myself or my readers as “clueless about money” or “clueless about everything.”

      If you would like to send me an article explaining your concept of “in-process promise…” and explain it to the rest of us clueless people, I will consider it….

      The Deviant Investor


    • You are absolutely correct regarding the parasitic insurance companies. In 2009, in Detroit, the replacement value insurance on an old mansion (3,000+ square feet, 5 or more BRs) was as much as 25% of the price of the house (property values dropped precipitously then)! And clearly the odds were not that the house would be destroyed in 4 years!


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