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Thursday, October 25, 2007

Is the Stock Market Worth Anything?

I'm beginning to think that an agorist revolution is a historic inevitability.

As the agorist revolution occurs, there will be hyperinflation. More and more economic activity will occur in the agorist economy. Fewer and fewer goods will be traded in dollar-denominated transactions. The supply of dollars will continue to increase. Therefore, there will be hyperinflation. Eventually, the US government will completely collapse.

At this point, will the stock market be worth anything? Large corporations are only profitable because they receive massive government subsidies. Without this subsidy, corporations are useless. Corporations will no longer be able to shield people from liability for their bad actions. In an agorist economy, everyone is individually responsible for what they do.

A large corporations is optimized solely for extracting perks from the government. A large corporation is *NOT* optimized for efficiency.

In a truly free market, there's no such thing as a limited liability corporation. A limited liability corporation is the artificial creation of a coercive government. In a truly free market, management and owners will be held accountable in the event of a bankruptcy. A group of people are free to pretend that they're a corporation, if they want to. However, a corporation has no special legal status in a truly free market.

Large corporations are only possible in the presence of a coercive government. In a truly free market, there cannot be a stock market, because the buyers would be assuming a potentially unlimited liability. In a truly free market, there's no such thing as a stock market. Perversely, a stock market is only possible in a communist dictatorship.

Corporate ownership is functionally equivalent to government ownership. After the government collapses, everything will be considered to be unowned property. Who has the strongest claim to the property formerly owned by the government? The people who work in a factory would have the strongest claim to its assets. After all, without the knowledge of the people who operate the machinery, it's useless. Further, many large corporations might be forced into bankruptcy before the government itself falls. Most goods will be produced in the agorist economy instead of by large corporations. For pink market industries, such as communications and energy, the agorist community will hire the workers to continue performing their repairs and maintenance. There should be no interruption in electricity, phone service, or other key services. Key industries might be bought by agorist associations before the red market falls.

In other words, every single share of stock in every corporation is completely worthless. After the red market falls, large corporations won't be profitable without the massive government subsidies they receive now.

There probably won't be a reliable way to convert wealth from the old economic system to the new economic system. Gold and silver would work, but gold and silver are useless unless you have a trusted trading partner. Someone who suddenly appeared with a huge quantity of gold or silver would be viewed with suspicion. Besides, even if the international banking cartel is hoarding gold and silver, their power would be limited to the value of the actual gold and silver; they wouldn't be able to control the whole world's economy like they do now. The total value of the world economy is much more than the total value of all the gold and silver there is.

If you own real estate with a mortgage, it'll be easy for to pay it off as hyperinflation occurs. However, rental properties might not be worth anything. With the government gone, everything is unowned property. Why does the landlord have a more valid claim to owning a rental property than the current tenants? The tenants might decide to continue hiring the former landlord to do repairs, but rents will be lower.

On the other hand, a landlord may reach an agreement with a tenant before the red market falls. In that case, the tenant would continue to recognize the landlord as the valid owner. However, someone who rents a property with the agreement "You're still the owner after the red market falls" should be required to pay a rent LOWER than the current free-market rent.

What investments will hold their value? You'll probably be able to keep your primary residence; your mortgage payments will be easy as hyperinflation occurs. You'll be able to keep any physical gold and silver in your possession, but you would need trading partners in order to be able to spend it. You'll be able to keep goods and tools. Fiat money and stock investments will probably be worthless.

Some people are hedging by buying farmland and retreating to the countryside. That probably is unnecessary. In the current food distribution network, most of the work is done by for-profit workers. That should remain intact. However, the economy would probably become decentralized and people will move away from big cities.

Summarizing, the stock market is probably not going to be worth anything after the red market collapses. That does not mean you should immediately abandon stock investments; the end is still at least 20 years away. In the meantime, stock investments are still the safest investments.

However, you're probably better off working for equity in the new economic system, rather than working for worthless equity in the obsolete economic system. You should only do enough work in the obsolete economic system so you can survive until after the government collapses.

1 comment:

Anonymous said...

I think the aim of the globalizers is world government (State). For bringing this about they destroy the nation-states which were a step on the ladder towards One World State.

Hyperinflation and others such things are just tools to do the job. They are also creating 'a level playing field' where all the nation-states and their peoples are brought under the similar socio-economic conditions. The US moves down in its socio-economic conditions to become similar to Mexico and so on. A small elite rules and benefits and the rest just toil, pay their debts and serve the elites who only manage and deploy their system, they do not do any productive work.

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