EBAY AUCTION CUSTOMER GETS ANGRY WHILE DEFENDING THE CULT OF MISES AND HIS FALSE BELIEFS ABOUT AUCTIONS

In comments on a blog, someone wrote to me, "The only way to make a local currency have real value is to make it useful for payment of local taxes."

And I replied with this: Nothing ever in the history of mankind has had "real value". Always, it takes two things to make value. Value arises from trading one thing for another.

Value is merely the Old French word for the English word worth. All worth comes from the minds of men and what they esteem versus what they don't.

To believe that anything has "real value" is to believe in the fallacy of intrinsic worth. And thus, to believe in that fallacy requires anyone to believe that all prices ought to be fixed in proportion to the stuff inside each thing.

I brought to his attention a work of my from long ago, which you can read right here on Bizarro Theater: DEBUNKING YET ANOTHER ACADEMICIAN EGGHEAD AND HIS ECONOMICS FOOLERY. That work exposes an "Austrian" school economist and his silly beliefs.

Straight away, one of the defenders of that fallacy riddled camp of academia economics chimed in to me. Here is what happened.

Ebay Eddie

I read that article. I'm a fan of the Austrian school. They're right. Everyone else is wrong. What are you, a Keynesian?

You don't know anything about auctions. I do because I shop at ebay! Auction losers don't lose because of a lack of buying power. They lose because they give up.

I've been to thousands of auctions.

Me

In English auctions, winning bidders outbid the other bidders.

If two start bidding but one drops out, the one who drops out failed to have the buying power to match the one who won. Clearly, all bid participants started out wanting the same thing.

The winning bidder matched the bid of the loser and then surpassed it. The winning bidder had the means to gain property in whatever has been auctioned. The losing bidder did not. If the loser had the means he could have bid higher.

Besides, unknowingly, you have confirmed what I wrote above, All worth comes from the minds of men and what they esteem versus what they don't. It is because the loser lacks the means that he comes to believe that it is not worth it at this price.

Ebay Eddie

You do not need to lecture me about auctions, I have attended literally hundreds of live auctions, and participated in over 1000 ebay auctions as buyer and seller.

Me

Well Eddie, if two people are bidding for the same thing and one outbids the other, the one who bid more has the means to do so. Because if the other one had the means, the other one would have kept bidding until winning. The loser can't gain property in what is being auctioned and take possession of it because he can't pay the trade rate set by the market.

Even if the two are bidding on the same thing for the purpose of re-sale, and one can outbid the other, the one who fails to outbid does so because he can't break even on the higher price what is to be re-sold. So again, the one losing the bidding lacks the means.

Ebay Eddie

You are wrong because I said so. I go to auctions. I know.

Me

When Bugatti offers cars for sale, they bid down against other car sellers of their kind. That is a Dutch auction. Likewise, would-be car buyers bid up against each other. That is an English auction. Where the winning participants match, that is a purchase and sale.

What stops the woman with a $50,000 a year from buying a $200,000 Bugatti Veyron?

If you want to read more about these Misean Cultists like Ebay Eddie, check out:

• JASON X AND LEW ROCKWELL'S CULT OF MISES. ANOTHER EXAMPLE OF WHY AMERICANS ARE IN BIG TROUBLE.

And if you want to discover why academia economists are wrong, in general, about everything, read these:

• THE WEALTHY PEOPLE EFFECT AND WHAT IT TRULY SHOULD MEAN TO YOU
• INTEREST, CAPITALISTS AND FUTURISTIC TIME COPS
• WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE.

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THE WEALTHY PEOPLE EFFECT AND WHAT IT TRULY SHOULD MEAN TO YOU

As their neoclassical school brethren, those of the Austrian school get reality as wrong as the Keynesians and Monetarists do. The latter wrongly believe one side of the coin, spending, leads to a better state of trade. The Austrians wrongly believe its the other side of the coin, savings (see Chris Casey's attempt to justify savings over at the Austrian mouthpiece in the USA, Mises.org).

Neither spending nor savings increases the state of trade. It's profit. 

Savings are illusory. It's profit that must arise. If profit lays idle, then trade stops.

Whether Austrians, Keynesians or Monetarists, the Neoclassicists get it wrong because economics is fake, a false knowledge. As I explained in WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE, like the Keynesians, the Austrians wrongly believe that the basis of trade, or what they call, "the economy" is scarcity and utility. 

Yet, the whole of what humans do, which is trade, can be summed up in two words, property and profit. 

The "wealth effect" is badly named. It should be said as the "wealthy people effect." The "wealthy people effect" also is known as "trickle-down" economics. 

The "wealthy people effect" is the belief that if street prices rise of extant property (right of ownership) that can be held as collateral, wealthy people will trade that property as wealth held in collateral letting them sell rights of action against themselves to buy bank credits in a purchase and sale. With these bank credits, these wealthy ones then will buy luxury goods (e.g., through HELOCs) or to expand business. In either case, it is believed that employment should rise either to produce more of these goods or to fulfill work in expanding business.

The idea of savings is rather silly. There is no such thing as savings. Beyond break-even, individuals and firms gain profit. In trade, there are only purchases and sales. Individuals for themselves or their firms through purchases and sales buy property in bank credits by selling cash, bank credits or debt, or buy property in other things by selling selling cash, bank credits or debt instruments.

Only through profit for workers (wages less living expenses) or firms (sales less outlays) can individuals and firms call for more goods. It is from confidence in expectation of profit that bankers enter into purchases and sales of bank credits for both cash and debt at discount. 

Back in 2010, then chairman of the Federal Reserve, Ben Bernanke said, "Higher equity prices will boost consumer wealth and help increase confidence, which can spur spending." Deciphering, Bernanke said, when stock prices rise, those who hold stock have collateral with increased liquidation prices, which instills confidence in bankers, who will sell bank credits to those seeking it with such collateral.

As I explained in YOU LIVE AT THE MERCY OF A CLOWN-CAR DRIVEN BY MEN AND WOMEN OF THE FEDERAL RESERVE, guys like Bernanke believe prices make people behave rather than increases in their buying power owing to increasing profits, whether by wages less living expenses for individuals or sales less outlays for firms.

Prices aren't wealth, whether rising or not. Only property which can be traded at the moment of trade is wealth. Once trade ceases, that which was traded no longer is wealth, but merely potential wealth. A used bicycle with flat tires and bent handle bars on offer at a garage sale no one buys isn't wealth, yet the seller has property in it.

The foolish believe the key lies in prices. For them, higher prices means worthier collateral. However, ever increasing prices leads to the profit squeeze, when at some point of ever rising prices, outlays outstrip sales and wages fail to rise with living expenses thus pushing people to below break-even loss. It is from then that collapse follows and debt reckoning begins.

Even the phrase "paradox of thrift" is badly named. Thrift means prosperity, not savings.

The word savings enters English in 1737 meaning "money saved," in turn from the Old French "save" meaning to "keep safe," which came into English around 1200. By 1300 save was being said to mean "keep possession, hold back." 

In the days of money, and money only ever can be coined metal by weight and fineness, some would sell their gold or silver to bankers in purchases and sales for shares of future profits of those bankers. The rhetoric around doing such became "Save your money with us," and "We'll keep your money safe with us."

Yet, nothing ever was saved. Bankers didn't keep anyone's money separated from all others in a warehouse, keeping anyone's money for safe. Instead, bankers lent money in which they had property, property acquired in purchases and sales of claims against profit, which gets called interest, for money.


The word thrift is a Middle English word from about 1300 meaning "thriving, prosperity" and comes from the Old Norse meaning the same.

In prosperity, anyone who wants to work can find work. Profit abounds. Wages increase faster than living expenses. Sales increase faster than outlays. The creation of property grows at an increasing rate.


Under false-belief faux prosperity, little creation of property of wealth happens. Instead, increases in the estimates of street prices for extant property of potential wealth swells false beliefs leading to credit inflation and speculative promotion (2002-2008 Residential Realty Bubble, 1997-2000 Dot Com Bubble) .

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DEBUNKING YET ANOTHER ACADEMICIAN EGGHEAD AND HIS ECONOMICS FOOLERY

ON THE FALLACY OF UTILITY AND VALUE

Art Carden fails at 0:46 when he claims, falsely, of course, that "value of a resource is determined by what you can do with one more unit of the good." Art Carden accepts and perpetuates fallacy when he spews such foolery. Value does not arise from use.

Value is not a quality, an aspect of a thing residing absolutely within it. Nor does value arise from utility as Carden foolishly claims nor cost of production or any other claimed intrinsic quality.

Value results solely in the trade rate of property each of two things.  Value expresses a ratio of importance each trader has for the two things traded. 

When one of two things in trade is cash or credit denominated in cash, we give value another name. We call it price.

It's a specious claim that utility stands as the cause of value. Holding that utility makes the cause of value forces the belief in intrinsic, absolute value owing to some quality inherent in a thing. While the qualities of a thing remain the same, such a thing can be useful during some times and yet not during others.

Numerous examples abound. Cigarettes are useful only for those who smoke and when they smoke. Alcohol is useful only for those who drink and when they drink. Medical drugs are useful only for when someone is sick and never when someone isn't. A rowboat is useful for a river or a lake but has no use when in the desert. A broom that sits idle has no usefulness in the now.

If utility were the cause of value, then things ought to be valuable in proportion to their utility. Water has the greatest utility, yet where it's abundant, it has little value. Food has the greatest utility, yet where crops grow abundant and men have no means to transport such to markets or even to tell others about the bounty, such crops have little value.

Art Carden falls for the fallacy of utility imputes value. He looks every bit the fool when he says diamonds are "worth a lot [because] we can do a lot with them." That is laughable.

Diamonds get their worth simply because of the bid rate some are willing pay to gain property in diamonds. Value arises in only trade of property in cash or credit for property in something else. Value has nothing to do with what happens "at the margin."

For someone could spend millions to hire men and buy huge machines to mine a ounce of gold buried miles within a mountain. And yet, another could stroll along a river descending from the Sierra Nevada and find an ounce of gold sitting on the riverbank.

Both could go to market and buy cash, each by selling their respective ounces of gold and both would get the exact same sum, $1,649.92, if they sold their ounces for U.S. dollars.

The infrangible Law of Prices girds under the whole of economics. Carden, like all others who accept pseudo-science Gossen marginalism, conflates the last winning bid, which sets the price with "at the margin."

ON THE FALLACY OF SCARCITY

Also, Art Carden fails at 0:42 when he claims, falsely, of course, that "resources are scarce." For assuredly, resources are not scarce. The Earth is superabundant with resources.

Scarcity is a bogus concept. Scarcity is chimera. Scarcity is a concept to justify political action — confiscation of output and redistribution to those of favored groups. Those who parrot the false belief that economics has anything to do with scarcity have accepted rhetoric and thus have let false beliefs get inculcated into their minds.

To believe in scarcity is to disavow the one, true, and only law in the whole of commece — the Law of Prices — and thus to reject reality. The Law of Prices holds that the winning bids of purchase and sale in the face of offers set the price. All should come to see at once the great working of the Law of Prices as the one true law that girds under the whole of trade, also said as commerce, both of which are authentic economics..

The highest bidders win the day for whatever is being offered. It's through superior buying power that highest bidders win the day. In short, it is a lack of cash and credit that makes losers go without. 

Excuse makers express their false beliefs and blame the false concept of scarcity rather than their skill at winning economic quantities of purchasing (cash and credit) to gain what they want. It is buying power — property in cash and credit — that constrains choice. Scarcity has nothing to do with it.

Take two women, one with $200,000 and one with only $15,000 in the market for a new car. The woman with $200,000 has many choices before her, from BMWs and Audis to Nissans and even Chryslers. In fact, she can buy from nearly every car manufactured today that would not be classed as a supercar and she could buy any of few supercars! This cougar has amazing buying power.

The woman with $15,000 has few choices. She can buy only a handful cars like a Honda Fit or maybe a Ford Focus. This poor woman has little buying power.

58,264,344 new cars were manufactured in 2010. That is many choices, the opposite of scarcity! However, the $15,000 woman faces few choices.

If only one thingamabob exists on the whole of the earth and someone is willing to pay a trillion dollars while everyone else is willing to pay something less than a trillion, that only one thingamabob exists doesn't make it scarce. The rest of those who would like to possess it simply haven't the means for the winning bid.

Any right-minded thinker at once sees that it us buying power that constrains choice and not scarcity.

ON THE AUSTRIAN SCHOOL

The Austrian School of Neoclassical Economics is flawed as all schools of Neoclassical Economics are. All schools of Neoclassical Economics base their doctrines on two things: [1] pseudoscience psychology [2] Smithian, Ricardian and Millian fallacies, of which there are numerous.

The Austrian School of Neoclassical Economics rests on two major false beliefs: marginal utility and time preference (see: INTEREST, CAPITALISTS AND FUTURISTIC TIME COPS). Both beliefs arise from faulty pseudoscience psychology never proven scientifically and thus must be rejected by all. This is why the Austrian School once was known as the Psychology School.

Only one law exists for the whole subject of commece, the Law of Prices. Any explanation that renders exception to this law automatically fails.

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