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Two free men walk into a bank to borrow money. With no capital to secure it , they walk out of the bank empty handed.
So before they walk into the next bank, one of them decides to put themselves in a state of bondage to the other. The free man with his slave borrows against the value of his new slave with a bag of money. Assets created out of thin air due to the power of coercion.
Imagine free access beaches, turned into a private assets becoming debtor owned cash flows, turning the proceeds of new burdens to the bankers. $20 a head. Maybe a little proprietorship on the beach will keep it clean and not too crowed. However one can easily see this going very wrong.
Interest based monetary system in essense promotes commodification and monetization of every - literally - aspect of human existence. Advanced so to speak societies see collateralizable assets in everything and everybody,. This probably is #1 driver of advanced economies
I think that is a bad analogy for the following reasons:
#1 You can simply choose to skip a beer or even give up beer if you are in a tight financial fix.
and so can da guberment.
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#2 The Public Debt is real debt owed to real people. More Americans own bonds than stocks in their 401Ks, IRAs, brokerage accounts and contrary to popular opinion, yes pensions too.
No it isn't' . Its a non convertible currency. You get to choose the form of the IOU. That it. Not even a rubber nickle may be demanded.
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The federal government must pay these bonds because real people are expecting it to be there for their retirement.
Created on a computer.
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No. It is a real debt owed to real people who expect and even "need" the money to be there.
No it isn't. The debt is a myth.
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Yes, we are currently "printing" (or digitizing) 60% of the money that the federal government spends - created out of thin air.
If we do this long enough we risk high inflation or hyper inflation.
No we won't. Ya wanna know how to stop inflation? Raise taxes. Blamo, watch demand fall like a rock.
Do you have any examples of runaway inflation cause by central banks?
I have studied Wiemar, Zimbabwe , the Confederacy, Russian rubles assiduously. zippo. All caused by the dissolution of the political entity.
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The Federal Reserve and federal government are playing a dangerous game.
When the Fed monetizes junk in a people's garage , yes they lose political legitimacy. They are printing money secured with fictitious capital.
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With all levels of government down to cities having unsustainable debt everyone is going to be looking for a bailout. What happens when we "print" all of that and it floods into the economy? So far most money creation has flooded assets and we can see those bubbles.
Well yes bailouts allow failure to persist. That is dangerous. Paying a farmer money to keep his farm when not letting him grow anything is quite the opposite. It preserves capital.
The problem I have is that the lock down is not a market force . it is an imposition on legitimate capital.
Bailing out the banks did not produce inflation, quite the opposite. It prevented the fall in asset prices. No one could afford them to turn a profit. If you have a coconut grove capable of growing 1k worth of coconuts but the rent is 2k then its in negative equity. It may very well produce zero coconut and will hire no one. Industrial capital sits idle. With no rent then it would produce 1k worth of coconuts. Had they let bankruptcy then capital would have found the price point to begin operations.
The biggest drain of liquidity is the concentration of wealth. Those dollars hardly matter. All the bailout money was let them sit indefinitely.
it was during the housing bubble that the dollar lost value because there was wide spread tapping of equity.
If they over do it with the stimulus checks then yes, the $USD will tend to weaken. But with labor and industrial utilization being what it is......don't see much sign of that.
Stimulus, QE, bailouts, etc only "work" if there is increased energy production to back up all that extra printed currency. Last crisis, we had increased energy production in the form of shale oil coming to the market. Now, the shale oil industry is on the ropes, and in the early stages of collapse.
Stimulus, QE, and bailouts with declining or stagnant energy production will have no "stimumating" effect whatsoever, in fact it will be more like a sedative.
I have a source on the history of the Caribbean. It was one of those passages that you remember , not quite unlike that roast by Ammianus Marcellinus.
After the manumission of the slaves , only one kind of island produced sugar. Certainly not the ones with little territory to grow cane, but also, paradoxically, not those with plenty of land. Only the ones without a surplus of land had a captive labor force that could be coerced into working since there was no substance farm to be had. Right out of Marx's Das Kapital on primative accumulation as well. I find the theme in many places. The Scottish clearances juxtaposed to American homesteads explains British industrialization in advance of the American .
The answer is a delicate one. Wealth creation peaks with light coercion, so that people must work, but not in the absence of hope. Argentina I knew to make the most wine per capita. They drank nearly as much. The fate of that country has turned their misfortune into the world's surplus in the form of Argentinian wine. Subsistence farming meets globalism does not bode well for the former.
Notice the huge increase in rents without similar increase in wages and the huge decrease in small cheap rural properties to escape racing the rodents and participating in the lunatic asylum we call an economy. Force everybody to scramble after crumbs from 1%ers table just to survive. In other words prevent more people becoming freelanders not having to rent but able to do subsistance ag if necessary. Cause in cities even those that manage to buy a property end up paying equivalent of rent to the king in form of property tax. Its a system to prevent majority from ever exiting the forced struggle to survive. Cause if significant number escape, the modern version of indentured servent system collapses.
Stimulus, QE, bailouts, etc only "work" if there is increased energy production to back up all that extra printed currency. Last crisis, we had increased energy production in the form of shale oil coming to the market. Now, the shale oil industry is on the ropes, and in the early stages of collapse.
Stimulus, QE, and bailouts with declining or stagnant energy production will have no "stimumating" effect whatsoever, in fact it will be more like a sedative.
I don't think I agree with your premise on energy production . Not with this level of financialization .It is as obsolete as the quest for breadfruit. Here is an example of Ricardian trade theory that once considered the energy of the day, grain.
But today’s budgets are dominated by payments to the finance, insurance and real estate (FIRE) sector, and to newly privatized monopolies. This has made FIRE the determining factor in trade competitiveness.
Competitiveness is now determined by the cost of the rentier. Germany had low cost rentiers, the PIGGS have expensive ones.
Its like the opposite of the US military. Instead of 12 people supporting each combat soldier its one worker paying 12 people to do nothing while trying to sell at a competitive price.
Many states will have to go through bankruptcy. There’s literally no other way.
End result will be huge reductions in state and local services, deteriorating roads, schools, etc. Massive government layoffs, government salaries will be cut or frozen and pensions will get decimated.
But, once this is over with, we can start rebuilding on a far better foundation. I’m actually looking forward to getting it over with and moving on. Unfortunately democrats are doing their best to delay the inevitable.
Republicans are not innocent either. Trump has raised tax collections, which helps, but he's done little to encourage Dems to slow the spending....he's gone right along with massive deficit spending.
Trump, and the Pubs have tried to hold the line on the Feds bailing out the bankrupt states...so far.
Neither party will cut spending...its political suicide. So, instead, they both drive us off the spending cliff (we land at the bottom in '24).
Yes, some cities, county's, & states will fail first, & it will begin right after the election (if Trump wins).
No party will want to be in power in 2024, because that's when the spending must be reversed.
I'm hoping the Dems are in power in 2024 so they will have to be the ones to cut social security payouts, fed gov't worker pension payouts, medicare, medicaid, food stamps, & all other entitlements...plus military spending.
Threads on fiscal responsibility die a fast death. It's too boring...for now. The wolf hasn't blown the house down yet.
Last edited by beach43ofus; 09-12-2020 at 02:35 PM..
Notice the huge increase in rents without similar increase in wages and the huge decrease in small cheap rural properties to escape racing the rodents and participating in the lunatic asylum we call an economy. Force everybody to scramble after crumbs from 1%ers table just to survive. In other words prevent more people becoming freelanders not having to rent but able to do subsistance ag if necessary. Cause in cities even those that manage to buy a property end up paying equivalent of rent to the king in form of property tax. Its a system to prevent majority from ever exiting the forced struggle to survive. Cause if significant number escape, the modern version of indentured servent system collapses.
Well again its a delicate balance, pick you paradigm. Those will the most freedom are in the most danger of loosing it , to channel Montesquieu. Create a Marxist paradise, the absence of any coercive force brings coercion because it has no resistence( war communism). Quite like the frolicking Visigoths when they met Islam, like dodo birds.
The large windward Islands in the Caribbean were free , until they weren't. Too disorganized. Once the whole is swallowed , that freedom ends. . That is the epitome of Athens/Sparta. . Internal freedom in Athens, but if too free, ripe for Sparta.
The richest soils were always most subject to this change of masters; such as the district now called Thessaly, Boeotia, most of the Peloponnese, Arcadia excepted, and the most fertile parts of the rest of Hellas. The goodness of the land favoured the aggrandizement of particular individuals, and thus created faction which proved a fertile source of ruin. It also invited invasion. Accordingly Attica, from the poverty of its soil enjoying from a very remote period freedom from faction, never changed its inhabitants. And here is no inconsiderable exemplification of my assertion that the migrations were the cause of there being no correspondent growth in other parts. The most powerful victims of war or faction from the rest of Hellas took refuge with the Athenians as a safe retreat; and at an early period, becoming naturalized, swelled the already large population of the city to such a height that Attica became at last too small to hold them, and they had to send out colonies to Ionia.
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