it's actually very easy to agree with sutton from the left. it's a little harder to say "therefore, hayekian liberalism", but he's not actually contradicting anything at all in the leftist tradition, and it's for two reasons:
1) marx was aware that he was an authoritarian. if you read marx carefully, his dictatorship of the proletariat is more or less an update on the existing prussian status quo of "enlightened despotism". he often agreed more with conservatives like burke or hobbes than with liberals like paine or rousseau or even proudhon. there's a large amount of marxist literature that reduces happiness and freedom to some kind of illusion and argues that the slave will be happy if she is taught to be happy, and never under any other circumstance. a great deal of it is actually about ways to brainwash slaves into happiness so they can be more productive. there's your cultural marxism, and it's exactly what the capitalists ordered! if you read the capitalist engels carefully, there's a few points where he more or less admits it. read his history of christianity, it's very eye-opening as to the reasons he was promoting this guy. if marx was alive today, most people would consider him a fascist rather than a socialist.
2) there were plenty of socialists that realized this well before the shit hit the fan. we refer to them today as anarchists, but the separation at the time was not very strong. there was actually even a break in the international as a result of marx' open, clear authoritarian tendencies. anarchist socialists like bakunin were entirely aware that the marxist approach of centralizing power into these committees would not somehow lead to communism but would be co-opted by capitalists and produce untold human misery. so, he wanted to smash the state yesterday rather than through some weird process of proletariat dictatorship. there were plenty of socialists alive in the nineteenth and early twentieth centuries that predicted the results of marxism and fought violently against it. unfortunately, as the bolsheviks had capital on their side, they were able to destroy all the real socialists. and, something similar happened in spain.
so, the way to read sutton from the left is as verification of the early anarchist polemics against marx. and, this is certainly also the empirical way to read it
further, there's plenty of literature on the left that is very similar to sutton's in terms of analysis, if not in terms of proposals. i've heard chomsky say all the same things. it's consistent with zinn's writings. &etc.
Svelt Man
good post. i am of the left too and am finding all this illuminating and basically irrefutable.
maersklandro
Dude is a fucking moron. Lying moron propagandist for the right.
http://www.youtube.com/watch?v=vftNpSXUOU8
Barry Smyth
Said the left wing looney.
maersklandro
Looney? Maybe. At least I'm not full of shit like this guy right here.
This clown didn't have a clue about industry and technology.
He's just talking out his ass and his asshat cult following are simply lapping it up.
Libertarian Views Scotty M
+maersklandro http://static.comicvine.com/uploads/original/1/12397/3653741-baby-crying-1884717.jpg
deathtokoalas
as a leftist, i sometimes cringe at sutton's proposals. but, his research is rigorous and his analysis is spot on. you should try and listen a little more closely rather than write it off. i mean, you need to put "socialist" in quotes the way he uses it or replace it with "vulgar marxists" or something (he often does this himself) but there's otherwise not really a very strong political component in his work. if the lecture was spoken by chomsky, you wouldn't react like that. those are the kind of blinders that keep us at each other's backs.
maersklandro
His research is not rigorous nor his analysis spot on. And you clearly aren't a leftist if you believe that.
Anyone who knows anything about some of the technical matters he touches upon cringes at his ragingly arrogant ignorance and stupidity on the matter of Soviet technological and scientific development.
Dude knows (knew) fucking nothing about Soviet technology and parallel and original development.
Go watch 'The Engines That Came In From The Cold! (The Soviet Moon Program)' for just one example of what I'm talking about.
That bloody moron would have had us believe the soviets couldn't manufacture a ball bearing.
Nothing further from the truth. Just another right wing moron historical revisionist.
Libertarian Views Scotty M
+maersklandro Oh he isn't lying, one only needs to read the history of the likes of Alexander Hamilton to see what he advocated. This is the same Alexander Hamilton who founded the First National Bank of the United States of America, a Banker. Alexander Hamilton was strongly opposed to the Articles of Confederation because he wanted more power to the National Government. If that's not Socialist, what is? He was a strong supporter and advocate of central planning of the economy, again, if that's not Socialist, what is? Someone who greatly increased taxation and was a supporter of protectionist tariffs. If that's not Socialist, what is? The fact is, all of those things are Socialist, you just don't like those facts, you can't stand facts.
You are the typical lefty that despises the practice of Socialism because you can't bare to see that what Socialism really is, (not what you dream of) is a disaster. If anyone is thick enough to sit and deny central planning of the economy isn't Socialist, then they don't understand Marxism, this is how stupid Socialists are.
I wonder who Alexander Hamilton's arch-rival was, hmmm? I wonder who? Maybe it was Thomas Jefferson, the Classical Liberal Capitalist, perhaps? And what did Alexander Hamilton support more power to National Government for? Well because he wanted to subsidize businesses from the public, make the public poorer to fund the rich. He was the founder of Crony Capitalism in America. That's right, the Socialist founded Crony Capitalism. Now go stick your two fingers down the back of your throat, because that fact makes you sick.
Oh and he maybe a revisionist in your eyes, but when it comes down to it, where do you think the Soviet Union was getting the capital to fund all those things? That's right, Capitalist countries, why? Because 100% of your capital (money) is produced by Capitalism. Without Capitalism, you wouldn't have money.
Barry Smyth
+maersklandro Ha! The Soviet moon program was one of the several reasons why the USSR collapsed when ever the government is way too involved in economic life collapsed is bound to happen. Wars, economic central planning. The Space industry was a big drain on the economy, no wonder it caused the technological lag behind the rest of the world.
Barry Smyth
+maersklandro Cult following you have some nerve one name> Noam Chomsky
Libertarian Views Scotty M
+Barry Smith Agreed, central planning was detrimental, just look at Nikita Krushchev who boasted that their Soviet scientific socialism would be better than anything Capitalism could ever provide. Yep, which is why by 1991 it collapsed lol
deathtokoalas
+Scotty M as mentioned, russian science was heavily dependent on technology that was taken from the germans after wwII. it was also heavily driven by espionage. they weren't a little behind, they were dramatically behind.
but this doesn't have anything to do with socialism or capitalism. it has to do with a ridiculous czarist state that kept russia in the dark ages into the twentieth century v the large amount of state expenditure in the anglosphere that invested heavily in science for the benefit of the mercentalist and capitalist classes. that heavy state subsidization of industry is the reason our technological sector is so developed.
the soviets made some advances in terms of quality of living. those advances would have also been made under fascist or capitalist states. the key wasn't any single type of collectivist statism, but ditching the czarist hierarchy, which simply didn't care about the population.
there's simply not any way they could have competed immediately, even if bolshevism actually was comparable to socialism in any meaningful sense. they would have had to spend a very long time catching up first, which would have required the massive state expenditure that is only possible under capitalism. this is according to marx, remember. and, as they couldn't do something that defied all economic sense (marxist or otherwise), they collapsed before they caught up.
Libertarian Views Scotty M
+deathtokoalas You fail to understand socialism, because socialism has nothing to do with liberty or democracy, it's a contradiction of both, and what it does is suppresses innovation, destroys incentives to be creative and to work. Because of socialism's fixated nature, it lacks innovation.
deathtokoalas
+Scotty M can you define socialism for me, scotty?
thanks.
Libertarian Views Scotty M
+deathtokoalas Well Socialism is not about workers control over production, that's for sure, it's not what you have in theory, even the theory alone of Socialism is deeply flawed. You can never put theory above practice and yes the true face of Socialism was plastered all over the Soviet Union, even in Nazi Germany. Socialism's defining ethic is government coercion, which is dangerous. It's all about THE PLAN and when it comes down to it, Socialism is all about central planning of the economy. In order to carry out THE PLAN, you need THE PLANNERS, who are the government, they are the ones who carry out the distribution.
By definition and theory, it is social ownership of production, about sharing more or less, however the reality of Socialism is, it always leads into the hands of the few, basically the small elite. We have tonnes of historical evidence to prove of this evidence.
deathtokoalas
+Scotty M well, i agree with part of what you're saying. i posted a long comment on the video about the difference between marxist/authoritarian "socialism" (which is indeed quite similar to fascism both in theory and in practice) and anti-authoritarian, decentralized anarchist socialism.
as you know, socialism is the idea that production should be socially rather than privately owned. you can imagine that i've had many debates with people that don't know this. that's why i asked you to define it for me.
this really doesn't have any implications about central planning. for example, one could take the syndicalist position that the workers that work in the factory ought to own the factory. those factories may then compete on a market, and all the liberal market theory would continue to apply. this would merely remove a level of bureaucratic waste in the management of the factory. nor does it imply anything about big or small government. a real advocate of small government ought to see something of value in removing the management class. it's the same argument.
personally, i am not in favour of centralized planning. i think production ought to be primarily local, and run for the benefit of the citizens in the region rather than carry out the multi-year plans produced by the centralized bodies of large corporations. there's not any contradiction arising between my rejection of centralized planning and my view that production should work for social purposes, rather than to generate profit for an elite class of people.
as i pointed out in my post, the historical fact is that both the bolsheviks and nazis killed millions of socialists that were fighting against their goal to centralize everything in the hands of a totalitarian state. you can have these arguments with marxists, and they'll mostly play into your mischaracterizations, because a lot of your perceptions about them are, indeed, largely accurate. but you need to be careful in generalizing those views to socialism in a larger context, because they are simply not applicable in full generalization.
as an anarcho-socialist, i can agree with a lot of hayek's analysis. it's his conclusions that i find fault with.
i just want to add something about coercion, because the argument reduces to property rights. i can talk abstractly about how localizing production into social bodies doesn't need to produce coercion, but i do realize that some coercion is inevitable. but, i'm going to use an extreme example to demonstrate a point. laws against rape are technically coercive, but we universally acknowledge their validity due to some abstraction of the non-aggression principle. i like the non-aggression principle for negative rights, but i feel it's lacking for positive rights and should be extrapolated to something more social. what i'm getting at is that this kind of arrangement is only coercive on people that want to demonstrate anti-social behaviour.
now, you can compare that to a more traditional market society. it always makes me laugh when people argue that markets are voluntary. the only way that markets can be truly voluntary is if market relations only exist on top of a system of full distributive justice. that is, you can only talk about free and voluntary association in a market system if it's regarding the exchange of luxury items. basic necessities need to be taken for granted. there's plenty of classical liberals that have realized this and derived the idea of a minimum income to adjust for it. theory aside, i have to say i'd be largely satisfied with liberalism if the minimum income were to be worked into it, as it would provide me with the ability for real and voluntary association.
but, if you don't take that into account, markets place the vast majority of people (that is, people in the proletariat) with the choice of working or starving. there's nothing free or voluntary about that. it's the whole basis of the left anarchist desire to abolish markets as fundamentally oppressive, coercive institutions.
so, you're left with a choice between the kind of coercion that is inherent in markets (work or starve) and the kind of coercion that is inherent in communism (work towards the common good or be ostracized). they're both coercive, but one is a far more altruistic and acceptable type of coercion than the other. nobody is going to argue laws against rape should be abolished because they are coercive, even though they are clearly coercive. likewise, i have a difficulty taking people seriously when they argue that a social order that promotes sharing over hoarding is bad because it is coercive.
maersklandro
+Barry Smith You don't know shit. The USSR collapsed because the people running it and the people running 'the free world' wanted it to collapse.
And because of the petrodollar and bretton woods monetary system that basically crowned the US the hegemon of world.
BTW, capitalism collapses in an instant if it ceases to exponentially inflate its money supply. Because without that there is nowhere for profits and the firm's expenses towards other firms to come from.
They can't come out of nothing. For someone to be able to pay their suppliers, let alone register a profit, someone else HAS to not even be able to pay their suppliers.
Unless, of course, the money supply grows continually to provide the missing monies for most of the firms in the economy to at least cover their expenses with their suppliers.
What, you thought you can get something out of nothing (profit, expenses towards other businesses)?
That's just insanity, religion. Not science.
Modern economics is not even pseudo-science. It's glorified religion.
There absolutely nothing scientific about it.
No, the money for your suppliers has to come out of a printing press.
The money the stockholders, the employees and other people take out of what the firm takes in is less than 100%. So they can't recycle the difference between what they take out of the firm and what the firm takes in.
Because the difference is what goes out to the firm's suppliers. That is to say, mostly other firms.
So people can't pay that back directly to the firm because they never get the money directly from the firm to give it back to it. And all firms are like this because all firms directly take in from either people or other businesses more than what they directly pay out to people, either as dividends, wages, rents, whatever.
The shortfall has to be continually made up by the printing press, which has to print ever faster because of the law of diminishing returns (inflation).
Of course, I doubt you could understand any of that.
Käptn Kook
+maersklandro "BTW, capitalism collapses in an instant if it ceases to exponentially inflate its money supply."
inflation is not capitalism.... its an outcome of central bank state capitalism..exactly what sutton fights against.
deathtokoalas
+Käptn Kook but, you need inflation to fight against the concentration of resources. he's right - and sutton is wrong - on this point. capitalism is impossible without inflation.
this isn't a theoretical consideration, either. it's historical fact. we tried this, under a system called the "gold standard". it was an absolute catastrophe - it caused the depression. europe tried a similar system recently with the euro, and it's also been a disaster. and, any other attempts to abolish inflation will likewise be disastrous...
Libertarian Views Scotty M
You need inflation to fight the concentration of resources? One of the beautiful things about a free market is the fact that there is no possible way for you to become successful and prosper without providing for your consumers and if you cannot provide for your consumers your competition will wipe the floor with you. A Capitalist system is not about special privileges and this religious need to try and connect Capitalism to that is desperation because there is no other argument left.
It is within fact that under a Capitalist system you have no bailouts. Saying that you require inflation referring to the higher costs is ludicrous really and what contradicts that is the fact that private businesses main goal is to make profits and how do you maximise your profits? You maximise profits by minimising your costs, that essentially means using the fewest resources as possible, not abusing it. Furthermore private land owners have the incentive to look after their land and resources because land can appreciate in value or depreciate, why would any private land owner wish to depreciate the value of his land? That would run him at a loss, he wouldn't have the incentive to.
Turn your attention now to the government who didn't have to work for your money, is there any risk at hand over how government spends YOUR money that YOU earned? No, it didn't have to work for it. Isn't it funny how government council housed areas look like World War 2 had just finished, yet private land and housing looks immaculate? I wonder why that must be?
What you have stated is not historical fact especially when you talk about the disaster of the Gold Standard, Tom Woods already flattened your argument on the Gold Standard explaining the reason for the boom and bust cycle of the 19th Century was due to the trying and testing of the paper currency, nothing to do with the Gold Standard. In fact between 1700 to 1930 the Gold Standard was stable in Great Britain. In the 1920s with the Federal Reserve stepping in with Open Market Operations in 1922 stripping the Gold Standard away and printing fiat currency out of thin air, that is part of what led to the Great Depression. So where do you get the idea from that the Gold Standard was a disaster?
The € currency is a disaster because IT IS a fiat currency with nothing backing it and many nation states using the one currency with different tax and spend policies, so how you think that pans out when the ECB (European Central Bank) tries to set ONE interest rate across different nations with different tax and spend policies? A disaster.
Did your school put you up to this? Your school needs educated on economics.
Käptn Kook
+deathtokoalas this is what mainstream economists try to tell you. listen to what "austrian school of economics" say, and you'll see what the real issue was. certainly not the so called "gold standard".
its both neoclassical and neoliberal myth, that you need inflation. thats exactly on of the biggest issues we have in our economy today. the skewing of prices and interest rates trough inflation. its societies problem since a century now.
so, inflation is neither capitalistic, nor is it necessary. its one of the biggest causes of economic crisis.
deathtokoalas
+Libertarian Views Scotty M
it's new years eve. i'm not reading this right now. i'd rather smoke a joint than argue about market theory. give me a few days to come back to this. i'll leave it open in a tab.
but, the basic point is that the theory underlying capitalism is essentially garbage. there is absolutely no empirical evidence that suggests that any of these "equilibrium" points can ever actually happen. what empirical evidence - and, in fact, they teach this in first year economics nowadays - suggests is that a market is an imaginary ideal that immediately collapses into an oligarchy. if you take the state away, and leave markets in place, you don't get this utopian fantasy that you call capitalism. what you get is feudalism: power concentrated in the hands of a small elite, and a mass of starving peasants.
further, it's not a question of whether this is desirable or not. i mean, it is - for me. you probably don't care. which separates you from the core liberal thinkers, who actually did. they weren't evil, they were just naive.
from your perspective, it's a question of whether it's sustainable - and it isn't. even if you get to be the feudal baron, which you no doubt think you will, you can't withstand an onslaught of billions of people. all you end up with, in the end, is massive guerrilla warfare and literal, textbook anarchy.
i'll state this again: i didn't read your post. i'll come back to this in a few days.
Libertarian Views Scotty M
I'll leave it at that.
maersklandro
+Käptn Kook
Yet another right wing ignorant moron. You can't have capitalism without a geometrically growing money supply.
There's nowhere for businesses' profits and operating expenses towards other businesses to come from without money supply growth.
It's bloody hilarious how such a simple realization escapes you right wing zombies.
Ignorance and stupidity, thy name is right wing electorate.
Käptn Kook
do yu even read little asshole? dumb fuck.. i wont talk to you anymore.
Libertarian Views Scotty M
Wouldn't bother arguing with that ignorance, there was no requirement of the contraction of the Gold Standard, this I already stated but ignorance turns a blind eye to this fact. Last but not least the very reason our economy ended up in the mess it did was the result of inflation, the fact these people think inflation is a positive thing speaks for itself, I mean how stupid can you possibly get? Increasing the costs of your living does not equate to positivity, it means you're poorer. But that's okay, let's live in a backwards world they live in and pretend that's what leads to prosperity.
The laughable part is, the contraction of the paper currency which leads to the devaluation of the currency and costs of living going up means your purchasing power is driving down and you're becoming poorer, but that's okay, we'll choose to ignore that fact because we're all ignorant.
deathtokoalas
+Libertarian Views Scotty M
do you realize that what actually happened was that they ran out of gold?
a monetary supply needs to increase as the population increases. more people. therefore, more money. makes sense, right?
inflation is a necessary side effect of this. and capitalism cannot function without a sufficient level of capital to circulate.
what's insane and should be abolished is not inflation, it's interest. you leave your money in the bank, and it magically gains value? that's absurd.
if you're going to refuse to spend your money, it should lose value - as an incentive to spend it.
let me respond to some of your points.
"One of the beautiful things about a free market is the fact that there is no possible way for you to become successful and prosper without providing for your consumers and if you cannot provide for your consumers your competition will wipe the floor with you."
in theory, perhaps - albeit not in practice. in practice, firms collude with each other to harm consumers. competition is irrational, so firms will seek to avoid it at essentially all costs. your theory rests on the assumption that firms will behave irrationally for the benefit of consumers. a proper model needs to understand that firms are in collusion with each other, and in conflict with consumers - not in conflict with each other for the benefit of consumers. that is, it needs a class analysis.
but this actually has nothing to do with the money supply, or why it needs to continue to expand in order for capitalism to function.
"It is within fact that under a Capitalist system you have no bailouts."
bailouts don't have anything to do with inflation, either.
what we call a "bailout" is actually an interest-bearing loan - and the state always comes out ahead, because it collects the interest. so, in the end, there's no inflation from bailouts. the money that was created ends up destroyed when it's returned, and the state generates a profit out of it. rather, it functions as a kind of fine put in place for irresponsible behaviour.
but i don't dispute your claim so much as i question whether it's a good idea. this abstraction of stateless capitalism would indeed cause large banking institutions to collapse when they fail. and, then what? well, all the depositors would lose all their wealth. if you had a nest egg in that institution, it would merely cease to exist. that is something that also happened in the depression, and in fact the reason we erected the state to act as a lender of last resort - essentially an insurance company. you had people wandering the streets because the banks destroyed all their savings. this was rightly understood as unfair, so a system was created to counteract it.
you might argue in favour of private bank insurance. but, then you're just arguing for the status quo, because that's all the system that exists really is - except that a private system of bank insurance would (like private healthcare) ensure far less people at a far greater cost.
"Saying that you require inflation referring to the higher costs is ludicrous really and what contradicts that is the fact that private businesses main goal is to make profits and how do you maximise your profits?"
you seem to be confusing inflation in the money supply with inflation in prices. these are not the same thing and should not be confused, as you seem to be doing.
there is no formula for price inflation. that's the basic idea of a market system - that prices should be allowed to go up and down based on the costs of production. in the modern economy, this is determined by things like weather (the weather in california has increased the price of strawberries in canada), oil, currency exchange, etc. of course, we essentially never see prices come down when the costs of production decrease and we often see exaggerated price increases (price-gauging).
the cpi has almost nothing to do with inflation in the money supply.
"You maximise profits by minimising your costs, that essentially means using the fewest resources as possible, not abusing it."
that's exactly the point. firms will spend the least amount that they can, and will consequently end up sitting on profits. over time, all the money trickles up to the top, leaving nothing left for the unwashed masses to trade with. so, you either need to create more money for the masses to trade with or you need to find a way to redistribute that wealth.
now, i'm a socialist. i'd prefer the latter, actually - the abolition of currency altogether. but, if we're stuck with capitalism, we need the money generation to prevent mass poverty in the lower classes - and i'll take that choice over the alternative.
i've never heard of tom woods, and google doesn't suggest he's somebody i should take particularly seriously. britain was a horribly unequal and terrible place to live in the nineteenth century, and not something that should be held up as a model - if that's what you mean by "stable", there's a cross of gold out back for you to crucify yourself on. i'm expressing the dominant academic understanding of the situation. if you want to make more specific arguments, i'll be glad to entertain them.
the problem that greece, especially, is dealing with is an inability to print money. it's stuck with an over-valued currency that it cannot deflate, which has completely ravaged it's economy. there's various answers to this conundrum, but my point is that this is the same basic problem that the gold standard predictably produces and will be produced here if that kind of inflexibility presents itself in the money supply.
Käptn Kook
your understanding is grotesk, deathtokoalas. what you think is just ill. did you ast least gather information from "the austrian school of economy" like people asked you to?
or did you just dismiss them, because you learned these ideas you are perpetuating somewhere more thrustworthy?
getting rid of interest is such a no go. makes the whole inflation desaster even worse.
if there is no fiat money, saving your money in banks would release more capacities for investments. and lending your money would not even make sense, if you would not get any interest out of it. you have now less than before... very bad motivation for savings.
but what am i trying here... if you are not able to at least consider watching a speech of tom woods, why should i bother explaining you this?!
deathtokoalas
+Käptn Kook well, i didn't say i wouldn't consider watching something if you had a link; i did suggest that i probably wasn't going to read his book unless you sold me on it a bit, though - libertarian monetary theory isn't really my idea of a good read. sorry.
you're going to have to explain to me how you come up with the idea that reducing the money supply is going to increase lending. but, if you've got some kind of argument, feel free to present it.
when i was in university, i studied mathematics, which is a sort of an unusually interdisciplinary thing to study. nobody really has a serious separate undergraduate math department, so you end up taking a series of specialized courses for other disciplines, and, there's your math degree - although they ban you from taking the too easy stuff, like math for psychiatry.
so, i took math courses for physicists, math courses for chemists, math courses for biologists, math courses for computer scientists (and perhaps linguists), and even a few math courses for math courses, although mostly at the graduate level - and, also, math courses for economists.
i was always a little withdrawn, but you get to talking to people in classes, or overhearing conversations. i remember hearing an economics exchange student once explain it something like this:
you study economics because you think that's where the money is, in the economy. but, in the first year they teach you about market theory. then, in the second year they teach you that market theory is wrong. then, in the third year they just start making things up, and then it's all just making stuff up from there.
that kind of stuck with me as an interesting synopsis.
but, here's the thing: now they teach you that market theory is wrong in first year, so you don't walk out of first year thinking it's useful.
Libertarian Views Scotty M
Yeah, because Socialism is such a wonderful read, so wonderful it destroyed my country Scotland.
maersklandro
+deathtokoalas That's not the only reason the money supply has to increase. It primarily has to increase because businesses' expenses towards other businesses and their own profits have nowhere to come from except either money supply growth or other people or businesses' losses.
Libertarian Views Scotty M
Your monetary supply growth is what devalues the base of the currency and drives up inflation making the poor poorer.
maersklandro
+Libertarian Views Scotty M Not necessarily. If the newly issued money is distributed perfectly equally, it will actually make the poorest 50% richer (through their nominal wealth growing faster than the money supply) and the richest 50% poorer (through their nominal wealth growing slower than the money supply).
If you and I have $100 and $25 to our names, respectively, for a total money supply of $125 and we each get $10 of newly printed money, the money supply will grow to $145 for a percentual money supply growth of 16%.
Per $ purchasing power, at least in the short term, will be 86.20% what it used to be before the new money was printed.
Meaning that each dollar would only buy what 86 cents used to before the new money supply grew.
However, my nominal wealth will have grown by 40%. Taking that into account as well as the loss of purchasing power, we see that my actual purchasing power is :
1.4 x 125 / 145 = 1.2068... or a 20.7% increase in actual wealth.
Your nominal wealth will have increased from $100 to $110, for a nominal growth of 10%.
1.1 x 125 / 145 = 0.9482... or a 5.17% contraction of actual wealth.
There you go, mathematically proven that printing money and distributing it equally to everyone in society helps the poor and hurts the rich.
Of course, I don't expect an obtuse, ignorant, lying right winger to admit the simple mathematical fact I just outlined.
deathtokoalas
+maersklandro
it's kind of the same statement. the fact that the upward flow of capital is zero-sum is only a systemic problem under capitalism in the context of exhaustion, but what you're saying is basically a restatement of what i'm saying. capitalism is all about gaining at another's expense, after all. that's no travesty, it's the point. but the game needs sufficient circulation in order to be played, or everything dries up.
deathtokoalas
+Libertarian Views Scotty M
this always blows my mind, although i've seen it before: the market fundamentalist that opposes price changes.
currency exchange is only a minor factor in price-setting, and currency inflation is only a minor factor in currency exchange. you're supposed to be the Market Man. you're supposed to know these things.
i mean, it can make a difference, sure. the canadian dollar is down. bananas are up 20%. but, the canadian dollar is down because the petro-dollar is up and oil prices are down. our central bank has nothing to do with this.
i just don't get this. market advocates are supposed to be all hunky dory about price fluctuations - it's stability, it's fairness, it allows producers to pass on costs and savings to consumers. what happened to all that stuff?
it's all been replaced by this absurd reading of friedman.
i mean, ok: if a central bank increases it's money supply by 50%, that's going to make a difference.
but, you can't even measure the tweaks they make, most of the time. it's such a minor factor in real-life inflation that it's not even worth noting.
deathtokoalas
+maersklandro
i think you've effectively demonstrated how specious economic logic can be, when scratched a little bit.
kind of an off the wall assumption about purchasing power, don't you think?
Käptn Kook
just anyone.. please shut up.. with this nonsense.
deathtokoalas
+Käptn Kook i think i broke this one.
maersklandro
+deathtokoalas No, it's not the same statement.
You're saying that the money supply needs to grow with the population.
I'm saying it even needs to grow if the population is contracting.
It needs to grow continually, as long as there is capitalist / monetarist, private, for profit, dispersed / decentralized economic activity.
Otherwise there's nowhere for the money required for profits and expenses towards other businesses (subcontractors, suppliers) to come from, except other people and businesses' losses.
Basically, there's a net purchasing power deficit inherent to capitalism.
And there's also net directional money flows in capitalism. From retail businesses to capital goods manufacturing and servicing businesses. And from people to businesses, because all businesses take in more money directly from either people or other businesses than they pay back out directly to people.
All of this need to be continually financed through the continual issuance of money ex nihilo. Which, because of the law of diminishing returns, needs to be geometrical.
And which, in capitalism, is done through interest bearing consumer loans such as home mortgage loans and car loans.
Until the credit market collapsed in 2008. Because capitalism is basically a pyramid scheme made up of several different pyramid schemes and simply can't run on forever.
When private borrowing and spending stops growing, let alone stops or even contracts, the government has to step in and create the needed monetary growth through deficit spending.
This is one of the reason capitalism requires population growth to function. It always needs more borrowers.
It's also why the banks lent to subprime borrowers (unemployed, unemployable, bereft of assets to pledge as collateral etc.).
And why illegal and legal immigration is tolerated. That and driving down the cost of labour.
When there isn't enough private borrowing or spending (because you've simply run out of borrowers you can lend to, no matter what you do), the government simply has to step in and borrow and spend through deficit spending to create the required money supply growth.
Which the fucktarded, drooling idiot right wing and their right wing electorate vehemently oppose.
As if :
1. money were scarce when there's tens, hundreds or even thousands of trillions of monetary units worldwide and growing.
2. money had intrinsic value when it doesn't and it's created out of nothing. This is closely tied in to 1.
3. money poofed and disappeared out of existence when spent by the government as part of deficit spending. Which is false, the money doesn't disappear. It goes to the private contractors hired by the government to the work it's funding through deficit spending.
That money will continue to percolate through the economy, paying for the production and rendering and consumption of goods and services.
And an even bigger, overarching problem is that the capitalism of the present and near future doesn't need employees all that much and needs fewer of them all the time even though it still needs consumers and borrowers, probably more than ever.
But you can't really have the latter without the formers.
What do you mean by 'off the wall assumption' of purchasing power?
In my argument, I used the (ideological enemy's) (assumption / presup)position of the right wingtard, that purchasing power of money is in an exact and immediate relationship of inverse proportionality to the money supply.
Libertarian Views Scotty M
Yes necessarily, you cannot make the poor richer off the back of printing fiat currency out of thin air which devalues the base of the currency and shoots the cost of living up at the same time. In fact it was primarily the reason for the wider gap between the rich and poor for what Labour Party caused between 1945 to 1979, the laughable thing is the rich are not affected by this because they hold all the assets.
For anyone to claim that printing fiat currency out of thin air can benefit the poor simply be redistribution of perfect equality is simply nonsense. The valuation of the purchasing power driving down does not equate to poor people becoming richer, it results in them becoming poorer as that is all they hold in hand for the work they do in exchange.
For every £1 and $1 you print there is a 1+ debt added to the currency, the more you print in circulation the lower the valuation of the currency, the higher your costs of living grows from that inflation of the paper currency, the poorer people become. That is why 50 odd years ago you could buy far more with £10 or $10 than you ever could today, to say otherwise is simply nonsense, or do you want to argue with historical recorded facts proving your Keynesian nonsense caused £5 trillion UK debt? This picture comes to mind:
http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2011/1/14/1295007178679/Margaret-Thatcher-MP-with-007.jpg
That was Lady Thatcher proving that initial point despite being a monetarist herself.
Yes, I don't expect ignorance like you to know any better, your wonderful money printing showed itself in Great Britain between 1945 to the 1970s where we became known as the sick man of Europe, but it seems to me you don't like recorded history now, do you? Doesn't seem like it, because that is precisely what led to the decline of the British economy. It is a simple fact that when you devalue the base of the currency it makes the poor poorer.
Secondly, this idea that you are creating egalitarianism when the rich are not affected by the devaluation of the paper currency itself is laughable, but that's not the major reason of what is flawed with your argument, the biggest flaw and hole in your argument is the question, what exactly is moral about the theft and violence by a government to steal tax money to redistribute? As for your mathematical nonsense? Please, you're speaking theoretically about egalitarianism when the history of Britain is contradicting you.
Nor do I expect an ignoramus like you to understand the only places in history that ever saw the wealth gap close were free markets like Hong Kong where the wealth gap closed between 1961 to 1997 meanwhile it was a widening of the wealth gap between 1945 to 1979. But I wouldn't expect you to understand the costs of living rising and purchasing power driving down making poor people poorer and rich people not affected by this to cause a wealth gap, because you're not intelligent enough to understand that.
Gaining at another's expense?
Yes, because Standard Oil reducing a barrel of oil from ¢30 a barrel to ¢5.9 cents a barrel by 1897 was gaining at others expense, wasn't it? It gained at others expense so much that John Davison Rockefeller enriched the whole of society and opened opportunity, the gate to Henry Ford's automobile industry, but I suppose no one benefited from that now, did they? Oh wait a minute, everyone's driving about in cars.
Yes it does blow your mind, because you're an economic illiterate, there is no such thing as a literate Socialist, it doesn't exist. Who in the right mind regardless of whether you're a Socialist that supports the mixed economy or just a Socialist in general thinks you can enact price controls and then expect efficiency at the other end of it? The only people who think government price controls are efficient, are those who do not understand the fundamental basics of economics and have never studied pricing.
I mean who in the right mind is daft enough to carry out a government price ceiling or price floor which inevitably causes the distortion of market value destroying the information of profits and losses and causes what we call the Economic Calculation Problem where government cannot calculate value rationally meaning that it cannot allocate scarce resources efficiently? I'll tell you who thinks that is rational, an economic illiterate.
If you understood the market son, you would know you do NOT set prices, that is exactly what causes waste and shortages and the misallocation of scarce resources, real value is what the market sets value and that is determined by consumers, so this idea about price setting is just ignorance. Does Venezuela and food shortages ring a bell after what government caused with its price ceiling? Does the housing bubble on the lead up to 2008 ring a bell with your wonderful Labour Party RENT CONTROLS ring a bell? Yeah well it should, because if you understood economics that is primarily the reason for the housing bubble, it caused a shortage.
"our central bank has nothing to do with this."
You're living in 2016 now and you don't understand the problem with central banking? I'm guessing you are a millenial, born after the year 2000, how can I tell? You're a brainwashed Marxist subject to the Marxist educational system under Obama, what a bloody joke. Are you trying to tell me your central banking system isn't a problem for why you're facing these problems today? Are you having a laugh?
"i just don't get this. market advocates are supposed to be all hunky dory about price fluctuations - it's stability, it's fairness, it allows producers to pass on costs and savings to consumers. what happened to all that stuff?"
Of course you don't, you haven't the intelligence to understand it, that's the reason why you don't get it. Prices fluctuate because value does not remain the same, what this proves is you do not understand prices, nor do you understand supply and demand, are you telling me the price should remain the same if you end up with a shortage of something? So how then do you know if you have a shortage? You don't, because that's what PRICES tell you, PRICES are signals, without the information of prices you don't hold the information, you don't know. This is why you are illiterate.
Absurd reading from Friedman?
More like understanding basic economics which you clearly do not.
From what the Federal Reserve caused on the lead up to the Great Depression which ignorance such as yourself attempted to try and blame the free market for? Please, you are the same type of stupid person who tried to blame Calvin Coolidge and tried making that fool FDR, that TYRANT out as if he was heroic, the same FDR who prolonged the Great Depression with all his Socialist government interventionist nonsense, argue with that historical fact and you will prove to me you don't know history.
deathtokoalas
+maersklandro i apologize for the late response. i got busy focusing on something more important to me. i'm de-nicing over the next few days, so i have some time.
"I'm saying it even needs to grow if the population is contracting."
that would not be accurate. you're assuming a sense of moral order that the capitalist class does not have. for historical examples of the consequences of such policies, see the disastrous levels of inequality in nineteenth century england. it would create a brutal, class-based society that may inevitably collapse - but capitalism is too short-sighted to see it's own inevitable decline, and too greedy to care about the consequences of inequality.
but, what does need to happen for capitalism to work, however crudely own defines 'work', is circulation. and, on that point we are making the same argument. whether we need to increase the money supply to ensure circulation in the face of decreasing dollars due to population growth or we need to increase the money supply to ensure circulation to offset the effects of accumulation, or we need to increase the money supply to ensure circulation for some other reason, we need to increase the money supply to ensure circulation. and, it's maybe a better idea to understand it at that higher level of abstraction, so you can recognize other equivalent concerns when you see them.
"Otherwise there's nowhere for the money required for profits and expenses towards other businesses (subcontractors, suppliers) to come from, except other people and businesses' losses."
but, capitalism can function just fine by circulating money only amongst those who own capital - so long as the existence of a feudal labour system is taken for granted. but, the money does at least have to come from other people's losses.
there's nothing preventing the system from running with a fixed money supply, so long as the money is circulating. it's just an awful system to contemplate - it basically necessitates slavery. the united states has operated under this system, and it did not collapse - people were just miserable within it.
"When there isn't enough private borrowing or spending (because you've simply run out of borrowers you can lend to, no matter what you do), the government simply has to step in and borrow and spend through deficit spending to create the required money supply growth."
that's not true, either - and your concept of money creation seems to, itself, be monetarist. government doesn't create money out of thin air. that's right-wing nonsense - propaganda, really. what it can do is liquidate assets and float them on a market in the form of bonds. banks can create money, but it's not the same thing.
if you can cut through the confusion in what you're saying, you're again assuming a concept of moral impetus that capitalism does not have built into it. we can allow the banks to fail. we can allow people to lose their homes. we can watch people starve on the streets and not help them. it's not pretty, but allowing these things to happen will not, in themselves, collapse the system - and, hence, your prescription is not necessary to uphold capitalism itself, but only necessary to minimize it's harmful effects - which capitalism does not, itself, see as necessary at all.
Libertarian Views Scotty M
Disastrous inequality in 19th Century England?
What an ignoramus, really?
What was the wealth like in Britain between 1650 to 1700 and then compare that to 1850 what was the wealth like then? You don't know, you're clueless, you just made something up in your own head in hope that someone didn't have an answer to flatten you with, I will later on.
Here is the reason you are a moron
Between 1650 to 1700 here is what the 3 class groups in wealth looked like:
EXTREMELY WEALTH
> consisted of 2% of the population
> held 80% of the wealth
MIDDLE CLASS
> consisted of 8% of the population
> held 10% of the wealth
WORKING CLASS
> consisted of 90% of the population
> held 10% of the wealth
NOTE: wealth in this period was measured largely by land and building ownership, take into consideration there is a slightly different measurement in the mid 19th Century as more had been introduced. Now that we can see the statistics from that period prior to the Industrial Revolution and note that the extremely wealthy who were the monarchy owned practically everything, there was barely anything left for the middle class and working class people, notice how the working class and middle class both held 10% wealth? Let's compare that to 1850:
EXTREMELY WEALTH
> consisted of 2% of the population
> held 30% of the wealth
MIDDLE CLASS
> consisted of 58% of the population
> held 50% of the wealth
WORKING CLASS
> consisted of 40% of the population
> held 20% of the wealth
Take note of this, as you can see the working class population dropped from 90% to 40% as they moved up into the middle class which is why the middle class moved from 8% of the population to 58% of the population. As you can see the middle class went from 10% wealth to 50% wealth and the working class went from 10% wealth to 20% wealth, the extremely wealthy went from 80% down to 30%, although the extremely wealthy became richer, you can see wealth disparity spread, there was more equality.
That's why you never trust a lefty with history.
The above proves lefties do nothing but talk shit.
maersklandro
+deathtokoalas I didn't say the state creates money. It doesn't. Most states have not issued any money for centuries. You're responding to points and assertions I never made.
The banks create money. And mostly the private banking system at large, very little of the money supply is actually created by the central bank. And that's a private bank too, even when the state is majority or even sole stakeholder.
Because the state doesn't issue money even when it's majority or sole stakeholder of the central bank.
If it had the power to issue money it would not need to borrow it, at interest, from the central bank or other banks.
It could simply issue the money it needs to finance the budget deficit itself, to itself, without needing to borrow it from anyone. So with no debt to pay it back, let alone with interest.
Only right wingers could claim that borrowing money from one's self, at interest, that one's self issued out of nothing to lend to one's self makes sense. So only right wingers claim the central bank is a state/government organ/institution.
And the state can't even borrow directly from the central bank. Through law in most countries, it has to do it through the intermediation of private banks which simply add more interest to the issued debt and perform no other role at all in the process. In the US these are called prime lenders.
Also, you're asserting I attributed morality to capitalism when saying that the money supply has to grow geometrically perpetually for capitalism to function, even when the population is stagnant or even contracting.
I did no such thing.
I explained that the reason for my assertion is that, without a continually geometrically expanding money supply, there is nowhere for businesses expenses towards other businesses, let alone profits, to come from except other people or businesses' loses.
Presumably, you extrapolated from this and assumed the reason I said capitalism would not work if business expenses and profits could only come from other parties' losses was because of some modicum of morality inherent in capitalism or something of the sort.
That's not what I believe at all.
I believe that without a perpetually geometrically expanding money supply (or if that money is not introduced into the real economy but instead withheld by the banking system and the sick fucks that work in or for them and own them), the real economy enters a contractionary spiral.
Like we saw in the Great Depression and we are seeing today, since 2007~8.
This could result in a reversion to feudalism, which would technically constitute a failure or collapse of capitalism.
Or, theoretically possibly, a revolution or uprising where capitalism is replaced with state capitalism or socialism. Or maybe even something completely different, like a Technocracy or RBE.
Capitalism can't operate fine with a static money supply.
Businesses can't operate and won't be operated when, because of the static money supply, there is less than a 50% chance of just breaking even, let alone registering a profit. And no new businesses would be started either, to replace those that went out of business.
Ownership of wealth and the money supply would concentrate even faster than in a 'functional' capitalist economy and more and more of the population would simply drop out of the economy altogether, with no means of income whatsoever and no or trivial savings.
Most people would quickly lose all of the little property they have by either it being confiscated by the banks they supposedly owe money to or them having to sell it themselves, at pennies on the dollar, to purchase food.
After they have nothing at all, if not long before that, they'd be forced to turn to crime, if they hadn't done so already, begging and panhandling or simply starve or die of exposure.
Capitalism goes into a spiral of economic contraction and wealth concentration which is untenable because of the social effects it has and either leads to feudalism or a revolution.
Or at the very least, significant political changes, normally to the left. At least that's what one would expect.
Unless, of course, the population is as stupid, ignorant and brainwashed as they are today.
Where the already heavily right wing thick as pig shit and ignorant electorate goes even further to the right with every failure of capitalism.
Also, the owner class of today's capitalist society will soon simply be able to mass exterminate everyone else using robots or technology. Which they would not have been able to do at the time of the great depression.
And they'll do it to, if they can. Especially as they don't need most people alive for slave or wage slave labour even today. As the vast majority of jobs today are either redundant or useless in the greater scheme of things or they can already be automated.
So either capitalism is overthrown and replaced with something other than neofeudalism soon, such as a Technocracy or RBE or communism with robots, or we're quickly headed towards the greatest genocide in human history.
There's no confusion in what I'm saying. You're reading and responding to things I never said. Or reading things into what I said that I never meant.
deathtokoalas
+Libertarian Views Scotty M i'm blocking scotty again. he's unable to put together a coherent argument, and not worth my time. but, i want to correct a few of the baseless accusations he put down in order to tear down the strawman he then tore down.
1) i would identify as gen x.
2) i've pointed out a few times that i'm from canada.
3) i reject marx. i think he was an authoritarian tyrant.
4) i do not actually advocate monetarism. i'm a leftist. monetarism is not a leftist type of thinking. i actually advocate the abolition of currency, and it's replacement by a needs-based system. this is a view that is more historically associated with anarchists like kropotkin. it is a very different proposed social order than scotty is suggesting i would support.
in all his huffing and puffing and finger pointing and baseless accusations and tearing down of strawmen, scotty never addressed the contradiction in viewing the market as a dynamic source of pricing and being deeply opposed to inflation. he doesn't seem to realize that the inflation is a consequence of the market, rather than of monetary policy - and that his solution would consequently actually exacerbate the problem.
i'm having a hard time making precise sense of the numbers he recently posted, and he provided no source for them. marx himself wrote widely on the rise of the bourgeoisie, and i think that's what he's trying to get across - although his dates seem wrong, to me (the bourgeoisie in england would have risen earlier than 1850). but, the language of "middle class" suggests that the bourgeoisie was less separated from the proletariat than the aristocracy - and this is really just propaganda. the trick is that he changes the meaning of the middle class halfway through, to make it look like the rich went from 80% of the wealth to 30% of the wealth. and, i think he knows what he's doing, too - that it's just open dishonesty.
but, even so, this says little about inequality in the period, as it was defined by the terrible conditions of the british working class.
deathtokoalas
+maersklandro
i'm going to pull out of this discussion as well. i don't actually disagree with much of what you're saying (although, in some countries - like canada - the separation between the central bank and the government is weak enough that the state can actually print interest-free money directly if it really wants, although it tends not to), so much as i disagree over the question of whether the effects are enough that capitalism requires inflation for this reason.
i mean, look at europe. they have a zero-inflation monetary policy. it has essentially destroyed their society - they're being pulled back into the dark ages by their adoption of a gold standard. services are crumbling. unemployment is structural. mass poverty has become normal. we've seen demonstrations all over the place. but, you know what? the elite are actually doing quite well. they don't seem to be hurt by this zero-inflation; they're thriving. and, the police are functioning properly in making the masses invisible to them.
so, i do think there's a moral bias underlying your perspective - even if you're not entirely aware of it. maybe, instead of rejecting that claim, you might think about it for a bit, first.
Käptn Kook
finally...
maersklandro
+deathtokoalas Scotty is a well known right wing troll who seems as ubiquitous as he is immune to logic and reason and dishonest.
Might be a professional propaganda operation software bot or team of paid trolls.
I define working or functioning capitalism as capitalism where capitalism functions with the consent or even support of a large majority of the population. Where a majority of people would vote or even fight to preserve it.
Also, you make the mistake of confusing 0 inflation with 0 money supply growth. This is pretty monetarist and right wing of you.
You yourself said that money supply growth need not mean proportional inflation.
There can be money supply growth without proportional inflation.
Have a look at this chart for Euro Area Money Supply M3 :
http://cdn.tradingeconomics.com/embed/?s=emuevolvmonsupm3&v=201601111707n&d1=19160101&d2=20161231&h=300&w=600
deathtokoalas
+maersklandro the zero-inflation target refers to the money supply concept rather than the cpi concept, although it's expressed in a kind of intermediate point of interest rate policy. the eu central bank isn't pretending that it can affect the cpi through monetary policy.
maersklandro
+deathtokoalas I'm not sure what you mean by that, that central banks or at least the ECB target money supply growth rather than goods basket price growth.
It's the first time I've heard that central banks give a damn about what the money supply is rather than giving a damn (or pretending to) about goods basket price indicator.
That's irrelevant as well, if not compared with the median wage.
Rising prices are not a problem if wages or incomes rise as fast or faster. They're only a problem for savers, if prices rise faster than interest accrues.
I'm not expressing an opinion on what the ECB wants or does not want or can or can't do to control the cpi.
I'm trying to show that for capitalism to function, the money supply needs to grow geometrically continuously.
And for that to occur, the banks need to lend continuously, ever more, to ever more people and businesses. And ever more people and businesses need to want to borrow and to meet the requirements or conditions for the loans they seek.
Which is why (what the right wingers would call irresponsible but they're just morons) borrowing and spending has been encouraged and conditions and requirements for bank loans have been relaxed more and more over time.
Also, you might even say that money supply growth, which is required by capitalism to continue to function, requires population growth, rather than the other way around.
And also why most if not all (not very well informed on the matter) nations run budget deficits and why these have been growing over time. Because private sector borrowing simply is not enough. And has not been for a while.
Only time a local, state or national/federal budget can be balanced is when private borrowing is booming so there isn't so much of a need for governments to borrow to ensure the necessary money supply growth.
Of course, moronic, ignorant right wingers want to cut deficit spending.
Because they're just that fucking stupid.
They actually think :
1. money has intrinsic value or at least should (when the very notion and definition of money is that it has no intrinsic value or negligible intrinsic value, otherwise it's just another good and using it is no different from barter).
2. money is scarce, has to be earned through honest, hard work.
3. people make exactly as much money as they deserve and their work is worth.
4. running a budget deficit is like burning money (as if that were a problem, you can simply print more) and unsustainable (lulz).
5. issuing any new money is unsustainable and causes hyperinflation.
6. we should have a static money supply, preferably "backed by" gold (as if fractional reserve banking cares whether the underlying asset is gold or paper and we didn't already have that system in place a century ago and it did nothing to constrain money supply growth - because that's what capitalism needs to work).
7. inflation is always awful and bad for everyone. My mathematical thought experiment earlier in this discussion disproves this.
Now please compare these two graphs and tell me capitalism doesn't need a perpetually geometrically expanding money supply to work :
http://www.tradingeconomics.com/greece/money-supply-m3
http://www.tradingeconomics.com/germany/money-supply-m3
How is Greece doing economically and how is Germany?
Which of the two has the fastest declining living standards?
Which of the two has the highest unemployment and youth unemployment and homelessness?
Now you tell me again why you disagree with my assertion that capitalism needs a geometrically expanding money supply to function or work.
Because I did not perfectly exactly define what functioning or working means when referring to capitalism?
Ok then, can we at least agree that German capitalism is working better than Greek capitalism because German capitalism is able to grow its money supply while strangling Greek capitalism through contracting its money supply?
Isn't the capitalism which is able to print its own money in whichever quantities it wishes doing arguably better by every possible metric and statistic you choose to use (not just economic indicators but also social indicators) than the capitalism which depends on a foreign capitalism to issue its money supply, a foreign capitalism which has decided it would be just fine and dandy to starve peripheral european capitalist countries of money, not by limiting or constraining them out of any money supply growth but actually contracting their money supply?
Germany has control over the ECB and, by virtue of having control over the ECB, the banking system rules and regulations as well as policy throughout the eurozone.
Which means it has control over which countries' banking system get paper and coins to cover withdrawals from its banking system of money of account it issues internally, in and through its national banking system.
Which means it can collapse the monetary / banking system of any country in the eurozone which is issuing more money than itself out of nothing.
Which means it can collapse the money supply of any country in the eurozone.
This was the intention for the euro from the outset.
Joining the eurozone is the biggest, downright suicidal socio-economic policy mistake a country can make.
It's basically electing to be a colony of Germany.
Germany conquered Europe. And did so not by the muzzle of a gun but by getting moronic, ignorant people and the treasonous politicians they voted into office relinquish their national, sovereign right to issue their own money inside their own country, without requiring the consent or approval of a foreign social, economic or political entity, institution or organism.
Kindly tell me what of the above you disagree with, if anything.
deathtokoalas
+maersklandro that was worded awkwardly. i pointed out that i'm quitting smoking this week. i was trying to disarm a misperception, and it came out badly.
the purpose of the central bank is to "minimize inflation" and allow for "price stability". but, what the central banks do - set interest rates - doesn't have a large effect on the fluctuations we see on a day-to-day basis. they will talk about the cpi in various types of propaganda. and, in the most abstract sense it is true that they could possibly affect the exchange rate by fractions of a cent, and it could have some barely measurable effect on the basket of goods. they will interpret this as a part of their mandate, because it's what the public wants to hear, kind of thing. what i was trying to say is that they don't really buy into this, it's just political nonsense.
what the central banks really do is prevent currency competition on a national basis. that's what you had before central banks. then, you'd have buddy farmer in missouri dealing with his nest egg (and the price of eggs) floating around all over the place because the morgans and rockefellers were having a currency war. that's what the mandate of "controlling inflation" and "maintaining stability" is all about. and, all the bank has to do to ensure this is exist. it's not a question of what the rate is. these quarter of a percent hikes and cuts don't change anybody's behaviour. it's a question of there being a single rate that everybody abides to.
the m3 isn't liquid currency, so the argument you're constructing is based on flawed data. the problem in greece is that they can't devalue. they would of course devalue by printing money. but, they've abandoned their sovereignty and replaced it with actual, real debt.
the number of euros is constant through the eurozone, and determined by the central bankers. there's no basis for comparing the money supply in greece to the money supply in germany. it's the same money supply. and, that's the actual problem.
greece and germany need to set up a fiscal relationship that is similar to the one that exists between ontario and nova scotia. what we have here is an "equalization payment", where we collect taxes from the wealthy provinces and redistribute them to the poorer ones. we don't call this "bailouts". we call it "confederation".
maersklandro
+deathtokoalas If you don't like M3 you can look up M1 and M2. You'll see the same geometric growth pattern except a smaller absolute size and absolute growth.
I don't know why you don't like M3 as a measure though. Because for every long term deposit, there's free money wandering around in the economy as banks don't sit on deposits. Especially long term deposits. Or at least they didn't use to when the money from the central bank wasn't actually free.
And you can look at whichever country you like, you'll see all of their money supplies (M1, M2, M3 etc.) are growing. Except for countries conquered and occupied monetarily by Germany at the periphery of the euro monetary zone.
For instance, between January 2007 and November 2015, Romania's M1 money supply (cash in circulation and overnight deposits) grew 2.64 times, from 51,638,854,200 RON to 136,061,806,900 RON.
I reject your contention that the money supply is static.
Greeks and Greek businesses and businesses operating in Greece have less money than they used to have even a year ago, speaking nominally.
While it's the other way around with Germans, German businesses and businesses operating in Germany.
The money supply is not constant in the eurozone.
There is basis for comparison. They're not the same thing. Euros in a Greek's bank account and wallet are not the same thing as Euros in a German's bank account or wallet.
The Greek can't spend the euros in the German's bank account or wallet on himself or something he wants. Only those euros in his own bank account or wallet..
Also, his banking system can't issue more euros out of nothing as it pleases, regardless how the German banking system feels or policy makers feel about it.
And that's the actual problem.
I agree with your last paragraph but that is politically untenable because of the stupidity, ignorance, selfishness, callousness and prejudice of the electorate in Germany.
deathtokoalas
+maersklandro it's the m0/mB that is relevant to the discussion and the comparison to the gold standard, and it's been flat forever. that's what they need to actually increase to get the economy going. and, it is static across the eurozone - that's the point of having a eurozone. but, the policy is to keep it flat, or even reign it in. the other measures of wealth are largely only meaningful to investors. most people never engage with wealth beyond the sense of actual dollars coming in and out of their accounts; most people have precisely no real wealth at all.
the germans would actually probably benefit from decreasing the m0, whereas the greeks need it drastically increased. and, it's really actually that conflict that is the problem.
maersklandro
+deathtokoalas What? How does M0/MB matter at all?
The money in circulation matters. Which means M1, M2 and M3 matter, because of the reasons I gave (long term deposits aren't sat on by the banking system, even if you adhere to the incorrect view that bank loans come out of deposits).
By your claim you're basically saying only cash transactions matter or even exist in the economy. Not even debit or credit card transactions matter by this metric.
No, you're not even saying that. I have no idea what you're trying to say by claiming that M0/MB matters at all, for anything.
How do reserves at the central bank matter at all, for anyone?
And how does anything you've said disprove my thesis that the money supply needs to grow geometrically continually for capitalism to work?
deathtokoalas
+maersklandro what i'm saying is exactly that only cash transactions matter to the proletariat - that the rest is just make believe, for the benefit of the ruling class. the central bank consequently doesn't matter to anyone except investors, except in the sense that it minimizes currency speculation - and not through monetary policy, but by merely existing.
maersklandro
+deathtokoalas It's not make believe. Don't you purchase stuff with make believe money created by the banks out of nothing?
Didn't you ever get paid with that kind of money? Didn't you have to live on it?
I have and did. While I was unemployed I lived on fictional cash in the bank which I (my mom, really, as she owned it) obtained through the sale of an apartment and which I gradually used to redeem actual, real, physical cash to buy the necessities of life.
Even now, I get paid through bank transfers of fictional cash I then use to redeem actual cash to buy my groceries.
And I buy games and software applications on steam or online, paying using PayPal.
So I find your assertions that only cash matters to the proletariat (I most certainly am a proletarian) and that the fictional cash doesn't exist (it is money, it's just not cash) ludicrous.
My definition of money is quite a deal simpler.
If you can use it to buy stuff in the real world, it's money. Doesn't matter what its form is or how you can spend or receive it.
You see, I'd long been homeless and possibly dead or seriously ill if that were nto so.
Because I lived for quite while on the money off the sale of that apartment and no other source of income at all apart from paltry unemployment benefits of something like $47 a month, at today's exchange rate.
And the unemployment benefits were only for a few months. I think they don't last longer than 6 months unless you jump through a lot of hoops to prove you're actually looking. I had to claim the benefits because my mom wanted to shame me into finding a job.
Because she somehow thought I didn't want to or wasn't looking or something. Luckily I managed to find my current place of employment, a company from abroad which pays me via bank transfers as I work remotely, from home. As a support tech.
So I feel you are fudging how we feel about how things work and how we feel about how they should be working with how things actually work.
Believe me, I am no right winger. Nor proponent or advocate of capitalism. Furthest from it, in fact.
I myself would much prefer to see a moneyless society, with no private property (only right of exclusive and non-exclusive usufruct or personal property and a right to privacy) or guarantee of inheritance.
At the very least, I think we should have a citizen income, guaranteed nutrition, housing and healthcare.
However, I would much prefer a society completely free of money, profit, with no guarantee of inheritance or right of ownership.
Especially with regard to superfluous, unnecessary and luxury possessions such as a summer home, a yacht or your own means of production.
And apart from being an authoritarian, statist and culturally and socially conservative, I am as left wing economically as you can be. Possibly more than you are yourself.
I do not want to live in the society I was born in. I'd have much preferred to be born many decades from now.
All of the above don't change the fact that, in capitalism, the money supply needs to grow geometrically continually, with the new money being distributed to ordinary people, or it brings out the very worst in capitalism.
deathtokoalas
the m0/mb refers to cash in circulation, which includes actual transactions and debit card withdrawals. it doesn't include money created by bank practices, or by governments floating bonds for property.
you have never been paid in anything that is not included in the m0. even if you made money by selling real property. that is still a real transaction.
maersklandro
+deathtokoalas All money is created through bank loans. The people who bought the apartment paid for it mostly with money from a bank loan.
Which was basically new money created out of nothing through the issuance of their loan.
That money was not included in M0.
M0 is notes and coins in circulation, outside of bank vaults and the reserves at the central bank. Most of the money in any bank loan is electronic only. It doesn't exist as cash but only as make believe cash.
deathtokoalas
+maersklandro m0 includes all money in circulation - that is, all money that is transacted. it doesn't matter that the money was sourced by a loan (or that the way you're presenting this idea is wrong); the fact that it was used in a transaction and moved into your account brings it into m0.
this is not a difficult problem to work through. if all money is created by loans, and money created by loans is not included in m0, then m0 is precisely zero at all times. that is clearly false, so you should be able to immediately see that your reasoning is flawed.
the money created by fractional reserve banking is used in "money markets", not used for circulation. it goes into the stock markets.
you're very confused about how the banking system works, and i again need to point out that you're essentially repeating a lot of propaganda.
listen, i'm sorry - i'm not interested. and, i don't think you know what you're talking about, so i don't think this is a useful way to spend my time.
but, i think we should take a step back and realize that these definitions are not static. you might be looking at a different concept of liquid assets than i was. different countries define their statistics differently. in north america, m0 is understood to include money in circulation plus money than can be immediately withdrawn as cash - that is, money that is not tied into any kind of assets and is entirely liquid. not property, not bonds, not debt; actual money.
the point i was trying to make is that it doesn't matter how much make believe money the bank makes to trade on markets. what matters is how much actual money exists in circulation.
this is the measure of the money supply that you need if you're going to discuss comparisons to the gold standard, ways to balance out the business cycle or really anything else of any meaning or value.
and, in europe, this measure of money has stayed flat because the size of deposit accounts is steadily decreasing as a consequence of austerity. this is far more important in terms of measuring the money supply than anything that banks do.
i've explained to you already that those charts are not the charts you want to look at to understand why the euro zone is functionally a gold standard system, and why the central bank is less important in monetary policy than spending policies by national governments. the amount of money that is accessible to spenders has been flat in the eurozone for decades (conversely, it has steadily grown in canada). functionally speaking, the important point here is that government austerity programs reduce the real money supply - not that interest rates modify the make-believe money supply.
it's consequently not necessary to grow the money supply for capitalism to function, although not doing so will lead to mass unemployment and widespread poverty (as we are seeing today in europe).
it doesn't matter how money was created, whether or not it is "backed" by something, who created it or any of these other things. this is all a lot of nonsense. what matters is it's level of liquidity. that is what those subscripts refer to. and, if it's liquid it's m0/mb. it could be poofed into existence by aliens, or printed as counterfeit. the how is not important. it's the form the cash exists in that is important.
what i'm reacting against is the idea that creating make believe money for rich people to play games with will somehow increase the amount of money in circulation. that's reaganomics. and, it's absolute nonsense.
the only way to create liquid, accessible money is through government spending in the real economy.
--
David Longfellow
What is "Cultural Marxism"?
deathtokoalas
you probably know it better as "neo-conservatism".