On 12/16/2013 12:53 AM, Telmo Menezes wrote:
On Mon, Dec 16, 2013 at 5:59 AM, meekerdb <meeke...@verizon.net> wrote:
On 12/15/2013 4:23 AM, Telmo Menezes wrote:
On Sun, Dec 15, 2013 at 9:49 AM, Bruno Marchal <marc...@ulb.ac.be> wrote:
On 14 Dec 2013, at 23:27, LizR wrote:
I haven't had a chance to watch it, but I do know that banks are stealing
our wealth - as indeed are rich people generally, since "wealth breeds more
wealth" and that more wealth has to be extracted from you and me.
Money and richness is not a problem. It is the blood of the social system.
Money and richness is a problem only when it is based on lies, and when it
is used to hide the lies and perpetuate them.
Honest money enrich everybody. True, it is slower for poor, and quicker
for the rich, but when people play the game "honestly", everyone win, and
poverty regress.
In a working economy, there are few poor. Presence of poverty means that
there are stealers and bandits (or war or catastrophes). Accusing the system
and money itself is all benefices for the bandits. It dilutes their
responsibility and wrong-doing in the abstract. It helps them to feel like
not guilty.
As I said, criticizing the economical system is like attributing to the
blood cells the responsibility of some tumor since the blood cells feeds it.
It hides the real root of the problem, and focus on the wrong target.
I agree, unsurprisingly. :)
I also agree with Liz, in that it is clear who is stealing the money.
The "rich get richer" is a very fundamental phenomenon. Even if we remove
money from society, it will still happen because it also applies to social
interactions. The more friends and alliances you have, the more likely you
are to get new ones. This is the reason why every entrepreneur seeks the
allegiance of celebrities. It's a more subtle form of currency.
However, we got trapped into a system that effectively amplifies "rich get
richer" dynamics. This system is central banking -- since the powerful have
the capacity to issue fiat money in the form of debt, two things happen:
It doesn't take central banking to make the rich get richer.
Yes, that is what I said. My claim is that central banking amplifies the effect.
Ever since
civilization began the rich have been able to get richer just by owning
stuff. For a couple of millenia it was owning land. If you owned land then
serfs and peasants had to pay you for working the land. Then merchantilism
added ships to what you could own. Then industrialization added mines and
oil and factories. Banking and insurance added financial instruments that
you could own. But it's all of a piece. If you own stuff that you can
rent/lend you're rich and you can get richer.
But central banks can print new money. This new money is lent. The
more money you have, the more new money the banking system will lend
to you. Thus the amplification. Also, the marginal value of money
decreases the more you have, so this devaluation and speculation with
new money exposes the poor to more risk, while they don't actually
have access to the investment opportunities that the rich have.
You always refer to "central" banks. But all banks always did this. The bank would take
1M$ in deposits and then make 10M$ in loans, depending on the fact that statistically only
a few depositors would ask for their money at any one time. So they collected interest on
10M$ while only having to pay interest on 1M$ (if at all). Of course this occasionally
resulted in "runs" on banks and consequence failure of the bank. Central banks were set
up as part of a system to regulate this. The central bank insures deposits, but also the
same regulatory system limits the discount rate, i.e. the amount of money a bank has to
have as a fraction of what it can loan. So Central banks exist to *limit* the "printing"
of money.
And the policy is generally adjusted to try produce small, but positive inflation. This
is because deflation is considered unstable. Inflation is stable and encourages
investment because just holding money loses value.
Of course you can also
influence government and governments exist largely to protect your property
rights.
- The money I have in my pocket is not safe. They can devalue it and there
is nothing I can do about it. They have a strong incentive to devalue my
money because they can give the new money they created to their allies,
through sophisticated mechanisms. It is very cleverly disguised, but it's
still plain old theft;
That means you have a strong incentive to invest/spend your money. And that
applies also to a rich person that has a lot of money - inflation encourages
him to spend it on something.
Right, and this prevents the bulk of the population from escaping wage
slavery even though technology could replace labour.
The reason technology doesn't allow them to escape is that they generally can't buy the
technology to replace their labor. When they can, as for example farmers do by buying
tractors, cultivators, etc, then they replace the laborers they would otherwise employ.
This causes the latter to escape wage slavery by being unemployed.
So one of the reasons for the current
recession is that wealth is very concentrated by inflation is quite low, so
corporations and wealthy persons are not motivated to take much risk on
investing their money; they can easily wait and see.
I would argue that a deeper reason is that technology made many jobs
disappear, but the inflationary economic system we live under cannot
accommodate that.
I'd say it accommodates that just fine from an economics standpoint. In the U.S. the
recession only lasted a year after the mortgage crisis; the GDP started back up. BUT
unemployment has remained high for three years. And I think you are right that technology
is a good part of the reason for that. But the other part is just because many are
unemployed and many more are concerned about their economic security, consumer spending is
low. The rich won't invest in making stuff if they think it will be hard to sell it. So
there's a negative feedback - deflationary instability.
- The more wealthy, who can invest, can leverage their investments by orders
of greatness. The more money you have, the more you can leverage it (by
effectively creating new "fake" money). The poor are the most vulnerable to
the inevitable systemic collapse that a debt-based economy will create. The
poor implicitly risk their homes and means of survival when the rich play
the big casino game of leveraged investments, derivative markets and so on.
But that money isn't fake.
Yes, maybe a better word is stolen, because it was created by diluting
the value of the money in people's banks accounts, but it is then
given to other people.
The poor may lose their home which has real
value. And even if they don't lose their home they end up paying
excessively for the money they borrowed to buy it - that's real labor value.
The rich gain real money, not just fake. All over Southern California
houses whose value dropped and are threatened with foreclosure are being
bought up for cash. It's not poor people who can pay $500,000 in cash for a
house.
Bitcoin might solve these two problems.
Naah. It's just another medium of exchange.
Unlike the existing mediums of exchange after the end of the gold
standard, a central authority cannot issue more bitcoins. Bitcoins can
only be produced by mining, with a predictable and increasing
computational effort, and up to a certain amount. So in some point in
the future the last bitcoin will be mined, and that's it. If I own a
bitcoin right now, I do not have to fear that it will get devalued by
political decisions. Also, it is not possible for a bank to lend
bitcoin that it doesn't own or that were lend to it, so there is no
amplification effect.
That's like going on a gold standard. There's only so much gold. Which is both an
advantage, in that is prevents inflation devaluing the gold, but also a disadvantage in
that there's not enough to support the level of international trade. But ultimately trade
depends on trust in the system. There's nothing to prevent a bank that owns 1M bitcoins
from lending 10M in bitcoin value. It's all numbers in ledgers.
I'm not saying that Bitcoin is a silver bullet that will solve all of
the problems, but I find it hard to argue that it does not prevent
inflation by the actions of central authorities and that it does not
prevent the ability of the rich to leverage their investments by 1000x
like they can do in derivative markets with fiat currency.
Whoever owns a lot of stuff
will still be able to use it to get more -
Yes, this is true even without money, as I said before.
without actually producing the
extra value, rather by taking it from those who have little.
One advantage of having rich people is that they can tolerate more
risk. This allows for the allocation of resources to speculative ideas
that could improve everyone's lives in the future.
That's fine and companies like H-P and Apple and Google were started that way. But some
enterprises are too big and risky for private investors. So satellites, vaccination, GPS,
the internet, radar,...were underwritten by government investment.
The problem with rich people is many just inherited their wealth and then they grow it
just by "renting" it, without contributing anything actively. I always find it
fascinating when a candidate for the U.S. Presidency is asked about his wealth (and most
of them are wealthy). He generally disclaims any knowledge of how it is managed and says
he has put it in a blind trust. This always raises the question in my mind, "If you're
not even managing the money (and you probably haven't for years) why should any of the
proceeds go to you? It's just money earning money."
Brent
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