[quote=ProudCorporateTool]> I also think it’s complete bullshit that the government feels that other people are entitled to what I earn. So you earned in a bubble? No help from the taxpayer-supplied infrastructure? You didn’t use the roads, you didn’t use the fresh air that gov’t regulations caused, you didn’t use the sewer systems, you didn’t use the relatively bribe-free business climate that the gov’t provides here? LOL[/quote]Tool -
I think I made details of that particular statement clear in post #55.
One more time…people, not programs, neither in totality either way. See post #55 for details.
Welcome to the site BTW. Have you watched Crash Course yet?
i’m quietly bothered that the little ones in this household might have to be outa reading distance when i open a thread.robie (father,farmer,husband,optometrist)
[quote=robie robinson]i’m quietly bothered that the little ones in this household might have to be outa reading distance when i open a thread.
robie (father,farmer,husband,optometrist)
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Have I missed something?
It will take nothing less than another war time like effort from the citizens of this country. This is war and we have all been drafted for an open ended tour of duty. We may not sacrifice like our troops do every day, but suffer we will. Grand schemes, social engineering and reelection pressures have put our backs against the wall. The tea party is the baby boomer generation’s version of an anti war protest. These folks resent being drafted into an immoral and unnecessary war to save America from a self inflicted wound. It has come down to participate or perish.
cmartenson: One of the conclusions that I try to coax, lead, and/or nudge people towards is acceptance of the fact that the economy can’t be fixed.
Jct: Can’t be fixed by people who are taken in by the Big Lie of Economics hiding that printing money fights inflation Shift B.
CM: “debt-based money systems operate best when they can grow exponentially forever.”
Jct: LETS is a debt-based system that doesn’t grow, it’s interest that makes debt grow exponentially.
CM: “Too much credit”
Jct: Is what people who think we have inflation Shift A, too much money chasing the goods when it’s the same money chasing less goods, inflation shift B.
CM: “the ability of the loan to repay both the principal and interest from enhanced production”
Jct: Sure you can pay your principal with the principal you received but banks won’t accept enhanced production in payment of your usury. Can’t pay P+I when we all only got P. Musical chairs. Someone must fail and be foreclosed. If it’s really Shift B inflation, printing paychecks fights inflation. Just find “Big Lie of Economics” or “Shift B inflation”
[quote=Mike Pilat]It always seems to be the middle class that gets ripped off. I certainly can’t endorse China in many ways, but economically they have an inherent advantage over us, even if they do abuse human rights. China tends to do things because they are smart and productive.
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I wouldn’t be so sure about that…
Gail Tverberg: Observations based on my Trip to China
Globalization, dude, globalization… we all think the same, we’re all lemmings! Sad, but true
ROTFLOL
Samuel
Yes, and 7 billion people looking out for their own well being, unregulated, will consume the planet to death. Regarding Point No. 2, since we both agree that our (current) governments have no intention of acting benignly towards us, why do you assume that a small group of oil company and bank CEO’s with extreme amounts of power over everyone else (and who were not elected and have zero accountability to anyone) will somehow behave any better than politicians, when their prime directive in life is to make money? And when they control the politicians?
I don’t disagree, unless those laws and regulations are enacted to legitimately protect the environment or your neighbour.
I totally agree. It’s about personal responsibility, not only to yourself, but to everyone else and to the environment. Government bailouts do not promote this.
I totally agree, except that it’s not the fact that it is fiat currency that all these problems arise, rather it is because that fiat currency is issued by private banks as debt, and it is done so on a fractional reserve basis, and because that monetary system revolves around interest, which creates a requirement for perpetual growth. If the government issued its own fiat currency, debt free and interest free, those problems would go away.
If we had limited government with little power then there would be nothing holding back the lobbyists! Even fewer politicians to buy off! And all those programs and regulations you disparage as being corrupt … I haven’t seen any corruption there at those low levels, at least from my perspective in Canada and a little while in California. From my experience, government workers work hard for little pay, and do things that are abolutely necessary to protect the environment and the vulnerable. My experience may not be representative of all government bureaucracies of course, and certainly not at all representative of the current US federal government, because it has trillions of dollars to spend to “stimulate” the economy!!! We all know how that turns out, right? It’s a disaster waiting to happen. That’s Keynesian economics for you.
That centrally managed money system is managed by private bankers for their own benefit. That is the antithesis of socialism. All the money currently being printed up and thrown around is the bankers’ last ditch attempt to keep the ponzi scheme going for as long as possible by keeping liquidity up, it has nothing to do with socialism.
Government managed healthcare is the norm in the developed world, and they are all cheaper than the US’s pseudo-privatized, psuedo-socialized hybrid system. But I could delve deeper into this and argue that the US health care system is so ridiculously expensive because the US populace (and Canada too) has become addicted to junk food and that’s why everyone is sick and needs medical care. Everyone is addicted to junk food because the fast food and soft drink corporations spend lots of money trying to get kids hooked, for life. It’s a good investment on their part … long term profit-wise. Externalize the costs onto taxpayers (who pay for the medical system) and privatize the profits. That ain’t socialism.
Every country has a centrally controlled education system, what’s wrong with that?
Do you not understand that truly free markets are delicate things, and are easy prey for big bullies to move in and take them over, so then they aren’t free anymore? I am not interested in free market ideology. It doesn’t work. Corrupt entities do not bankrupt their way out of the system as the fairy tales say; they become central bankers and politicians and prevent their bankruptcies through money printing.
Totally agree, except for the first sentence. That’s why I’m a proponent of freegold and freesilver. People should be able to choose whatever medium they want to use as money. However, using physical gold and silver for everyday transactions isn’t practical and that’s why there should also be a parallel fiat currency issued by the government for that purpose (if people chooose to use it). The government would pay for its expenditures with its fiat currency (NOT issued by bankers), and taxpayers would be forced to pay their taxes back in that currency, and everything in between is up to individuals to come to their own decisions about how they deal with money. That fiat currency does not need to have any backing at all to function as currency, the point is that it’s not based on debt, it does not recieve interest, and does not require perpetual growth to function. Therefore, it can’t be turned into a ponzi scheme (unless we let our guard down and allow bankers to regain control of the issuance of money).
But the government is (should be) us!!! If our government is a corrupt fascist dictatorship, we need a revolution to kick them out! That’s what we’ll be getting!
Good point, thanks for that link. But private ownership of fishing rights doesn’t seem to work very well either in my experience. The best example seems to be the Scandinavian system where a “board” manages fish stocks and quotas, and that board is made up of different representatives from all the fishermen and interest groups, as well as government.
I agree with much of what you are saying but your thinking is polarized. I am not a leftist central planner. If you read through what I say it should be obvious that I am advocating maximizing individual freedoms for people who want to work for it, but not allowing that freedom to get out of hand so that it impinges on other peoples’ freedoms. In a world of rapidly diminishing resources, we all have to be more considerate and less greedy. Unfortunately, many of us (who unfortunately tend to be the same people who become billionaires and wield lots of power) don’t feel the same way, and therefore this morality of sharing should be “centrally planned” into them.
I totally agree, that’s exactly what I’m saying. Is it not totally ridiculous that over the last 15 years during the housing boom, workers spent their time building new freeways to new housing developments that weren’t needed, while existing yet necessary infrastructure was crumbling? That’s what I meant when I said that our ponzi scheme monetary system allocates resources towards making our economies bigger (new and unnecessary freeways) at the expense of making the economy better (maintaining existing freeways). And one other point, it is not the government per se that created this problem, it was the Federal Reserve via interest rate manipulation, a private bank that controls your money and your government.
Because they earn so much. Here in BC, our local billionaire, Jimmi Pattison, could probably pay for our provincial budget if he was taxed more heavily. And I don’t buy the argument that his wealth has enabled so many new projects to go ahead that otherwise wouldn’t have, and therefore he “deserves” to have billions of dollars. His wealth came from BC citizens and consumers, it’s all the same pool of money.
I don’t disagree, and that’s why we should be fighting the oil and other industries which control the government and prevent alternative technologies from coming to market that would improve your life, save you money, and promote further innovations.
http://green.autoblog.com/2011/05/19/senate-votes-down-bill-to-end-oil-company-subsidies-see-how-the/
[quote=Mark_BC]If we had limited government with little power then there would be nothing holding back the lobbyists! Even fewer politicians to buy off! And all those programs and regulations you disparage as being corrupt … I haven’t seen any corruption there at those low levels, at least from my perspective in Canada and a little while in California. From my experience, government workers work hard for little pay, and do things that are abolutely necessary to protect the environment and the vulnerable
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Oh really? How do you call this:
Muskrat Math
Don’t know about you, but this sounds eerily like those ten dollars a brick for a school you’re making in the south of Argentina that Ferfal’s talking about…
Samuel
Presumably, everyone opting to read and post here is in general agreement with Chris’ theses re: peak oil & the relative likelihood of increasing inflation or even hyperinflation/currency collapse despite the obvious deflationary factors. Even if one accepts his premises and suggestions re: financial preps (e.g. precious metals) and practical preps (eg. purchasing desired items that may increase in price and or decrease in supply) the operative question remains: Where does one opt to brace for/live in/thrive in the future we anticipate? (i.e. Stay put, move within or outside or one’s country).
How will the lenders be repaid if the borrowers decline to repay them enmasse. After all, if you think aout it, the wealthy have acquired the majority of their wealth off of the backs of those who have been influenced to borrow. How then can they charge them for the fruits of their labors which have been withheld all the while?
[quote=indecisive1]Presumably, everyone opting to read and post here is in general agreement with Chris’ theses re: peak oil & the relative likelihood of increasing inflation or even hyperinflation/currency collapse despite the obvious deflationary factors. Even if one accepts his premises and suggestions re: financial preps (e.g. precious metals) and practical preps (eg. purchasing desired items that may increase in price and or decrease in supply) the operative question remains: Where does one opt to brace for/live in/thrive in the future we anticipate? (i.e. Stay put, move within or outside or one’s country).
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Indecisive1
I suggest you use the Google Custom Search box in the upper right corner of many pages on this site, using a few key phrases. I believe you will find at least one thread about location, relocation, country or land considerations, etc. That will be a better launching point than this comment section devoted to Dr. Martenson’s “Death By Debt” article.
Poet
Fair enough.
ASSUMPTIONS OF TECHNOLOGYTechnology may increase worker productivity, but because workers can do more with technology, technology actually reduces the need for workers to accomplish the same task. What was done by hand is done by machine. What took hours to hand-enter takes second to do now. But the primary fruits of productivity boosts do not belong to the workers. They belong to the owners of the technology." "All of economic history has taught us that. Which is why we see the extremes of income inequality that we do today, and so many people out of work. Sure, GDP and productivity per capita rises, but most of it accrues to those at the toYou want more jobs . . . here's a way. We should try to remove all of the economic penalties (taxes) from labor. In other cases we raise taxes on things that we think are socially destructive (cigarettes and alcohol) and we remove taxes from things we think a good for society (churches and charitable organizations.) Jobs are good for society but we tax them heavily. If a person does work, they pay several taxes. If a machine does the work it pays none. When a machine does the work of 10 people then it could be taxed at the same amount that 10 people would have paid. That would be fair . . . right? With this system I don’t think we would be lacking for jobs. The payroll taxes could be lowered to a tiny fraction of what they are now. The portion of the payroll taxes that an employer pays for hiring people could be lowered significantly. A person working and paying taxes . . . good. A machine working and paying no taxes . . . not so good. Just a thought . . . nothing is going to change as the rich elite like it this way . . . keeping the workers down. acomfort
Several decades ago, Margaret Thatcher claimed: "There is no alternative". She was referring to capitalism. Today, this negative attitude still persists.
I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: "Home of the Brave?" which was published by the Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
I think the person who takes a job in order to live - that is to say, for the money - has turned himself into a slave.
--Joseph Campbell
[quote=John Steinsvold]Several decades ago, Margaret Thatcher claimed: “There is no alternative”. She was referring to capitalism. Today, this negative attitude still persists. I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy: http://evans-experientialism.freewebspace.com/steinsvold.htm John Steinsvold I think the person who takes a job in order to live - that is to say, for the money - has turned himself into a slave.–Joseph Campbell
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This issue has been debated here up, down, inside out, ad nauseum. I’d be very interested in one real world example where this situation has worked over a protracted period of time. So far, no one has cited such an example.
Take a closer look. There were 5 doublings of debt, not four between 1970 and 2006. So debt increased by a factor of 32 from about 1.5 to about 50 trillion, while GDP only increased by a factor or 13. So Debt over GDP is about 2.5 time larger than in 1970. And that doesn’t include all of the GDP “enhancing” shenanigans that have been put in place since then.
I will go with the little hope you provide:
There’s always a slight chance , should some transformative technology come along, like another Internet, or perhaps the equivalent of another Industrial Revolution, but no such catalysts are on the horizon, let alone at the ready.
The next transformative dimension of the economy is “EcoCommerce”. Much of the ecological outputs are positive externalities of our economy with a total worth in trillions of dollars. The corporate world, lead by food processors, is seeking a process to account for these externalities via a framework they call “shared value”. (Porter, M. HBR Jan 2011). In my book, EcoCommerce 101: Adding an ecological dimension to the economy, I referred to it as 'shared responsibility". It connects value to land management to improve the natural capital of the economy. It will allow corporate dollars to flow to improve this capital and provide some glimmer of production and capital improvement over the next couple of decades. Since the agro-ecosystem provides 90% of the world’s food, it is essential that this economic capital is shored up first. Reviews and info at www.ecocommerce101.com.
Thanks for the blunt insight. We will continue to find our future leaders are not elected, as the governance of our ecology and economy shifts toward private enterprises. Thanks for being one.
Tim Gieseke
Poet,You’ve hit on the only possible solution to the debt-money endgame. So far all of the bailouts have bailed out the supply side of debt, the banks who created that debt-money as loans. If those same trillions had been given, not lent, to households, via a “debt salvation” program that gives each adult American with an SS number $1000/month, with a condition that any American who has debt must devote 100% of this money to debt repayment, then by bailing out households we could have bailed out the banks by restoring pretty much all loans to performing status.
Fiat money is a pure creation that, since it was unmoored from gold that limited the quantity of fiat that could be created, can be created in unlimited amounts simply by keystrokes that add numbers to people’s deposit accounts in bank computers. Under the current (1913) system, only the Fed can create “base money” (bank reserves held at the Fed, and Federal Reserve banknotes), but it is the commercial banks who create all of the credit money that actually circulates in the economy as the “money supply”. They create this money as accounting entries. The principal amount of the loan is added as a deposit to the borrower’s deposit account, and the debt + interest is charged to the borrower’s loan account.
You say, “Now obviously it’s wrong to just print money out of thin air.”, but that’s exactly what commercial banks do when they make loans. The Federal Reserve Act and the Bank Act transfer the government’s money issuing power to the privately owned Fed and to private commercial banks. Students of monetary systems, like Irving Fisher and more recently the Modern Money Theory folks, recognize that this current fiat debt-money system requires permanent exponential growth of debt-money in order to keep working. As Chris observes, we have reached peak debt and we are not going to be doubling our debt again over the next 10 years to keep this arithmetically impossible system working.
Money is issued by banks as principal at interest. This process only creates the loan principal, not the interest. So money supply, the quantity of money that is spent into the economy by borrowers, is P. But debt, the amount of money people need to earn back out of the economy to repay principal + interest, is P + I. Arithmetically there is always more debt in the system than there is money to repay the debt.
Banks have a monopoly on money creation. The ONLY source of non debt money by which borrowers can repay loans is “income” that is earned by working or investing in the economy. But “the economy” is the demand side of money. Only the total spending of loan principal exists in the economy where it is available to be earned as income. There is no money in the economy to pay the interest. And, when “financial investors” (i.e. finance capitalists) remove money from circulation in the producing and consuming (i.e. earning and spending) economy and ‘invest’ it in the financial economy (converting their “money” to “capital” in the form of stocks, bonds, and other financial assets that pay the investor more money than he invested), there is even less money available in the “real” economy for debtors to earn to repay their loans.
The only kind of money that can truly become unencumbered “income” is money that is “spent” into the economy, trading money for production or services. Money that is “lent” into the economy with the intention of getting back more money than you put in, simply adds to the money deficit. There is always more debt than money in our system, which is why exponential debt growth, a classic Ponzi, is the only way to keep the system going. Our money system is a Ponzi, and the jig is up.
Most people assume that “government” creates our money. This has been false since 1913, actually since the 1860s when Lincoln printed his own greenbacks and the Confederates printed their own graybacks, before the bankers took back control and replaced government fiat money with banker “gold-backed” money. Private commercial banks actually create all our circulating money.
On the monetary balance sheet, the banking system is the supply side of money and governments, households and firms (i.e. “the economy”) are the demand side. Most “inflationistas” mistakenly accuse the government of creating too much money. But in fact the government is on the demand side of money, just like you and me. We do not enjoy the legislated privilege of creating and issuing money. Only the banking system is allowed to create and issue money.
If somebody is to blame for irresponsibly creating too much money, it is bankers, not politicians. The supposed justification for taking the money issuing power out of the hands of government and giving it to “prudent” bankers was exactly to prevent inflationary money creation. True, it takes two to tango. Bankers could not create all this bubble money if borrowers, including government, were not willing to take on bubble levels of debt. But the justification for private money issuance is precisely to secure the value of money and prevent bubble money from happening, and it happened in the 1920s only a few years after this “prudent” system was installed, then the first bubble collapsed giving us the wonderful Great Depression. Now we have megatrillions of real estate bubble debt, and unless a whole lot of non debt money is issued to households to repay their debts and resume their consumption, there will be a greater depression in our future.
Even QE, where the Fed buys old Treasuries from the primary dealer (PD) banks and pays for them by creating new reserves in those banks’ accounts at the Fed; and then the PD banks use their new reserves to backstop their purchase of new Treasuries to fund the $100 billion per month of deficit fiscal spending, depends ultimately on the private PD banks creating money to buy the new Treasuries. A Treasury sold to a PD bank for “money”, for a new deposit added to Treasury’s accounts at those PD banks, is no different than you or me signing a promissory note to a bank to ‘secure’ a loan from the bank. Our note, just like a Treasury note, is simply an IOU acknowledging our debt to the bank and our intention of repaying it. You and me and the government are all on the demand side of the money supply. Only bankers are on the supply side of money.
QE has to run through the PD banks because the Fed is legally prohibited from directly purchasing Treasury IOUs. So the Fed buys Treasuries from the PDs then the PDs buy new debt from the Treasury. Since the 1980s the Fed rebates its interest profit to Treasury after deducting its operating costs and its disbursements of dividends to its member/owner banks. The PD banks take a cut of the action for doing the Treasury buying and selling that is QE2. So the PD’s cut and the Fed’s costs are the only net interest that Treasury pays on its deficit spending via the QE2 program.
To fund a “debt salvation” program, Treasury could issue zero interest “perpetual bonds” (bonds that can be repaid, or not, at the discretion of the borrower) via QE3, and the only cost to Treasury would be the PD banks’ cut, their transaction fees. Under current monetary legislation this is the closest we can get to government issued non-debt money. Treasury’s perpetual bonds held by the Fed would be technically “debt”, but if the government never has to repay it and if it’s zero interest then it is the equivalent of debt-free money.
By giving this money to households, the demand side of money, the broken tormented demand side that has more debt than it can possibly repay out of future income, we could initiate the kind of virtuous debt repayment cycle you outline in your comment. So far all the trillions have bailed out the supply side of money, the banks who find themselves with trillions of unpayable loans on the asset side of their balance sheets. By suspending mark to market accounting, these bank’s insolvency (i.e. all the real estate and other liquifiable assets that have been pledged as collateral against bank loans is now worth less than the banks’ book value of those loans, so the banks’ assets are currently worth less than their liabilities, which is the definition of “insolvency”) is not a pressing problem, and they now have trillions in excess reserves, but no willing and able customers to borrow all the money and spend it into the economy where it can be earned as income and used by income earners to repay their old debts. Call it a “liquidity trap” after Keynes, or a “balance sheet recession” after Richard Koo.
Either way, the supply siders who control the government have bailed themselves out and charged all the costs to the demand side, to households and the government and future taxpayers in the nonbanking sectors of the economy. That same money, created debt free by the government and given to households, would have indirectly balied out the banks by bailing out their defaulting borrowers.
So there is a solution, as MMT’ers have been arguing. But it seems there’s a global bankster conspiracy to destroy the middle class and create a new global feudalism, a plutocracy, rule by bankers and their collaborators the corporate titans. We are to become debt peons, serf-slaves, serving our monied masters the banksters. If there is no such conspiracy, then why is MMT “debt salvation” not on the table as a policy option, when its benefits have been clearly explicated at least since Irving Fisher in the 1920s and 30s? And when statesmen like Jefferson from the founding of the Republic have warned of the dire consequences of allowing “European banking interests” to gain ownership and control of American money issuance like they had done in Europe?
We “know” where the problem is (private banker debt-at-interest monopoly money issuance) and we know what the solution is (government debt free money issuance). If we know this, and are not using this knowledge to solve the problem, then somebody’s powerful agenda is preventing this simple solution from being enacted or even discussed in the mainstream policy debate.
“Never attribute to malice what can be explained by ignorance.” If all the bankers and monetary and fiscal policymakers are simply ignorant of the simple mechanics of debt money vs. non debt money that I have outlined above, then they should be exposed as stupid fools and replaced with adults who understand how money systems work. If they are not stupid fools and they understand the consequences of the current money system and are intent on perpetuating it to its logical conclusion of global plutocracy, then they are evil conspirators. If they don’t understand money mechanics but arrogantly believe they do understand, even though their brilliant understanding ruins our real economy and leads us off the cliff, then the arrogance of their stupidity is evil.
Evil or stupid, maybe both. So take comfort in knowing that the banksters and corporate titans who are gaining absolute ownership and control of the Earth are either evil or stupid, and they are converting you to a serf either by design or by accident. Either way you’re in good prudent hands, aren’t you?
If someone makes 60K per year and owes 240K on his mortgage, his debt is 400% of his GDP.
By comparison, a homeless guy who makes 10K per year panhandling but only owes his buddy $100 has a debt ratio of 1% of his GDP.
Based on just debt, the homeless guy looks a lot better than the guy with a home and job.
Now, the 240K home is worth 300K, even in today’s market. Hence, this 400% debt guy has a net worth of 60K vs the homeless guy with -100$ net worth.
I’m not a Ph.D. economist (just a Ph.D. Physical Chemist who is a small business owner), but can we really evaluate debt by just looking at debt and not also looking at assets? Shouldn’t we subtract the value of the assests from the total debts? If the USA has 100 million homes each worth 200K, isn’t that $20 trillion? Value of farm lands? Value of all autos? Factories? Infrastrutcture? Our military hardware? Our space program? Our research labs? Our hospitals?
Somebody educate me, please. Thank You.
Hi mikefoxWhat you are talking about is a blance sheet or maybe a financial statement or net worth. This would only come into play if our Gov. files BK and the court were then to liquidate the assets to pay off the debt. I don’t think the American people would stand to have its assets sold off at auction to pay off the national debt. Mybe I am wrong, we sure seem to tolerate alot these days. Also most of the assets you listed are in private hands not public.
Rich