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The consequences of Bitcoin
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Spending which (by itself) causes excessive inflation, before reaching full economic output, is a distributional problem with where the money is being spent, not a problem of money creation.
Yes and I would have nothing against rational investment in schools which even if it causes inflation now can be offset by changes in other policy to put downward pressure on prices. Such investment by itself will cause inflation though and it will cause it now.0 -
It doesn't have to really, because you can just design the investment program intelligently to ameliorate that.Yes and I would have nothing against rational investment in schools which even if it causes inflation now can be offset by changes in other policy to put downward pressure on prices. Such investment by itself will cause inflation though and it will cause it now.
Any amount of investment is going to cause a greater demand on certain resources, and if you pre-announce the project in advance (even setup contracts in advance), you can get production ramping up early so that you avoid resource/supply-squeezes (which would contribute to inflation).
'The markets' do this all the time without any government help, and the 'inflation' in a certain assets prices, due to increased demand, is just a signal to produce more; in other words, the markets will do their magic in solving the problem, by efficiently allocating resources.
It's really entirely just a distributional and logistical problem - if the resources and ability to produce them are there (and ability to ramp-up production...), a lot of the inflation is because you're not doing things as efficiently as you could be; just give the markets the right signals/incentives to sort it out for you.
Essentially, any inflation from that will be caused by reconfiguration of production within the economy, and that has to be done anyway - holding employment and economic output back to such a huge extent, out of a fear of that, wouldn't be a rational thing to do.0 -
Ok, so there is limited scope for monetary debasement to do more good than harm - i.e. spending money on useful stuff like school buildings, railway projects and other things that would make our economies more competitive. And as a side effect, these things also provide temporary jobs. Problem is that there's a harmonised limit IMO between the amount of money than can be usefully spent and the amount of money you can print before causing inflation.Lets take a real example of such a public bank; the European Investment Bank in conjuction with the ECB (which is mandated to keep inflation at or below 2%) Possibly something that has the potential to evolve to fulfill this role;
So the bank is influenced by technocrats, not gombeen politicians.
Lets look at a real loan by the bank; EUR 100m to the Irish government for capital investment in schools across Ireland over the next 2 years.
It will always have negative consequences. It's basic economic law - if there is more of something, the value of each individual piece is reduced. So when you debase the currency, either nominal prices go up to reflect the lack of scarcity of the currency, or nominal prices stay the same which means that producers are recieving less real wealth for their goods and services.Will this newly created money cause inflation in the current economic climate? I don't think so.
The latter applies doubly to poor people on fixed incomes, pensions, minimum wage etc.
True, but only if the money that you printed is very well spent. And that is subject to the law of diminishing returns. Today you build classrooms. (Very high ROI) Tomorrow you build roads and railways. (Good ROI). Next year you're paying people to dig ditches and fill them in again, as was done by the WPA in the Depression (utterly pointless).On the investment side, the next generation of citizens will be better educated and more productive than they would otherwise have been.
It is no longer the case that interest on money borrowed from the central bank is returned to the borrowing nation-state as central bank profit, because unlike the United States and the U.K, Japan etc. Ireland no longer has her own currency and is instead part of the Euro, so if we borrow from the ECB, the money we pay in interest is part of the ECB profits and shared out among the other nations. So we gain by not borrowing (taking the interest payments from other countries) and lose by borrowing (paying interest that ends up on other nations accounts)Interest repayments can be ploughed back into the general EU budget, thereby reducing the amount paid over to the EU annually by the taxpayers of individual states.
No argument there but if the government is still allowed to debase the currency, then the private banks are still unable to return a real reward to their savers.Meanwhile private banks could continue to lend to businesses, but in this brave new world they would only lend out whatever money they already had, and therefore could not bring down an economy by creating asset bubbles, and afterwards losing multiples of their own net worth.0 -
Yes, but when a lot of building workers are unemployed, their wages do not rise significantly when outside money is brought in as a stimulus. Not until a labour shortage kicks in. The significant effect is; more economic output, more tax collected, less social welfare paid out.It will always have negative consequences. It's basic economic law - if there is more of something, the value of each individual piece is reduced.
The important thing is that this money gets gradually withdrawn from the economy again, as the govt. pays back the loan to the public bank. No debasement of the currency can occur then.
According to this, the Irish Central Bank, despite being a sort of zombie central bank, would in theory get 1.1% of any profits earned by the ECB. Presumably then they would pass on some % of this to the Irish govt. (after deducting their own costs and bonuses).It is no longer the case that interest on money borrowed from the central bank is returned to the borrowing nation-state as central bank profit
What I meant was that the ECB should instead just plough any profit directly back into the general EU budget, thereby reducing the annual subscription costs of the member states.0 -
There's a limit, yes, and that's full economic-output/employment (which happens to be exactly where we want to get to).Ok, so there is limited scope for monetary debasement to do more good than harm - i.e. spending money on useful stuff like school buildings, railway projects and other things that would make our economies more competitive. And as a side effect, these things also provide temporary jobs. Problem is that there's a harmonised limit IMO between the amount of money than can be usefully spent and the amount of money you can print before causing inflation.
You are falsely assuming no change in the size of the economy here, which is wrong; the spending is aimed at increasing economic output.It will always have negative consequences. It's basic economic law - if there is more of something, the value of each individual piece is reduced. So when you debase the currency, either nominal prices go up to reflect the lack of scarcity of the currency, or nominal prices stay the same which means that producers are recieving less real wealth for their goods and services.
There is no restriction like that at all, because any money spent pumping up the private economy (which much of public spending does, since it goes to wages), is automatically letting 'the markets' reallocate spending into more efficient areas, no matter the level of efficiency of public spending.The latter applies doubly to poor people on fixed incomes, pensions, minimum wage etc.
True, but only if the money that you printed is very well spent. And that is subject to the law of diminishing returns. Today you build classrooms. (Very high ROI) Tomorrow you build roads and railways. (Good ROI). Next year you're paying people to dig ditches and fill them in again, as was done by the WPA in the Depression (utterly pointless).
You can just give people money if you want, instead of making them work for it, and it's still going to help pump up the private economy, but that would be an enormous waste of productive potential of unemployed people, who could be providing some kind of economically beneficial role.0 -
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Regarding 'debasement':
This is largely based on gold-standard era thinking. With a fiat currency, the currency valuation (among other factors not mentioned) depends upon economic output, and economic activity in the rest of the world, which plays a critically significant part in your currencies valuation.
You can have 'debasement' (if you want to call it that), by the rest of the world economies stalling, and keeping your own running at 100%. In this crisis, we have (effectively) stalled our economy to the same level the rest of the world has, which has retained valuation.
The question is: Do you want to do this, when it is such an enormously massive waste of labour potential, and causes enormous harm to your economy and society?
The pretty obvious answer is no, because if the resources are there to keep your economy ticking over, you should be using them and avoiding the above harm; if the rest of the world is stupid enough to stall their economies like that, that should not mean you follow the same path of stupidity, out of worry of your currencies valuation.0 -
Only you'll cause inflation long before you get to that point. Especially if the reason for less-than-full employment has to do with structural problems.KyussBishop wrote: »There's a limit, yes, and that's full economic-output/employment (which happens to be exactly where we want to get to).
No, I'm suggesting that if you go to the extreme of paying someome to dig a ditch then fill it up again, the effect is temporary but the money is gone: i.e. you print money, to pay the worker, he spends the money and after its gone, the worker is in the same position as he was before, only the money cannot be recalled because it rightly belongs to whoever the worker spent the money with.You are falsely assuming no change in the size of the economy here, which is wrong; the spending is aimed at increasing economic output.
That's very true, but unless you have something useful to be done, like infrastrtucture construction, or roadside maintenance etc, you might as well pay people to go back to education or indeed do nothing. But again, there's a limit to how much money you can print to do that - no matter what if you print enough money the laws of supply and demand WILL assert themselves - possibly with a vengance.You can just give people money if you want, instead of making them work for it, and it's still going to help pump up the private economy, but that would be an enormous waste of productive potential of unemployed people, who could be providing some kind of economically beneficial role.0 -
In ignoring these facts of reality, the economics propagated by Kyussbishop rank alongside money trees, underpants gnomes, and genie lamps. Unfortunately for us these alternatives are not fictional.
To think there is a way to print money that wouldn't raise prices is like thinking you can stand in a bucket and lift yourself up. It comes as no surprise then that most rebuttals to these simple facts are based on mind-bogglingly complex and indecipherable arcane econometric formulas, designed, essentially, to prove that 2 + 2 ≠ 4. Meanwhile, we all get robbed.
Hypothetically speaking, what would happen if new money printed was put into the economy as hard currency and not as a loan from a bank with interest?
I'm not saying I have an answer, I've just always found this an utterly absurd concept of how money should be circulated, causing constant inflation by expecting every business to pay more money back to the bank than was used to open it. The only way to do this is for the bank to loan more money to someone so it gets into circulation, and that seems like a sure-fire way of causing inflation to me.
How is this system actually justified, theoretically speaking? Are there any "pros" of it at all?0 -
KyussBishop wrote: »Regarding 'debasement':
This is largely based on gold-standard era thinking. With a fiat currency, the currency valuation (among other factors not mentioned) depends upon economic output,and economic activity in the rest of the world, which plays a critically significant part in your currencies valuation.
Most of your interludes regarding the gold standard are strange, firstly it is irrelevant and then you are wrong if you say modern currency is valued differently. The value for any currency is determined by what it can be exchanged for which is dependent on the supply and demand for both the currency and economic goods and services. Maybe your problem is with the specific word 'debasement' which referred to a lesser content of base metal being used in coin to inflate the money supply, which is fair enough, the term monetary inflation might be better and more current.0 -
hatrickpatrick wrote: »How is this system actually justified, theoretically speaking? Are there any "pros" of it at all?
The system emerged from fraud of goldsmiths, the fraud was legalized and regulated, after re-occurring booms and busts the diagnosis was the monetary base was not flexible enough not that the pyramid expansion of credit on top of the base money was the problem. A central bank only made it more flexible as long as pooling banks gold reserves could stave off a bank run. Gold convertibility was the limit on flexibleness. Gold convertibility for private individuals was first to go then for nations.
What is the justification for it? It's worked even if in a stop start boom bust manner, and there are little alternatives.0 -
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Inflation is a resource problem - if inflation occurs in sectors of the economy where the physical resources are available, then that is a signal to the markets, to ramp-up production in that area of the economy (thus restructuring the economy).Only you'll cause inflation long before you get to that point. Especially if the reason for less-than-full employment has to do with structural problems.
That is something that needs to be fixed anyway, whether the private sector does it with help or not - and that's all the more argument to get spending within inflation targets now, so this restructuring happens faster (because you're not going to fix this, by keeping the private sector starved of money).
The money isn't 'gone', money doesn't just disappear, it is in the private sector (a badly money-starved private sector).No, I'm suggesting that if you go to the extreme of paying someome to dig a ditch then fill it up again, the effect is temporary but the money is gone: i.e. you print money, to pay the worker, he spends the money and after its gone, the worker is in the same position as he was before, only the money cannot be recalled because it rightly belongs to whoever the worker spent the money with.
As long as there are the physical resources available to be used, you have all the physical supply and demand you need - when money becomes the artificial supply constraint (as it is in the private sector), that's where your supply and demand problem is, and if the economy is too loaded with debt to borrow more of its own accord, you have the option to assist with non-debt-based money.That's very true, but unless you have something useful to be done, like infrastrtucture construction, or roadside maintenance etc, you might as well pay people to go back to education or indeed do nothing. But again, there's a limit to how much money you can print to do that - no matter what if you print enough money the laws of supply and demand WILL assert themselves - possibly with a vengance.0 -
That's actually a large part of it, in the current ponzi-scheme system, all money is debt and indeed there is no way for it ever to be paid back.hatrickpatrick wrote: »Hypothetically speaking, what would happen if new money printed was put into the economy as hard currency and not as a loan from a bank with interest?
I'm not saying I have an answer, I've just always found this an utterly absurd concept of how money should be circulated, causing constant inflation by expecting every business to pay more money back to the bank than was used to open it. The only way to do this is for the bank to loan more money to someone so it gets into circulation, and that seems like a sure-fire way of causing inflation to me.
That's part of what I like about BitCoin. Not only is the final BTC supply limited to BTC21,000,000, but the coins are "mined" i.e. anyone can start bitcoin mining today, prove having done X amount of hashing work, and get bitcoins. So someone pays you 100 Euro, someone somewhere had to have borrowed it and unpayable interest is accruing on that, whereas if someone pays you 1BTC they may have mined it themselves or they paid someone (who paid someone etc etc) who did the mining.0 -
It's based on neverending economic growth, which is (in the long run) physically impossible, so it will crash and burn in the end (or well, crash and burn many many times before it ends, enriching a small few while leaving the less-well-off to suffer the consequences, as we see today).hatrickpatrick wrote: »Hypothetically speaking, what would happen if new money printed was put into the economy as hard currency and not as a loan from a bank with interest?
I'm not saying I have an answer, I've just always found this an utterly absurd concept of how money should be circulated, causing constant inflation by expecting every business to pay more money back to the bank than was used to open it. The only way to do this is for the bank to loan more money to someone so it gets into circulation, and that seems like a sure-fire way of causing inflation to me.
How is this system actually justified, theoretically speaking? Are there any "pros" of it at all?
It's not actually justified at all, is just the way it is. Eventually we are going to have to switch over to a 'steady-state' economy anyway, even if just to stop runaway climate change (the greater economic growth expands into future centuries, the more energy/heat we mandatorily have to pump into the atmosphere as power generation ramps up with it - and this, by the laws of physics, involves some inefficient heat loss into the atmosphere - so it has to be stopped at a steady-state at some stage).0 -
The massive worldwide difference is that we are not in a fixed exchange-rate system with the rest of the world (outside of Europe), as countries on the gold-standard were.Most of your interludes regarding the gold standard are strange, firstly it is irrelevant and then you are wrong if you say modern currency is valued differently. The value for any currency is determined by what it can be exchanged for which is dependent on the supply and demand for both the currency and economic goods and services. Maybe your problem is with the specific word 'debasement' which referred to a lesser content of base metal being used in coin to inflate the money supply, which is fair enough, the term monetary inflation might be better and more current.
Fixed exchange rate vs floating exchange rate is an enormous difference.
Monetary inflation isn't even what is being argued, it is changes in the external valuation of currencies that is being pointed out as 'debasement', even though that external devaluation depends as much upon what the rest of the world is doing, e.g. if the rest of the world decimates their economic output, and you keep your economic output at 100%, that is going to 'debase' your currency, even though you are doing nothing different.
People posting about this subject need to focus more on the actual physical resources available to world economies, as it's one of the better ways of cutting through the inaccurate black/white narrative (regarding money, inflation, currency valuation, 'debasement') that a lot of economic theory encourages.
The key to a proper understanding of inflation is physical resources, not 'money' (which is just a tool for allocating those physical resources).0 -
The alternatives are already known - the instability of that (this) system is the ever-expanding private debt it causes, so you need non-debt-based money creation (i.e. public spending through money creation), to correct that, along with other debt-alleviating policies.The system emerged from fraud of goldsmiths, the fraud was legalized and regulated, after re-occurring booms and busts the diagnosis was the monetary base was not flexible enough not that the pyramid expansion of credit on top of the base money was the problem. A central bank only made it more flexible as long as pooling banks gold reserves could stave off a bank run. Gold convertibility was the limit on flexibleness. Gold convertibility for private individuals was first to go then for nations.
What is the justification for it? It's worked even if in a stop start boom bust manner, and there are little alternatives.0 -
KyussBishop wrote: »The alternatives are already known - the instability of that (this) system is the ever-expanding private debt it causes, so you need non-debt-based money creation (i.e. public spending through money creation), to correct that, along with other debt-alleviating policies.
That is quite a comment. Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives. Different alternatives will continually emerge and shape the evolution of the current system.0 -
Sorry but just because the alternatives/solutions disagree with your ideology, doesn't mean it's an unresolved problem - the idea that the problem is unresolved is mainly used as FUD to fool people into thinking that the current economic situation "just can't be helped".That is quite a comment. Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives. Different alternatives will continually emerge and shape the evolution of the current system.
None of it is an economics or theoretical problem anymore (all of that is solvable), it's almost all a political problem now, with conservative factions (using arguments like your own) trying to resist any reform in economic teaching/practice, and other (generally less well funded) progressive factions trying to push for sorely needed reforms (such as very basic things, like recognizing endogenous money).0 -
KyussBishop wrote: »Sorry but just because the alternatives/solutions disagree with your ideology, doesn't mean it's an unresolved problem
If they disagree with my ideology that does not mean that they are viable solutions either. You've made a non-point to defend the naive notion that MMT has the problem solved.with conservative factions (using arguments like your own) trying to resist any reform in economic teaching/practice, and other (generally less well funded) progressive factions trying to push for sorely needed reforms (such as very basic things, like recognizing endogenous money).
Huh, what argument have I made that would resist change in economics?0 -
Originally Posted by KyussBishop View Post
The alternatives are already known - the instability of that (this) system is the ever-expanding private debt it causes, so you need non-debt-based money creation (i.e. public spending through money creation), to correct that, along with other debt-alleviating policies.
So the solution to ever expanding debt is not to limit its expansion in the first place but alleviate it by printing or key-stroking money into existence for the state to spend. This is not a new idea, only you claim the state will have a much wiser bunch of technocrats to run things smoothly, boost production and limit inflation. Seriously take a look around you, where are these ever so wise state technocrats ready to run your scheme?0 -
You can't provide an argument against it that isn't completely political.If they disagree with my ideology that does not mean that they are viable solutions either. You've made a non-point to defend the naive notion that MMT has the problem solved.
It's not even 'theory' (despite the name); once you accept endogenous money, then you can't avoid being forced to accept practically all of the foundations of MMT, because a lot of the rest is just accounting/balance-sheets, and tracking flows of money (and the effects of that), which is true as a matter of basic accounting (because all Assets minus Liabilities, have to sum to zero).
The idea that that monetary/banking system is not understood, and will not be for some time, when the solutions have been out there for 30+ years.Huh, what argument have I made that would resist change in economics?0 -
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Creating debt-free money does limit the expansion of private debt, because money creation has to come from either 1: Debt-based money, or 2: Debt-free money, and the limit to money creation is the inflation target for the economy (so if you add debt-free money, then you won't be able to create as much debt-based money, before hitting the inflation target).So the solution to ever expanding debt is not to limit its expansion in the first place but alleviate it by printing or key-stroking money into existence for the state to spend. This is not a new idea, only you claim the state will have a much wiser bunch of technocrats to run things smoothly, boost production and limit inflation. Seriously take a look around you, where are these ever so wise state technocrats ready to run your scheme?
Naturally, I'd prefer a much reduced expansion of private debt (I don't agree for instance, that private banks should have the ability to create money and demand interest at all), but so long as you have any private debt, the interest payments are going to create a situation where the Private-Debt:Money ratio keeps growing over time (with 'Private-Debt' becoming multiples of 'Money', creating an ever greater burden on the private economy until it seizes up), unless you either:
1: Write-down/off debt, 2: Grow the economy forever so you can keep rolling-over private debt, or 3: Create non-debt-based money to tip the ratio away from 'Private-Debt'.0 -
There actually is a very good related article here, which I just spotted:
http://www.guardian.co.uk/commentisfree/2013/jul/29/think-you-know-what-debt-is0 -
That is quite a comment. Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives. Different alternatives will continually emerge and shape the evolution of the current system.
They won't as long as everyone continues to use the word "reform" in relation to our financial system. It implies fixing problems with the existing system of currency instead of accepting that the system itself is the problem and needs to be overhauled altogether.
I'm not saying Bitcoin is a perfect or even long term viable solution, it's too new and there are already too many flaws for that to be true, at least at the moment - but the reason I support it is simply that for once, for the first time in my life in fact, someone has actually created a system of money which does not rely on perpetual debt creation in order to facilitate trade. Once that concept is out there, surely it's only a matter of time before more people start asking "How does money get created in mainstream currencies, anyway?" and realising that we need to simply get rid of it altogether and come up with a new way of doing it.0 -
hatrickpatrick wrote: »They won't as long as everyone continues to use the word "reform" in relation to our financial system. It implies fixing problems with the existing system of currency instead of accepting that the system itself is the problem and needs to be overhauled altogether.
I agree you won't see the reform you are looking for but changes will be made, usually little is done until it has to be. The euro itself is part of an evolution, it is the first fiat currency not subject to the whims if a single nation state, that might not have been the evolution some wanted but it is evolution nonetheless. The next evolution will probably occur in response to government bonds going to ****.I'm not saying Bitcoin is a perfect or even long term viable solution, it's too new and there are already too many flaws for that to be true, at least at the moment - but the reason I support it is simply that for once, for the first time in my life in fact, someone has actually created a system of money which does not rely on perpetual debt creation in order to facilitate trade. Once that concept is out there, surely it's only a matter of time before more people start asking "How does money get created in mainstream currencies, anyway?" and realising that we need to simply get rid of it altogether and come up with a new way of doing it.
I have nothing against bitcoin also, but the more popular it becomes the more you will see governments moving to shut it down or limit it. Governments don't want to lose any of their privilege to a freely adopted private currency.0 -
KyussBishop wrote: »once you accept endogenous money, then you can't avoid being forced to accept practically all of the foundations of MMT.
Can you describe your version of endogenous money that would force me to accept your stimulus with inflation targets. And If the inflation target is 2% there is little difference to what we have now, the ECB is doing just that.The idea that that monetary/banking system is not understood, and will not be for some time, when the solutions have been out there for 30+ years.
I said they are not "fully understood". Saying they are is the extraordinary position to take here.0 -
The Euro isn't an 'evolution', it's a bastardized devolution to gold-standard-like fixed exchange rates, that is greatly worsening the economic crisis for Europe.I agree you won't see the reform you are looking for but changes will be made, usually little is done until it has to be. The euro itself is part of an evolution, it is the first fiat currency not subject to the whims if a single nation state, that might not have been the evolution some wanted but it is evolution nonetheless. The next evolution will probably occur in response to government bonds going to ****.
You can't have a sovereign government without sovereign currency, because control over the countries currency, is inseparably critical to politics in the country, because whoever controls money controls the governments purse-strings, and has enormous undemocratic control over government policies in the bad times.
Ironically, the Euro does far more to increase the likelihood of bonds going to shít, simply because countries don't have control over their own currency.
A country in control of it's own currency, can never involuntarily default on its debt/bonds, due to the ability to create money.
And who gains privilege? For a currency that has deflation locked-in, with no way to redistribute wealth once the final Bitcoin is mined, you have guaranteed upward concentration of wealth, for people who already hold Bitcoins - that's a 'sure thing' for wealthy interests looking to extract wealth from the rest of the Bitcoin economy, from doing nothing, and gives them the privilege/power government used to have.I have nothing against bitcoin also, but the more popular it becomes the more you will see governments moving to shut it down or limit it. Governments don't want to lose any of their privilege to a freely adopted private currency.
That's is what all of the elimination-of-sovereign-currency ideology is all about (particularly when combined with massive economic deregulation fraud-enablement):
It's for giving enormous political/societal power to private interests (over the rest of society), who manage to fraudulently game the private economy enough, to get significant control over money (that's why bankers/financiers own us and governments today - they have control over the money and monetary system).0 -
There are no different 'versions' of endogenous money, the core concept is incredibly simple (the fact that banks create money through extending loans, and that the money multiplier is a myth), and a lot of the rest is easily built up just by examining the flows of money between centrals banks, banks, and the public/private/external sectors accumulative 'balance sheets' (the concept of 'sectoral balances' is one of the most useful and clear/lucid ways of understanding macroeconomics out there).Can you describe your version of endogenous money that would force me to accept your stimulus with inflation targets. And If the inflation target is 2% there is little difference to what we have now, the ECB is doing just that.
You're not open to convincing either so I'm not going to try - you've stated yourself, that you don't have any solutions (because you state not enough is known to have any now), and your only argument for rejecting the solutions presented is that 'government' is involved in them. That's it.
No, you said this:I said they are not "fully understood". Saying they are is the extraordinary position to take here.
"Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives"
You are wrong on all counts. We have descriptions of the macro-economy written from the ground-up, specifically to take into account empirical realities such as 'endogenous money', i.e. specifically for accurately describing the monetary system (hence 'Modern Money'), and which do a far better job of providing descriptions and predictions of the effect of policy choices, than any other competing macroeconomic descriptions.
From that, all the alternatives we need are easily constructed, and the only disagreements you can come up against them are that they involve government (and ideological denial centered around that).
You know full well that money creation can be used up to the point of full economic-output/employment (but not if it involves private debt), without exceeding inflation targets, and that any inflation before that point is a distributional problem of where money is spent, and a sign of the private economy reconfiguring itself (you know, because you have absolutely no argument against it), and in the face of that the only argument you have left is 'but it involves government'.
Since you have no argument against it either, you know inflation is a physical resource problem not an abstract 'money' problem, and any average joe can see the massive amount of labour, material and productive resources laying idle throughout Europe - the combining of which would grow the economy and avoid inflation - yet it is held back by 'money', because creating 'money' would supposedly create runaway inflation beyond inflation targets (two mutually contradictory positions - it doesn't create runaway inflation when spent growing the economy).
It's a ridiculous ideological position, that blinds you to the readily available solutions out there.0 -
KyussBishop wrote: »The Euro isn't an 'evolution', it's a bastardized devolution to gold-standard-like fixed exchange rates, that is greatly worsening the economic crisis for Europe.
Its not worsening the economic crisis for Europe, some countries are doing quite well, the currency is not the problem, no difference in the economics of it than how Texas shares a currency with California. Simply put the PIGS ****ed up big time, and most of the blame lays firmly at home for each of the respective countries.
According to you the PIGS must like pain, or are they just ignorant that its "been solved"? Or to take the ultimate basket case Greece, do they just know that sticking with the Euro is there best option? The re-introduction of the drachma would bring chaos, starting with a run on banks ending in hyperinflation. The hyperinflation riots would make the austerity riots look like playground stuff.You can't have a sovereign government without sovereign currency, because control over the countries currency, is inseparably critical to politics in the country, because whoever controls money controls the governments purse-strings, and has enormous undemocratic control over government policies in the bad times.
Greeks would curse that sovereignty if they had their drachma back.Ironically, the Euro does far more to increase the likelihood of bonds going to shít, simply because countries don't have control over their own currency.
A country in control of it's own currency, can never involuntarily default on its debt/bonds, due to the ability to create money.
Yeah but the bonds still go to **** just in a different manner and you sacrifice the currency to do it.0 -
KyussBishop wrote: »There are no different 'versions' of endogenous money, the core concept is incredibly simple (the fact that banks create money through extending loans, and that the money multiplier is a myth).
I'm aware that banks loan money/credit into existence, can you expand on how the money multiplier is a myth(I may agree)?
Also how I jump from knowledge of both to accepting wide-scale stimulus using debt free money creation?You're not open to convincing either so I'm not going to try - you've stated yourself, that you don't have any solutions (because you state not enough is known to have any now), and your only argument for rejecting the solutions presented is that 'government' is involved in them. That's it.
Government will be involved in any solution. So no my argument isn't that government are involved in your solution, it is that government is incapable of carrying out your solution the way you envisage.We have descriptions of the macro-economy written from the ground-up, specifically to take into account empirical realities such as 'endogenous money', i.e. specifically for accurately describing the monetary system (hence 'Modern Money'), and which do a far better job of providing descriptions and predictions of the effect of policy choices, than any other competing macroeconomic descriptions.
Okay money is loaned into existence, now how do these MMT guys predict better than any other macroeconomic view? Do you have some examples of someone versed in MMT that might show this superior insight that the ECB are so ignorant of?0 -
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KyussBishop wrote: »You know full well that money creation can be used up to the point of full economic-output/employment (but not if it involves private debt), without exceeding inflation targets, and that any inflation before that point is a distributional problem of where money is spent, and a sign of the private economy reconfiguring itself (you know, because you have absolutely no argument against it), and in the face of that the only argument you have left is 'but it involves government'.
Yes I know full well money spent on worthwhile projects can put downward pressure on prices at some point in the future. And your reply is if government invests in the wrong projects causing inflation, they invested in the wrong project. Fine I agree. And I think this is what would likely happen.and any average joe can see the massive amount of labour, material and productive resources laying idle throughout Europe - the combining of which would grow the economy and avoid inflation - yet it is held back by 'money', because creating 'money' would supposedly create runaway inflation beyond inflation targets (two mutually contradictory positions - it doesn't create runaway inflation when spent growing the economy).
It's all a nice story. I consider myself an average Joe and while I can see idle labour throughout Europe what idle material and productive resources are you referring to?It's a ridiculous ideological position, that blinds you to the readily available solutions out there.
My position, is that it isn't solved, it has nothing to do with ideology. I can only assume you bring it up so often because you can't defend or explain your position.0 -
Heh, yes the performance of Europe is judged by 'some' countries doing well, I see. Tell that to the massive amounts of needlessly unemployed people throughout Europe.Its not worsening the economic crisis for Europe, some countries are doing quite well, the currency is not the problem, no difference in the economics of it than how Texas shares a currency with California. Simply put the PIGS ****ed up big time, and most of the blame lays firmly at home for each of the respective countries.
According to you the PIGS must like pain, or are they just ignorant that its "been solved"? Or to take the ultimate basket case Greece, do they just know that sticking with the Euro is there best option? The re-introduction of the drachma would bring chaos, starting with a run on banks ending in hyperinflation. The hyperinflation riots would make the austerity riots look like playground stuff.
The currency, minus any kind of a political authority that can exercise fiscal policy, like the US government, absolutely is the problem. Europe is far too easily deadlocked against enacting actual recovery policies.
You don't understand how hyperinflation works either, which isn't surprising seeing as Austrians have successfully predicted 10 of the last 0 instances of hyperinflation.
How many decades of debt would they not have to repay? How long will they be waiting within the Euro, to restore previous employment levels and quality of life? (a bloody long time at this rate.)Greeks would curse that sovereignty if they had their drachma back.
Austrians are the first to advocate a massive destruction in quality of life, by immediate budget balancing and massive austerity, and wage reductions etc. (in a way that guarantees serious long-term unemployment), yet balk at doing that to a lesser extent, in a way that restores full employment and economic activity - total hypocrisy.
That's an assertion without backing. Do you not realize all your arguments go back to these kinds of assertions, and that it's a bit silly to be repeating the same assertions again and again, that are regularly debunked? (it kind of leads to the impression of desiring circular discussions, to muddy debate)Yeah but the bonds still go to **** just in a different manner and you sacrifice the currency to do it.0 -
It's explained well in this Steve Keen article:I'm aware that banks loan money/credit into existence, can you expand on how the money multiplier is a myth(I may agree)?
http://www.businessspectator.com.au/article/2012/10/22/commodities/myth-money-multiplier
That banks loan money into existence, means basically that reserve requirements aren't an impediment to money creation (capital requirements would be more of an impediment), particularly since money is loaned first and reserves fixed-up later
That also mean savings do not lead to investments, but investments lead to savings (business borrows money, puts it in bank account or into workers pockets - i.e. deposits) - that immediately torpedo's a lot of standard economic textbook writing.
So the level of deposits/savings has nothing to do with the ability to extend loans, which (along with other things) kills the money multiplier theory.
You look at sectoral balances (this, built upon 'endogenous money', is just basic accounting), and see that the private sector is starved of money, and that the way to add money to the private sector is through public spending, and that you want to do this without massive private debt (thus, utilizing debt-free money).Also how I jump from knowledge of both to accepting wide-scale stimulus using debt free money creation?
Info on sectoral balances:
http://neweconomicperspectives.org/2011/06/mmp-blog-2-basics-of-macro-accounting.html
http://neweconomicperspectives.org/2011/06/mmt-sectoral-balances-and-behavior.html
It's summed up by the accounting identity:
Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0
Next, now that we know banks create money all the time, we can discard with the silly hyperinflation stuff about money creation: Money creation is happening all of the time, and it is limited by inflation targets, so we have no hyperinflation.
This means, there is no reason government can't create and spend money either (all the arguments against this are entirely political), so long as it stays within inflation targets.
The next thing, is looking at foreign exchange rates to see how it affects currency valuation:
We have the sectoral balances to show us that the private economy is starved of money and will soak up much of the spending (until the private sector recovers), and that so long as we have the resources locally for production in Europe, we can avoid a lot of that money leaking out into the foreign sector.
The demand for money in the private sector stays high, and the fall in demand for our money in the foreign sector is ameliorated heavily because of the physical resources Europe has available - all of this can be determined just by tracing the flows of money with 'sectoral balances' (that's just accounting), and determining what actual physical resources we have and need.
Even Austrians support 'internal devaluation', which aims at destruction of workers wages, so it seems incredibly hypocritical to suddenly become hyper-critical of actual devaluation, even when a huge amount of it can be ameliorated, and even when it provides full employment.
You don't provide any argument substantiating that, just assertion.Government will be involved in any solution. So no my argument isn't that government are involved in your solution, it is that government is incapable of carrying out your solution the way you envisage.
They successfully predicted the slowdown in economic recovery when the US entered the sequester, Steve Keen predicted the economic crisis far better than any Austrian did (or any other economist for that matter - he was actually modelling it before it happened), and he routinely makes accurate predictions as to movements within the Australian housing market (which he is watching as a bubble), they (in general) routinely get right their predictions/statements about how many policy enactments (usually relating to austerity/cuts) will hinder economic recovery, rather than help.Okay money is loaned into existence, now how do these MMT guys predict better than any other macroeconomic view? Do you have some examples of someone versed in MMT that might show this superior insight that the ECB are so ignorant of?
If you just look at sectoral balances alone, and the fact that the private sector is starved of money, you can say a huge amount about how effective/ineffective certain policy actions will be.0 -
That's a political argument, and a claim without any backing.Yes I know full well money spent on worthwhile projects can put downward pressure on prices at some point in the future. And your reply is if government invests in the wrong projects causing inflation, they invested in the wrong project. Fine I agree. And I think this is what would likely happen.
The massive amounts of raw materials and labour in Europe? All of the jobs that have been shed the last 5 years, ready to be restored with increased availability of money?It's all a nice story. I consider myself an average Joe and while I can see idle labour throughout Europe what idle material and productive resources are you referring to?
Really, this is verging on claiming there is nothing worth doing, or that there is not the manpower/materials for it - that would simply be a lack of imagination.
I've explained it fine endless times, and you have no explanation for the arguments debunking endless re-asserted claims of hyperinflation and whatnot, and the more ideologically-oriented arguments that claim (without backing) that government will always spend money in hyperinflationary ways etc..My position, is that it isn't solved, it has nothing to do with ideology. I can only assume you bring it up so often because you can't defend or explain your position.
The whole anti-government-everything line is pure ideology, and when that is used to deny the solutions available with the use of government, it uses ideology to deny that solutions are available, that the (economic side of the) problem is already solved.
You don't give an argument to defend against really - just repeat the same already-debunked ones.0 -
KyussBishop wrote: »Heh, yes the performance of Europe is judged by 'some' countries doing well, I see.
I never said Europe was doing well, I said some countries are doing well in response to the aggregate claim the Europe was worsening.You don't understand how hyperinflation works either
Can you explain what I don't understand about hyperinflation?
Explaining what Austrians might not understand is pointless as they have different views. As I have asked you many times, deal with the person engaging with you in the thread not your caricature Austrian gold hoarder redneck from Texas.How many decades of debt would they not have to repay? How long will they be waiting within the Euro, to restore previous employment levels and quality of life? (a bloody long time at this rate.)
If it can be done faster outside the euro, what are they waiting for, are they simply ignorant of your solution?Austrians are the first to advocate a massive destruction in quality of life, by immediate budget balancing and massive austerity,
Again, deal with the people in the thread, I don't advocate immediate budget balancing.That's an assertion without backing.
Its backed by supply and demand, printing currency to avoid default increases the supply of that currency and diminishes its value.0 -
You said: "Its not worsening the economic crisis for Europe, some countries are doing quite well"I never said Europe was doing well, I said some countries are doing well in response to the aggregate claim the Europe was worsening.
If you're going to try and claim that some countries doing 'ok' in Europe, means Europe overall is not doing worse because of the Euro (than without), then that is the fallacy of composition.
To start with you don't seem to understand the definition of it, or you are wildly exaggerating the effects of a drachma reintroduction (nobody claims that would be pretty, but the claim of hyperinflation is absurd).Can you explain what I don't understand about hyperinflation?
That you claim it can happen on a whim, means you have no understanding of the actual causes of it. Explain how you think hyperinflation will occur (and quantify it too - just a ballpark even).
You said in another thread a while back, in response to "If Libertarianism is a viable system then why hasn't it arisen":If it can be done faster outside the euro, what are they waiting for, are they simply ignorant of your solution?
Isn't it a bit hypocritical/contradictory to use the same basic argument here, when it is equally valid against your own views? (and contradicts your own argument)When mass slavery was the norm people said the same thing. "If a system without slaves is a viable system then why hasn't it arisen". Well after enough time it did arise.
And you've just ignored a huge number of my arguments, to bring this back in circles again.Its backed by supply and demand, printing currency to avoid default increases the supply of that currency and diminishes its value.
The private economy has no more demand for debt, but it has plenty of demand for money (which debt-free money would happily satiate) - you want to tell me these unemployed people struggling to pay bills and rent, have no demand for money? (or the money-starved private sector in general?)0 -
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KyussBishop wrote: »That banks loan money into existence, means basically that reserve requirements aren't an impediment to money creation (capital requirements would be more of an impediment), particularly since money is loaned first and reserves fixed-up later
Reserve requirements may not, but lack of reserves certainly are. Fine I get this, and this is about the only thing MMT gets right as far as I know.That also mean savings do not lead to investments, but investments lead to savings (business borrows money, puts it in bank account or into workers pockets - i.e. deposits) - that immediately torpedo's a lot of standard economic textbook writing.
Well I don't read economic textbooks, but history and papers that tickle my fancy. Lets go back a little further, people store/save gold with goldsmith and are issued receipts. People start dealing in receipts, goldsmith lends receipts he doesn't have, lender spends those receipts, people save those new receipts. Those were quickly revealed as artificial/false savings once the inevitable bank run came. Fast forward to Nixon suspending the last of gold convertibility, what is the nature of the artificial claims on gold now that they are no longer claims on gold? Not artificial claims on gold anymore, they were artificial claims on fixed gold, but they continued as real claims on goods and services as before, an evolution and a positive one.
In there somewhere is a hint at a good argument made against the gold standard, and what is funny is the only people I have heard elaborate on this argument were themselves once goldbugs. All those who froth at the mouth over the gold standard still can't criticize it succinctly. Maybe read "Debt the first 5000 years" right up your street, and in there there is also the makings of a better argument against the gold standard, not that many would care or that it would shoot down your other thorn in the side Austrian economics.0 -
To start with you don't seem to understand the definition of it, or you are wildly exaggerating the effects of a drachma reintroduction (nobody claims that would be pretty, but the claim of hyperinflation is absurd).
What have I said that would go against that definition? A bank run would be guarenteed, if greece left the euro because of austerity, its obvious they would not decide to pursue just that austerity, so funding the deficit would come from printing drachmas, the people unlucky enough to get trapped by capital controls and wake up to drachmas would quickly look to get rid of them, velocity up prices up. And a government that has shown this level of irresponsibility up to now, is not likely to trim its own fat quick to rectify things, and the cost of government goes up, and the feedback loop begins etc etc. The severity of it depends on the just how bad the government acts.
Don't have time to get to the rest atm.0 -
They aren't claims on goods that physically exist here and now, like gold was (not even a fixed fraction of it either), so that comparison doesn't entirely fit. They are a tally of what the rest of society owes you, and the spending of money (demanding of certain goods), determines how society allocates production and configures the economy.Well I don't read economic textbooks, but history and papers that tickle my fancy. Lets go back a little further, people store/save gold with goldsmith and are issued receipts. People start dealing in receipts, goldsmith lends receipts he doesn't have, lender spends those receipts, people save those new receipts. Those were quickly revealed as artificial/false savings once the inevitable bank run came. Fast forward to Nixon suspending the last of gold convertibility, what is the nature of the artificial claims on gold now that they are no longer claims on gold? Not artificial claims on gold anymore, they were artificial claims on fixed gold, but they continued as real claims on goods and services as before, an evolution and a positive one.
It's how money is spent, and how that affects availability of resources, that determines its 'value' relative to other goods - if everyone in the world dipped into their savings tomorrow and started buying up oil, we would have massive hyperinflation, without any kind of money creation.
I would like to read that alright, certainly on my list, though may not end up getting a round to it for quite a while.In there somewhere is a hint at a good argument made against the gold standard, and what is funny is the only people I have heard elaborate on this argument were themselves once goldbugs. All those who froth at the mouth over the gold standard still can't criticize it succinctly. Maybe read "Debt the first 5000 years" right up your street, and in there there is also the makings of a better argument against the gold standard, not that many would care or that it would shoot down your other thorn in the side Austrian economics.
My issue with a lot of Austrian posters (and economists - not necessarily the entire theory itself), is that the same tired debunked arguments, keep getting trotted out all the time, as if the attempt is to muddy debate and control it with rhetoric, rather than engage in it.0 -
Thai gov bans BC for now
http://www.telegraph.co.uk/finance/currency/10210022/Bitcoins-banned-in-Thailand.html0 -
You'll have an intentional devaluation of the drachma immediately upon its introduction, with there being no logical reason thereafter, for anyone to throw away their drachma - they will still need that money to pay their taxes for starters, and to buy food and whatnot, and it's what they will be getting paid in.What have I said that would go against that definition? A bank run would be guarenteed, if greece left the euro because of austerity, its obvious they would not decide to pursue just that austerity, so funding the deficit would come from printing drachmas, the people unlucky enough to get trapped by capital controls and wake up to drachmas would quickly look to get rid of them, velocity up prices up. And a government that has shown this level of irresponsibility up to now, is not likely to trim its own fat quick to rectify things, and the cost of government goes up, and the feedback loop begins etc etc. The severity of it depends on the just how bad the government acts.
Don't have time to get to the rest atm.
Taxes drive demand for a particular currency.
It's basically a political (implied government will spend irresponsibly) and psychological argument, and its entirely speculative.0 -
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KyussBishop wrote: »They aren't claims on goods that physically exist here and now, like gold was (not even a fixed fraction of it either), so that comparison doesn't entirely fit. They are a tally of what the rest of society owes you, and the spending of money (demanding of certain goods), determines how society allocates production and configures the economy.
I wish you would realise when we agree, rather than disagree and state exactly the same thing in a different way, it would make things easier. Currencies are claims on physical goods now if you go out and use them now, if you accumulate €100 worth of claims, you can claim €100 worth of goods and services, or society owes you goods and services to the value of €100. Arguing every single point for the sake of it takes a way from the points worth discussing that we disagree on. I'm not interested in point scoring.0 -
KyussBishop wrote: »It's basically a political (implied government will spend irresponsibly) and psychological argument, and its entirely speculative.
Yes it is because hyperinflations are largely political, this is how countless hyperinflations have played out. Speculation yes, but much more reasoned and likely speculation than the one of devaluation and everything is fine after that.0 -
I don't have the time to go back over all of your posts in detail. But MMT is just Keynesianism with some of the rougher edges taken a way. The trait that seems to bind MMT is they emphasize money is loaned into existence and emphasize accounting but the prescriptions and promise is little different than what Keynesians have promoted for decades, we can have the boom without suffering the bust as long as governments step in with stimulus, or in your slightly refined version stimulus for the right projects. Despite knowledge of this solution for decades countless countries have gone through numerous booms and suffered painful busts. MMT'ers/Keynesians persist in claiming that these painful busts are needless if government stepped in with the right measures. Most everyone else sees busts as inevitable.
Everyone accepts a certain amount frictional unemployment in economies. So what happens during a boom, more and more people are sucked into the booming industry and become dependent on it. If there is a boom in housing, more and more resources are directed to this end, when the bust sets in, a lot of businesses that should go bust go bust, the excess workers in that industry are laid off. It takes time for industry to rewire itself in a sustainable way and it takes time for laid off workers to re-skill and be rehired in new industry. So instead of small frictional rate of unemployment you get a much larger spike in unemployment. To employ excess unemployed Keynesians assume that excess capacity to build houses on mass can be quickly directed to other infrastructure projects. But paddy the plasterer is not much use in constructing a high speed rail link, the materials needed are different to those for housing, and the factories required to produce those materials are different also, there is no spare capacity ready to be turned on like a switch to engage in such a project. Stimulus projects using construction workers delays the necessary re-balancing.
MMT emphasize loans create savings/deposits as seen in accounting, fine but if MMT thinks they focus on real resources they are missing a trick here. What matter are real savings and accumulation of capital goods, factories machinery etc. yes loans create deposits that someone will save, but increasing lending or even printing money while it increases nominal savings as verified by accounting it does not increase the amount of real capital available to an economy, which is what matters.0 -
Right, and in almost all cases hyperinflation was accompanied by very extreme political circumstances, such as massive reparations payments demanded in foreign currency (basically, external countries forcing you into hyperinflation), civil war and destruction of industry, massive debts in foreign currency, dictatorships governing poorly.Yes it is because hyperinflations are largely political, this is how countless hyperinflations have played out. Speculation yes, but much more reasoned and likely speculation than the one of devaluation and everything is fine after that.
Almost every one of them is caused by extreme internal/external political conditions, and there's a pretty simple list of things to do to resolve past political occurrences of hyperinflation:
No dictatorships
No (or very little) debt denominated in foreign currency
No civil wars or massive destruction of industry, or in general, massive loss of output0 -
You're missing the fundamental difference: Not using national debt - recognizing that you don't need government bonds to fund deficits (which is more inflationary than just creating the money, because you are locked-in to making interest payments on the bonds/debt).I don't have the time to go back over all of your posts in detail. But MMT is just Keynesianism with some of the rougher edges taken a way. The trait that seems to bind MMT is they emphasize money is loaned into existence and emphasize accounting but the prescriptions and promise is little different than what Keynesians have promoted for decades, we can have the boom without suffering the bust as long as governments step in with stimulus, or in your slightly refined version stimulus for the right projects. Despite knowledge of this solution for decades countless countries have gone through numerous booms and suffered painful busts. MMT'ers/Keynesians persist in claiming that these painful busts are needless if government stepped in with the right measures. Most everyone else sees busts as inevitable.
Everyone accepts a certain amount frictional unemployment in economies. So what happens during a boom, more and more people are sucked into the booming industry and become dependent on it. If there is a boom in housing, more and more resources are directed to this end, when the bust sets in, a lot of businesses that should go bust go bust, the excess workers in that industry are laid off. It takes time for industry to rewire itself in a sustainable way and it takes time for laid off workers to re-skill and be rehired in new industry. So instead of small frictional rate of unemployment you get a much larger spike in unemployment. To employ excess unemployed Keynesians assume that excess capacity to build houses on mass can be quickly directed to other infrastructure projects. But paddy the plasterer is not much use in constructing a high speed rail link, the materials needed are different to those for housing, and the factories required to produce those materials are different also, there is no spare capacity ready to be turned on like a switch to engage in such a project. Stimulus projects using construction workers delays the necessary re-balancing.
MMT emphasize loans create savings/deposits as seen in accounting, fine but if MMT thinks they focus on real resources they are missing a trick here. What matter are real savings and accumulation of capital goods, factories machinery etc. yes loans create deposits that someone will save, but increasing lending or even printing money while it increases nominal savings as verified by accounting it does not increase the amount of real capital available to an economy, which is what matters.
You also miss the job guarantee - which is far more efficient then straight-out unemployment.
You're trying to make an argument-ad-populum, which is again in contradiction to your own point that I quoted in the After Hours thread.
What you are right on though, is that this stuff has been known all along, since the last Great Depression at least, which makes it all the more insane that it's gone on like this.
'Keynesianism' in the form it took since then, actually has very little to do with Keynes, because it is a bastardized amalgamation of classical economics, with some of his views, (making neoclassical economics) but which is not representative of his overall views.
MMT doesn't say busts are 100% avoidable, it provides the right description of the macro-economy, to realize the prescriptive tools/automatic-stabilizers, that can comfortably bring the bust to an end for the entire population, without wasting any labour potential, or getting locked into stagnation.
It doesn't even matter what you put the unemployed workers to work on, because just by them getting money and spending it, that's re-building the private industry (which needs money + time to reconfigure itself more efficiently) - finding them the right/efficient work to do, is actually a tiny problem compared to the bigger issue being solved, you just want to do your best to avoid wasted labour potential in addition to solving the massive problem of deleveraging and general lack of money in the private sector (choking it from recovery).
Even when you consider specialization (an extremely exaggerated problem), we've been 5 years into this crisis already (probably with 5-10-15 years to go if we don't change course) - that's a ton of time to train workers into any specialized tasks you need, if action gets taken early on.
We've got unemployed workers of all skill-sets, all over Europe - there's nothing stopping you trying to make the best of their existing skills, and cross-training workers into related areas (vastly cutting training time).
That really is an overblown problem, used more to muddy debate than anything else, and drag it into minutiae on a search for non-existent stats on unemployed worker skillsets through Europe, where completely unbacked claims (that any useful work that can be done requires too much skill, and can't be resolved during the crisis - even when up to a decade is available) are held onto by remaining ever 'unconvinced'.
With regards to capital/savings etc.; endogenous money shows that Investments lead to Savings, not the other way around, and you get investments through money creation (which debt-based money can't satisfy, thus opening room for debt-free money), or tapping savings (such as through government bonds - but which has the negative of interest payments).
Capital is created by labour, and when you are holding the economy below full potential and wasting massive amounts of labour potential, then you are not creating as much capital as your economy is capable of.
To be honest, a lot of the post seems to just try and draw the debate in a deflected direction.
You're fully aware of the core point, that you can drive the European economy back up to full economic-output/employment through debt-free money, within inflation targets, and sourcing materials from within Europe to greatly lessen any effect on external valuation.
A lot of the rest of the argument seems to just feel like 'let private industry do that instead', even if that takes a decade longer, after massive unemployment and social destruction.
For example, stuff such as "Stimulus projects using construction workers delays the necessary re-balancing", which is just a totally unbacked/ideological assertion - 'sectoral balances' show (as a matter of basic accounting), that stimulus helps the (money-starved) private sector.0 -
KyussBishop wrote: »For example, stuff such as "Stimulus projects using construction workers delays the necessary re-balancing", which is just a totally unbacked/ideological assertion
For the love of god give over with this unbacked/idealogical assertion nonsense, this is reality. From 2000-2008 the number of those employed in construction rose from 165,000 to 280,000. It was all unsustainable bubble employment, the economy became completely unbalanced and devoted to and dependent on housing. By hiring those excess workers for state construction projects when they are laid off you prevent them from re-skilling. Reality not ideology.0 -
Sorry but, you are asserting again. You have posted nothing to show stimulus delays private sector 'rebalancing', and I have posted a ton of stuff showing that (particularly due to the starvation of needed money in the private sector), stimulus promotes private sector rebalancingFor the love of god give over with this unbacked/idealogical assertion nonsense, this is reality. From 2000-2008 the number of those employed in construction rose from 165,000 to 280,000. It was all unsustainable bubble employment, the economy became completely unbalanced and devoted to and dependent on housing. By hiring those excess workers for state construction projects when they are laid off you prevent them from re-skilling. Reality not ideology.
The entire point of the Job Guarantee program, is to give the workers jobs but at such a wage level that the private sector can easily afford to re-hire them when the money is available - it is a temporary job program, with the express purpose of getting all the workers reabsorbed back into the private economy as it recovers.
The Job Guarantee is not aimed at suppressing private sector demand for jobs (or availability of supply of labour for those jobs), but to use up the supply of labour when there is no private demand for these workers, as is the case now (and before we get to the 'at the current wage level' argument: my solution retains wage levels within a reasonable degree, unlike the 'free market' alternative that decimates wages and quality of life for workers).0 -
KyussBishop wrote: »Sorry but, you are asserting again. You have posted nothing to show stimulus delays private sector 'rebalancing
Simple logic not assertion, if workers are hired by government for construction projects those same workers can't be hired by the private sector to do something else, they can't be in two places at one time. So in 2008 whatever % of those 120,000 excess employed in construction you take, if its 20% you take 24,000 of those, you keep them employed and trained in construction, you maintain the imbalance.
Now this is an assertion, and one that goes against logic.stimulus promotes private sector rebalancing.0 -
There is no 'logic' there, just more (false) assertions - the private sector doesn't want these workers right now.Simple logic not assertion, if workers are hired by government for construction projects those same workers can't be hired by the private sector to do something else
You know that these workers are unemployed and that these jobs don't exist, and you know the only solution you have for providing jobs, is destroying more of the private economy by wage and working-hour decimation (along with decimation of quality of life).
I debunked that right in the post you are quoting (it is even the bit I explicitly underlined to stand out from the rest of the post):KyussBishop wrote: »The Job Guarantee is not aimed at suppressing private sector demand for jobs (or availability of supply of labour for those jobs), but to use up the supply of labour when there is no private demand for these workers, as is the case now (and before we get to the 'at the current wage level' argument: my solution retains wage levels within a reasonable degree, unlike the 'free market' alternative that decimates wages and quality of life for workers).
Even more to the point: I've specifically explained that these workers automatically move back into the private sector, as demand for workers within the private sector improves.
It was extremely clearly laid out in my post, and you are perceptive enough to know this, so I don't know why you went on to make those assertions that you can very clearly see to be false.
It's like you've gone from talking about an economy with massive unemployment, and suddenly switched your arguments to be based on an economy at full economic-activity/employment - even though you know it is an economy with significant unemployment we are talking about.0 -
Ah yes, a temporary government program. I can't wait to see the politicians try to sell us that one with straight faces.KyussBishop wrote: »it is a temporary job program, with the express purpose of getting all the workers reabsorbed back into the private economy as it recovers.
Let us consider the fact that the private sector can't afford to hire X amount of workers at price Y. The state then taxes the private sector to raise funds to employ these workers until the economy has recovered. With the private sector now paying for the jobs program and contending with an already bad economic environment, they have even less money than before to spend on new workers, with these new workers necessarily finding temporary employment with, hey presto, the job guarantee scheme, which is now starting to grow bigger and bigger. All this program would do is transfer large amounts of wealth from the private sector to the state and its new dependants, strangling the productive capacity of the private sector in the process and of course with it, any hope of recovery. Which of course defeats the point of the whole thing! Price controls have never worked and they never will.0 -
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