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johnm33

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Money
« on: November 09, 2017, 06:40:00 PM »
Money is [mostly] created as debt, whether it's a government bond, a mortgage or almost anything else, the money that appears in an account is created fresh, by fiat, against the security which is offered. It's a simple bookeeping exercise, there can be no shortage of it, as long as we have ink, or keyboards, so long as someone is willing to accept the assurance of the applicant that the debt will be repaid. A certain amount of money needs to be in existence at any one time to grease the wheels of commerce, the most economical, and fairest way to achieve that is for government to advance credit on an equal basis to all it's citizens, imho.
bit of a rant from Bill Mitchell http://bilbo.economicoutlook.net/blog/?p=37320#more-37320

gerontocrat

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Re: Money
« Reply #1 on: November 09, 2017, 07:27:58 PM »
Why a topic on money?
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
"Damn, I wanted to see what happened next" (Epitaph)

johnm33

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Re: Money
« Reply #2 on: November 11, 2017, 12:55:52 PM »
"Why?" http://michael-hudson.com/2015/09/killing-the-host-the-book/
It's not how money is created that bothers me it's how the aristocracies monopoly of it's creation has an overwhelming effect on the direction in which societies evolve. If there was a point where the 'monied' would cry enough and moderate their aquisition then many societal problems could be eliminated almost overnight, trouble is the 'monied' live in a seperate reality where they are in competition with each other but united in their efforts to subdue governments to serve them, and they've succeeded. More than this, there's the problem of the dynamic which aquiring ever more wealth sets in motion, it has it's own 'life' and appears beyond control, with every development normalising previously amoral behaviour.
http://www.sciencedirect.com/science/article/pii/S1057521914001070
https://www.sprottmoney.com/blog/the-one-bank-revisited-jeff-nielson.html
A fair account of 'money' http://moslereconomics.com/mandatory-readings/what-is-money/
 

sidd

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Re: Money
« Reply #3 on: November 11, 2017, 08:24:21 PM »
David Graeber has a very good book called "Debt:The First 5000 Years" which should be required reading.

sidd

johnm33

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Re: Money
« Reply #4 on: November 19, 2017, 02:23:01 AM »
Money wasn't always created as debt but mostly is now, read the overview, http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf
Here's an article where in passing, in the conclusion, Micheal Hudson mentions the costs imposed on an economy of ever increasing debt, the have's get rich participating in bubbles, housing for instance, but in the process society prices itself out of work, until only the most advanced industrial processes and http://www.eurasiareview.com/21102017-socialism-land-and-banking-2017-compared-to-1917-analysis/financial services end up being cost effective. though it's about much more than that.
With wages losing ground since the 70's inflation in the real economy would cause either economic collapse or societal collapse, but with free [almost] money available at the discount window it shows up elsewhere http://www.ianwelsh.net/the-missing-inflation-shows-up-as-hyper-inflation/

johnm33

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Re: Money
« Reply #5 on: December 15, 2017, 06:43:31 PM »
  A brief account of what money is, and of bitcoins utility from Charles Hugh Smith
http://www.oftwominds.com/blogdec17/what-is-money12-17.html
and as we approach negative interest rates, for plebs, he expands on the theme of the increased cost base, which is pricing the same out of the international jobs market. http://www.oftwominds.com/blogdec17/cost-basis12-17.html
Healthcare is another issue, but ill health is almost always caused by food, either there's something in it that should not be, or there's something not in it that should be, cheap food scores high on both counts, but if it's all you can afford...

johnm33

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Re: Money
« Reply #6 on: March 01, 2018, 11:47:38 AM »
Once you realise that money is created as debt out of thin air it becomes obvious that there can never be an actual shortage, and if the debt is created for the right reasons it doesn't matter if it's not repaid. https://ellenbrown.com/2018/02/27/funding-infrastructure-why-china-is-running-circles-around-america/
Here my favourite insider comments on QE https://dailyreckoning.com/trumps-new-dark-money-man-takes/
What she doesn't address is what the fed will do with all the [more or less worthless] securities it has accumulated. I suspect the only way to offload this debt, from the bankers, is to nationalise the Fed..

sidd

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Re: Money
« Reply #7 on: April 13, 2018, 06:10:34 PM »
From the vampire squids themselves: Curing people is not a sustainable business model.

There are "special dungheaps in the lo-rent section of hell" for those who commoditize mercy.

https://www.cnbc.com/2018/04/11/goldman-asks-is-curing-patients-a-sustainable-business-model.html

sidd

johnm33

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Re: Money
« Reply #8 on: May 11, 2018, 10:13:18 PM »
Michael Hudson
"Americans now have to pay up to 43 percent of their income for mortgage debt service, federally guaranteed. This imposes such high costs for home ownership that it is pricing the products of U.S. labor out of world markets. The pretense is that using bank credit (that is, homebuyers’ mortgage debt) to inflate the price of housing makes U.S. workers and the middle class prosperous by enabling them to sell their homes to a new generation of buyers at higher and higher prices each generation. This certainly does not make the buyers more prosperous. It diverts their income away from buying the products of labor to pay interest to banks for housing prices inflated on bank credit."
Thats on top of the near 40% upstream interest charges on everything they buy, and that a similar 40% of all taxation goes to pay interest that Gov. has to pay to banks on 'money' it borrowed which it could and is constitutionally mandated to create itself, interest free.
 A much more egalitarian way to create 'money' would be for the Gov. to create it as credit in each citizens account, charge a fee, say 10%, then collect 2.5% of every transaction to recoup the principle. Every year rinse repeat, so every year the tax goes up 2.5%, and every time a years debt is paid the reverse. And forbid Gov. borrowing!
« Last Edit: May 12, 2018, 12:33:57 AM by johnm33 »

TerryM

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Re: Money
« Reply #9 on: May 11, 2018, 10:45:37 PM »
When interest rates creep up, and they will, the banks are going to own a whole bunch of slightly used houses.
It's not just in the US. The average detached in Toronto is going for $1,354,719. It used to be that you needed to be rich to live in a Million dollar home, now you just need to be an average home buyer who isn't trying to keep up with the Joneses.
Terry

SteveMDFP

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Re: Money
« Reply #10 on: May 11, 2018, 11:15:05 PM »
When interest rates creep up, and they will,

Not necessarily.  Interest rates are creeping up in the US in large part because of increased Federal borrowing after the tax cuts.

In general, interest rates have been on a decline since ~1980.  I used to be among those who said "this trend can't continue."  I'm not so sure now. 

The trend may be a side effect of wealth inequality.  As incomes and wealth become more unequal, the wealthy have much more money to invest.  Steadily more money chasing after stocks and bonds raises the price of stocks, and lowers the interest rates on bonds.

Poorer people don't invest, they consume.

When (if) inequality improves, interest rates will trend up and stocks will decline.

TerryM

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Re: Money
« Reply #11 on: May 11, 2018, 11:26:47 PM »
If you're right it's the death of all the pension plans.
Work till you drop, then pass the debt on to your kids.



Why save when you can borrow at an interest rate lower than inflation?
I just don't see this as a sustainable path.
Terry

johnm33

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Re: Money
« Reply #12 on: May 12, 2018, 12:51:18 AM »
"Why save when you can borrow at an interest rate lower than inflation?" only the rich, for the working poor saving is not on the menu, and any crisis could mean resorting to payday loans at anything from 200-2000% apr not to mention fees.

Iceismylife

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Re: Money
« Reply #13 on: May 12, 2018, 01:19:34 AM »
When interest rates creep up, and they will,
...

In general, interest rates have been on a decline since ~1980.  I used to be among those who said "this trend can't continue."  I'm not so sure now. 

...
I'm of the "have to go up eventually" school of thought.  Eventually is the end of the debt bubble.  The pop of that thing doesn't look pretty.  My bet is hyperinflation.  The accumulation of debt in the system is long term unsustainable.

But you wont get higher interest rates until you get wage equilibration with where the manufacturing jobs went to.  Or you can get inflation by radically increasing the minimum wage.

SteveMDFP

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Re: Money
« Reply #14 on: May 12, 2018, 01:49:31 AM »
I'm of the "have to go up eventually" school of thought.  Eventually is the end of the debt bubble.  The pop of that thing doesn't look pretty.  My bet is hyperinflation.  The accumulation of debt in the system is long term unsustainable.

Some debt is unsustainable, much may be sustainable.  Sustainability of a given debt is strongly related to interest rates.
Don't forget that one entity's debt is always another entity's asset.
Decreasing debts also decreases assets.  Such decreases shrink the money supply, causing deflation.

Deflation is highly destructive to economic activity.  When deflation is the norm, it pays to hold on to physical currency, and not spend it.  This causes further contraction of the money supply, causing further deflation.  We had this during the Great Depression, and for a time during the global financial crisis.

Iceismylife

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Re: Money
« Reply #15 on: May 16, 2018, 04:22:15 AM »
...
Some debt is unsustainable, much may be sustainable.  Sustainability of a given debt is strongly related to interest rates.
Don't forget that one entity's debt is always another entity's asset.
Decreasing debts also decreases assets.  Such decreases shrink the money supply, causing deflation.

Deflation is highly destructive to economic activity.  When deflation is the norm, it pays to hold on to physical currency, and not spend it.  This causes further contraction of the money supply, causing further deflation.  We had this during the Great Depression, and for a time during the global financial crisis.
Deflation. I'd rather have 20% inflation than 3% deflation.

I agree 100% about deflation and debt write off.  Very destructive for an economy.  But there is going to be no strong economic growth until debt as % of GDP goes down.  two ways to get it. Debt write off and wage inflation.  You can use the minimum wage law to change the ration of debt to % GDP a 4x on minimum wages would reset debt to GDP ratio to a much more conducive to growth level.

As it is any contraction in the economy tends to threaten a repeat of 2008.  But upping the minimum wage far enough to trigger inflation means raising interest rates to control it.

oren

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Re: Money
« Reply #16 on: May 16, 2018, 04:41:14 AM »
What's up with the crazy fear of deflation, drummed up by so many economists?
The cell phone market has been in deflation for years. The PC market has been in deflation for decades. LCD TVs, the same. I don't see people holding on to physical currency and avoiding buying all these things, on the contrary they are buying them like crazy, upgrading every couple of years. Why - because they are cheaper of course.
Deflation is a nightmare for assets, not for products. As more and more leverage enters the system, a decline in asset prices can cause a wave of defaults that could crash the economy, as in 2008. This is made worse by the constant attempts of central bankers to blow up asset bubbles as a means to achieve temporary economic prosperity.
As a consumer, I'd rather have deflation in products I consume, than inflation.

SteveMDFP

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Re: Money
« Reply #17 on: May 16, 2018, 04:37:20 PM »

As a consumer, I'd rather have deflation in products I consume, than inflation.

There's a massive difference between decreased prices of selected commodities and generalized deflation in an economy.  Generalized deflation is a positive feedback loop, which is generally tied to a decline in economic activity.  Without vigorous central bank action, the fall can be deep and fast.  Cheap goods means little when people have no jobs, no income, and businesses are failing.

During the GFC Bernanke was vilified by the Right for printing money to buy securities, to support the contracting money supply.  All the evidence is that much more of that should have been done, and faster.

johnm33

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Re: Money
« Reply #18 on: May 16, 2018, 06:33:54 PM »
A must listen from two economists looking to model economies on reality. If a mans livelihood depends on him not understanding something chances are he won't. https://www.rt.com/shows/renegade-inc/426626-financial-crisis-steven-payson/ 27min.

Iceismylife

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Re: Money
« Reply #19 on: May 16, 2018, 07:58:50 PM »
What's up with the crazy fear of deflation, drummed up by so many economists?
...
Passing on the dropping cost of production as a result of increasing volume of production is not deflation.  A contraction in the availability of money, that is deflation that scares the crap out of me.

Money is debt, sort of, but we are on the labor standard as we have a statute that defines the value of money.  The minimum wage law.

Iceismylife

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Re: Money
« Reply #20 on: May 16, 2018, 08:39:20 PM »
...

During the GFC Bernanke was vilified by the Right for printing money to buy securities, to support the contracting money supply.  All the evidence is that much more of that should have been done, and faster.
printing money by buying...

My opinion at the time was that QE didn't have traction. It was just spinning its wheals.  The contraction of our manufacturing base meant that the jobs weren't there to support more debt.

More QE maybe.  More wages that gets you more debt. Upping the minimum wage a lot, that gets you more wages. Ten years later we are still not seeing upward pressure on wages.

johnm33

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Re: Money
« Reply #21 on: May 17, 2018, 09:36:44 AM »

johnm33

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Re: Money
« Reply #22 on: May 20, 2018, 12:58:54 AM »
The Swiss are having a vote on whether to take back the power to create their own currency from the corporations. https://www.macrobusiness.com.au/2018/05/switzerland-prepares-vote-sovereign-money/

SteveMDFP

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Re: Money
« Reply #23 on: May 20, 2018, 01:57:52 AM »
The Swiss are having a vote on whether to take back the power to create their own currency from the corporations. https://www.macrobusiness.com.au/2018/05/switzerland-prepares-vote-sovereign-money/

It's an interesting proposal.  It would seem to forbid fractional reserve banking for corporate banks.  But if depositors are to earn interest,  and if borrowers are to be provided any funds, then the same function must be borne by the central bank.  Corporate banks would have to become pass-through entities, transferring their deposits to the central bank, and borrowing money from the central bank to provide to borrowers.

This could be very good or very bad.  The devil is in the details.  The biggest risk, I think, is that banks wouldn't hold the risk for bad loans, and thus have every incentive to make lots of dodgy loans.  We saw how that played out during the GFC.

Or maybe the banks would retain risk and profits from lending, while not being able to use deposits as a source of funds.  But then you lose the advantage of removing the positive-feedback loop of lending drying up in recessions, just when the money supply needs to be expanded.

I'm not sure that gives any more difference than limitless deposit insurance on deposits.

johnm33

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Re: Money
« Reply #24 on: May 20, 2018, 10:04:21 AM »
With modern technology, and gov./social control of money creation all sorts of things are possible. It would be possible, for instance for a society to lend each citizen an amount equivalent to a living wage on an annual basis, for a %fee or not, with/without interest, and recover that with a transaction tax of say 2.5%. Every years debt being separate, that is if one owed 2years-5%tax 3years-7.5%tax etc and as each years debt is cleared the tax reduces. This would create a very different dynamic for a society to evolve through.
" The biggest risk, I think, is that banks wouldn't hold the risk for bad loans, and thus have every incentive to make lots of dodgy loans.  We saw how that played out during the GFC."
 I think it's pretty clear that banks currently survive on gov. welfare handouts disguised as the purchase of those very same dodgy loans and securities you refer to, with sovereign money you can remove the possibility of them blackmailing the idiot politicians by freezing credit and consequently commerce.
"Or maybe the banks would retain risk and profits from lending, while not being able to use deposits as a source of funds.  But then you lose the advantage of removing the positive-feedback loop of lending drying up in recessions, just when the money supply needs to be expanded."
Banks create deposits when they make loans, not the other way round see https://www.bankofengland.co.uk/working-paper/2015/banks-are-not-intermediaries-of-loanable-funds-and-why-this-matters  With sovereign money you could create the money to pay the interest charges alongside the initial debt, thus negating the need for a 'business cycle' to crush some asset values, create losses and free up money for debt servicing. Each individual could have access to some agreed level of credit, dependent on their level of economic activtiy, and thus expand the money supply as they saw fit freeing them from politically motivated recessions.

SteveMDFP

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Re: Money
« Reply #25 on: May 20, 2018, 04:02:30 PM »
Steve siad
" The biggest risk, I think, is that banks wouldn't hold the risk for bad loans, and thus have every incentive to make lots of dodgy loans.  We saw how that played out during the GFC."
johnm replied:
 I think it's pretty clear that banks currently survive on gov. welfare handouts disguised as the purchase of those very same dodgy loans and securities you refer to, with sovereign money you can remove the possibility of them blackmailing the idiot politicians by freezing credit and consequently commerce.... Each individual could have access to some agreed level of credit, dependent on their level of economic activtiy, and thus expand the money supply as they saw fit freeing them from politically motivated recessions.

I think the idea that the business cycle (alternate phases of growth and recession) is a politically-motivated conspiracy by bankers is needlessly paranoid.  All you need in order to create oscillations in any system is a positive-feedback mechanism.  The interaction of the overall money supply and risk-based lending is the positive-feedback mechanism. 

When growth slows, more loans can be seen to have increased risk of default.  Thus, lending rationally is decreased by all banks, being increasingly limited to the most credit-worthy, the borrowers with the most positive cash flow.  The reduction of debt-created money causes further financial stress on borrowers collectively, leading to more defaults, leading to yet-more restrictive lending activities. 

In the US, prior to the creation of the Federal Reserve, the US and other Western economies were wracked by repeated deep cycles of boom and bust, panics and financial exuberance, inflation and deflation cycles.  The creation of the Federal Reserve pre-dated the Great Depression--this disaster was possible only because the Federal Reserve was clueless about how to dampen the oscillation cycles described above.  They've since mostly learned their lessons.  Subsequent boom-and-bust cycles were generally far better dampened.  Bernanke's major failing was in taking bold actions that weren't as bold as they needed to be.

From:
https://blogs.wsj.com/economics/2015/12/14/a-brief-history-of-u-s-inflation-since-1775/
"From the U.S. Revolutionary War to World War II, inflation swung around much more dramatically than it does today. Especially in periods of war, prices would surge, to be followed by long periods of deflation. Over long periods of time, these dramatic swings tended to balance out, but it was a far cry from what anyone today would likely consider 'price stability.' "

The invention of central banks allowed dampening of the malignant oscillations otherwise inherent in capitalism.

SteveMDFP

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Re: Money
« Reply #26 on: May 20, 2018, 08:30:25 PM »
To bring that last post back to the Swiss vote on sovereign money. . .

None of what I've read about the initiative addresses the core pair of questions:
-Who will decide what loans are made?
-Who will bear the risk (and profits) of loans that go into default?

If the decision-making is by one entity, and the risk borne by another, then the decision-maker has perverse incentives to approve bad risk loans.  This was an element that led to the GFC and Great Recession.

If commercial banks make the decisions *and* bear risks, then there's little that changes from the status quo.  They'd still ratchet down their lending in economic downturns, accelerating the downturns.

If the central bank makes the decisions *and* bears the risks, there could be advantages.  But that means you'd ultimately get your mortgage from just one possible lender--the central bank.  Political pressures to have low risk standards might be unavoidable.  Having risky loans going into default and yet paid fully out of printed cash means potential for other corruption and also ruinous inflation rates.

An implied element of the Swiss scheme doesn't need such drastic economic restructuring.  That is, for any nation issuing its own currency, fiscal spending can be partially funded by newly-minted currency, rather than taxes and borrowing exclusively.  The only practical limit to this component of fiscal funding is inflation.  Since the GFC, most advanced economies have struggled with too-low inflation.  They haven't been doing *enough* money-printing.

The money-printing to date has mostly been done by the central banks, and used to buy securities.  Turns out, this is a highly inefficient way to bring relief to ordinary citizens.  Funding a fiscal deficit with printed money means all the stuff that a government provides (especially services to the needy) is directly supported, while more efficiently restoring prosperity and jobs.

johnm33

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Re: Money
« Reply #27 on: July 04, 2018, 07:52:02 PM »
Interesting [npi] post on naked capitalism about modern money. A bit long-winded but covers the subject well.

SteveMDFP

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Re: Money
« Reply #28 on: July 04, 2018, 10:56:38 PM »
Interesting [npi] post on naked capitalism about modern money. A bit long-winded but covers the subject well.

MMT is critically important to  grasp for progressive (or just humane) politics and society.  So the topic on the page is important.  But the text on the page doesn't begin to explain it.  And the extended audio is terrible as an educational tutorial.  Stephanie Kelton would be better to read and listen to:
Stephanie Kelton -The Angry Birds Approach to Understanding Deficits in the Modern Economy

In a nutshell:
  - One person's income is another person's spending
  - One person's asset is another person's debt
  - If the public sector (government) runs a deficit, the private sector (the economy) runs a surplus.

These are equations.  Conventional thinking says that one side of these equations is "good" and the other "bad."  But they're equal.  If the value on one side is pushed down, the other side goes down, always.

johnm33

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Re: Money
« Reply #29 on: July 05, 2018, 12:25:58 AM »
The only problem with S.Keltons, and many others view of mmt, is that they never seem to consider non government directed money creation. They just want to move the privilidge of creating money to other hands. My view is that unless every citizen has equal access to credit, thats to say money, creation then there can never be democracy. Since the power to create money was conceded by the Gov. to private parties they have used other peoples access to credit/ money creation [that 'money' never leaves their system] to buy up almost all real assets, and now we have the situation where the 'capitalist' class wields all pervasive political power. When in reality all they bring to the table is an accounting of the state of debt for every legal entity which could likely be managed by a simple computer at far lower cost. The power to create fiat lies within the social contract between citizens, and has been usurped, the cost of sustaining that usurpation is escalating, and will not be borne by the wealthy yet cannot be borne by the disposessed.
In both the US and UK there are upstream interest charges of +/- 40% on every transaction, in feudal times 20% went to the landlord, 10% to the church and that was that. Now besides that upstream 40% there's the 30-40% of tax's that go to pay interest charges on Gov. debt [on debt it could have created by slight of hand as easily as the banks] and then there's individual personal debt on inflated assets like houses which can account for another 40% of disposable income. With that level of imposition on the real economy there's no wonder that the only international options are extortion, loan sharking, fraud and theft. All under the banner of freedom and democracy and for their own good of course.

SteveMDFP

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Re: Money
« Reply #30 on: July 05, 2018, 01:00:02 AM »
The only problem with S.Keltons, and many others view of mmt, is that they never seem to consider non government directed money creation. They just want to move the privilidge of creating money to other hands. My view is that unless every citizen has equal access to credit, thats to say money, creation then there can never be democracy. Since the power to create money was conceded by the Gov. to private parties they have used other peoples access to credit/ money creation [that 'money' never leaves their system] to buy up almost all real assets, and now we have the situation where the 'capitalist' class wields all pervasive political power.
Not actually true.  Private banks don't create de novo dollars, they expand the existing money supply by a process of leveraging (lending and borrowing).
The Federal Reserve Bank has the exclusive power to create dollars de novo.  The Ron Paul types like to claim the Fed is a private corporation.  It's not.  It's a federally-chartered entity to which Congress has delegated the authority to create new dollars, under a system defined by the Federal Reserve Act.  If the Fed ceases to make reasonable decisions, the Act can be amended accordingly. 

With appropriate regulation of the private sector and appropriate tax and fiscal policies, this is all workable, even with funding a progressive agenda.

Her contribution is that there's a heck of a lot more room available to "pay for" a social agenda than the "fiscal conservatives" have been able to comprehend.

Quote
When in reality all they bring to the table is an accounting of the state of debt for every legal entity which could likely be managed by a simple computer at far lower cost. The power to create fiat lies within the social contract between citizens, and has been usurped, the cost of sustaining that usurpation is escalating, and will not be borne by the wealthy yet cannot be borne by the disposessed.
In both the US and UK there are upstream interest charges of +/- 40% on every transaction, in feudal times 20% went to the landlord, 10% to the church and that was that. Now besides that upstream 40% there's the 30-40% of tax's that go to pay interest charges on Gov. debt [on debt it could have created by slight of hand as easily as the banks] and then there's individual personal debt on inflated assets like houses which can account for another 40% of disposable income. With that level of imposition on the real economy there's no wonder that the only international options are extortion, loan sharking, fraud and theft. All under the banner of freedom and democracy and for their own good of course.

I don't think people necessarily need greater access to  credit/debt.  The lower income folks need more income and the upper-income folks need to have more taxes.  But the government can, and should, issue extra de novo dollars to pay for more income/benefits/infrastructure than taxes pay for. No change in budget/banking/Fed laws are needed, just political wisdom and leadership. More income will decrease the need to rely on credit/debt, for everyone.

johnm33

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Re: Money
« Reply #31 on: July 05, 2018, 10:14:50 AM »
"not actually true" , 'money' is created as debt whenever anyone/body borrows it into being, whether from a private bank, credit card co. or the Feds. the other side of the transaction is the created security. When the debt is settled the security is cancelled and that 'money' disappears.
"Her contribution" It's my particular view that idealogues are driving humanity into a cul-de-sac,  social engineering with the best or worst of intentions destroys endless possibilities for us as a species. The social insects have gamed central control and the outcomes don't appeal.
"access to credit/debt" What I'm suggesting is universal access to primary credit, that is at the rate the banks pay for it .5%[?], on an equal basis, possibly[after a kick start] released at the rate of a living wage. 'Money' is after all is a token of faith in a society, unless you use gold, silver and copper. If the credit was offered at the rate of a living wage, and accounted for on an annual basis, then for each year or part of that you owe you would have a transaction tax of 2.5% charged on all spending. Similarly you could liberate the whole existing tax structure by imposing a simple transaction tax on all commercial transactions, I think 1% would suffice.
"The Federal Reserve Bank", is so surrounded by legalese, best to judge it by it's fruit, it serves the 'banking community' who I'm sure consider their interests aligned with those of society, at least the one they want to bring about. Congress is dependent on handouts and crumbs from their table.

HapHazard

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Re: Money
« Reply #32 on: July 05, 2018, 11:01:22 AM »
I'm just patiently waiting for the technological singularity to arrive & render money essentially meaningless.  ;D

SteveMDFP

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Re: Money
« Reply #33 on: July 06, 2018, 03:45:48 PM »
"not actually true" , 'money' is created as debt whenever anyone/body borrows it into being, whether from a private bank, credit card co. or the Feds. the other side of the transaction is the created security.

Most of the money supply is generated by leveraging, through cascades of lending/borrowing.  But not all.  The physical currency in your wallet wasn't created through credit/debt.  It was printed, and used in the government's budget.  Most "printed' money now exists electronically, but functions exactly like physical currency.  Without such a monetary base, there would be nothing to leverage, nothing to expand.

No debt is created when the Federal Reserve creates this money.  They do, for accounting purposes, register the issued currency as a debit.  But the Fed's debits are not true debt.  Nobody can bring cash to the Federal Reserve and demand payment for the currency--the only repayment would be more currency.  This component of the money supply is debt-free money.

The ratio of leveraged money to the debt-free monetary base is huge.  The system can be modified to alter this ratio.  The advantage of having less leverage in the economy is that lower leverage leads to less instability.

The recent Swiss referendum would have made a dramatic step in the direction of reducing monetary leverage.  It failed, because less leverage means less profits for banks, and banking in Switzerland is vastly important.  It's among the least feasible places on the planet to try to reduce monetary leverage.

Rather than issuing credit to the population, the federal government could issue a universal basic income.  Excess expansion of the money supply could lead to inflation.  Inflation can be prevented by, for instance, regulating reduced leverage.  Yes, a transaction tax may be needed to sop up excess money being created.   
[/quote]

johnm33

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Re: Money
« Reply #34 on: July 06, 2018, 07:22:17 PM »
"Physical currency" and coins, true.The great advantage[dis] the USA has is that it can print bills for what 11cents each, so when it pays out interest on it's bonds if it uses folding the actual cost can be as little as .001% of the apparent interest rate, less of course if it's electronic 'money'. As long as it can enforce it's monopoly as the means of exchange that'll remain the case. The downside is that it has no use for it's citizens meanwhile, except to service and serve as the means of enforcement. It would take an extraordinarily benign regime to not act on that reality, and you don't have one.
A universal basic income, imho, would grow into a monster as people devised ways to game their portion, or politicians gamed it to garner particular demographics. That's certainly what's happened to the 'social security' system in the UK. That said it would be better than abandoning people to jobless despair, that's assuming that a different economy would grow out of that income stream, but where does the money come from?

oren

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Re: Money
« Reply #35 on: July 06, 2018, 11:17:31 PM »
I'm just patiently waiting for the technological singularity to arrive & render money essentially meaningless.  ;D
So true.
Unfortunately it seems civilizational collapse will arrive first, to do away with the leveraged money monstrosity and return humanity to gold or barter or whatever.

johnm33

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Re: Money
« Reply #36 on: July 24, 2018, 09:54:36 PM »
An economist explains the creation of money clearly, plus lots more, long but worth the time.
https://professorwerner.org/shifting-from-central-planning-to-a-decentralised-economy-do-we-need-central-banks/

johnm33

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Re: Money
« Reply #37 on: August 07, 2018, 08:34:04 PM »
Michael Hudson on the next financial crisis, same as the last financial crisis, and the need to move away from financialism, and get real "[Since 2008, people talk about “look at how that GDP is growing.” Especially in the last few quarters, you have the media saying look, “we’ve recovered. GDP is up.” But if you look at what they count as GDP, you find a primer on how to lie with statistics.

The largest element of fakery is a category that is imputed – that is, made up – for rising rents that homeowners would have to pay if they had to rent their houses from themselves. That’s about 6 percent of GDP right there.]"

sidd

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Re: Money
« Reply #38 on: August 07, 2018, 10:08:49 PM »
Thanks for the link to the Hudson interview: I quote:

"So this is the same crisis that we were in then. It’s never been fixed, and it can’t be fixed until you get rid of the bad-debt problem. The bad debts require restructuring the way in which pensions are paid – to pay them out of current income, not financializing them. The economy has to be de-financialized, but I don’t see that on the horizon for a while. That’s s why I think that rather than a new crisis, there will be a slow shrinkage until there’s a break in the chain of payments. Then they’re going to call that the crisis.

Hillary will say it’s the Russians who did it, but it really is Obama who did it. The Democratic Party leadership is in the hands of Wall Street, and has not done anything to prevent the same dynamics that caused the crisis in 2008 and are still causing the economy to shrink."

sidd