"Banks create money out of nothing" - Guardian

[Falcon]

I have argued absolutely nothing of the kind, the fact that you have to make this nonsense up shows the weakness of your supposed case.

As I say, I didn't expect you to understand what you were proposing by the assertion than economic expansion could be decoupled from energy use. Might I suggest you step away from the keyboard, form the ratio R=Q/E on an envelope, and consider what happens to the unit energy requirement R of your economy as economic activity Q tends to infinity (a necessary requirement of your decoupling hypothesis), irrespective of energy supply E.

This is Industrial Metabolism 101, btw.

Poor show Malthus

Malthus? More ad hominem in lieu of discussion? Nice one again. This is standard grade maths, not the 19th century politics of genocide.

 

[BigTom]

I'm still waiting for an answer to my question in post #269:


They created it out of thin air, didn't they?

central banks actually can create money out of nothing, that's part of their (theoretical) function - to control the money supply. The money for bank bailouts came from central banks creating money which they used to transfer debt from the commercial banks to governments.
This kind of money creation is distinctly different from the creation that occurs within the commercial banks from circulation and fractional reserve banking.

The issue here, the issue in the guardian article and that put forward by Positive Money which the article is based on is about frb and commercial banks, not about central banks.

 

[Falcon]

perhaps you should learn how to make a sensible, non-malthusian, argument then

Affirmation of the consequent again. "If you are Malthusian, then you suggest there are upper limits to the scale of the economy. You have suggested there are upper limits to the scale of the economy. Therefore you are Malthusian".

Basic fallacy.

 

[Dr Jon]

Malthus only appeared to be wrong because he did not anticipate the discovery of fossil fuels and the advances in medicine, agriculture, etc. this energy bounty enabled.

What very few people realize is that Malthus was right about most of human history — indeed, he was right about roughly 58 out of 60 centuries of civilization: living standards basically did not improve from the era of the first Pharaohs to the age of Louis XIV, because any technological gains were swallowed up by population pressure. We only think Malthus got it wrong because the two centuries he was wrong about were the two centuries that followed the publication of his work.

link

As fossil fuels deplete and energy supplies dwindle, Malthus will be back.

 

[butchersapron]

Malthus only appeared to be wrong because he did not anticipate the discovery of fossil fuels and the advances in medicine, agriculture, etc. this energy bounty enabled.

i.e because he was wrong. A good enough reason as any.

 

[love detective]

Different argument, butchers. The (untenable) argument in this thread is for the sustainability of certain money creation processes.

where has this argument been made and by whom?

 

[Falcon]

This kind of money creation is distinctly different from the creation that occurs within the commercial banks from circulation and fractional reserve banking.

The issue here, the issue in the guardian article and that put forward by Positive Money which the article is based on is about frb and commercial banks, not about central banks.

Distinctly different, and totally dwarfed by the kind of money creation that is actually taking place. That is what makes it the issue here.

 

[butchersapron]

What other people/ideas have only been wrong because they were wrong - thus proving their modern day utility i wonder? The discovery of Vulcan?

 

[love detective]

articul8's

 

[butchersapron]

articul8's

Yes. But wrongness is a complex issue blah blah

 

[love detective]

some people are right to be wrong etc...

 

[belboid]

As I say, I didn't expect you to understand what you were proposing by the assertion than economic expansion could be decoupled from energy use. Might I suggest you step away from the keyboard, form the ratio R=Q/E on an envelope, and consider what happens to the unit energy requirement R of your economy as economic activity Q tends to infinity (a necessary requirement of your decoupling hypothesis), irrespective of energy supply E.

This is Industrial Metabolism 101, btw.

It is pefectly possible to have economic growth - in the sense of providing better and more valuable services to the ultimate consumer - without consuming more physical resources. Consumers are ultimately not interested in goods per se but in the services those goods can provide. But that's a wholly different argument to the one here, about the role of banks (central and/or commerical) in creating money.

 

[Falcon]

Malthus wasn't wrong because he sketched out the economics of diminishing returns of marginal investment. He was wrong because he associated himself with some nauseating politics that was generated on the back of it.

Sadly, it has become impossible to deconvolve these different aspects. However, the principle of diminishing marginal returns is sound, and has only been temporarily masked by the exploitation by a finite supply of fossil energy.

Meanwhile, he is routinely deployed as a conversation stopper by anyone for whom the presence of the constraint imposed by the fact we occupy a sphere with a thin crust and thinner, highly unstable atmosphere, presents an inconvenience to their theories.

 

[belboid]

Affirmation of the consequent again. "If you are Malthusian, then you suggest there are upper limits to the scale of the economy. You have suggested there are upper limits to the scale of the economy. Therefore you are Malthusian".

Basic fallacy.

And wrong again. What is the point?

 

[love detective]

Different argument, butchers. The (untenable) argument in this thread is for the sustainability of certain money creation processes.

where has this argument been made and by whom?

 

[belboid]

Malthus wasn't wrong because he sketched out the economics of diminishing returns of marginal investment.

No, he was wrong because he got things factually qrong and failed to see the potential of new discoveries to change things. Exactly like you are doing

 

[Falcon]

It is pefectly possible to have economic growth - in the sense of providing better and more valuable services to the ultimate consumer - without consuming more physical resources.

And, of course, you have evidence of that? It's never - ever - been observed.

Consumers are ultimately not interested in goods per se but in the services those goods can provide.

80% of the planet subsist on less than a quarter of your energy consumption. They are not lacking intangible services and better versions of Microsoft Office. They are lacking food, clean water, sanitation, medicine, electricity. A whole bunch of them want cars, the roads the cars run on, iPods, and Levis. All of them incredibly energy intensive.

That's the sort of unexamined platitude that neoclassical economists trot out for benefit of the terminally incurious all the time.

 

[Bernie Gunther]

So, around $20 trillion worth (out of say $30 trillion) of hydrocarbons in the ground and on oil company books that can't be pumped and burned without trashing the global climate.

Not exactly fictitious capital, because maybe we will actually burn that stuff and trash the climate, but equally, maybe we'll somehow avoid doing that.

Sort of like Schrodinger's Cat

Not at all clear whether that's fictitious capital ('paper claims on wealth in excess of ... ' ... etc) or not. Question is still unresolved.

 

[Falcon]

failed to see the potential of new discoveries to change things. Exactly like you are doing

What new discoveries might you be referring to? I mean, real ones? Or are you referring to potential discoveries, rather than the potential of discoveries, in the context of your rather strenuous protest about assertion without evidence?

 

[love detective]

The (untenable) argument in this thread is for the sustainability of certain money creation processes.

where has this argument been made and by whom?

somewhat reticent to answer this simple question Falcon?

 

[JimW]

Sadly, it has become impossible to deconvolve these different aspects. However, the principle of diminishing marginal returns is sound, and has only been temporarily masked by the exploitation by a finite supply of fossil energy.

Except it wasn't just the use of fossil fuels that changed the game, it was also modes of production and social organisation that changed - history of the agricultural revolution was about changes in techniques and land-ownership long before fossil fuel fertilisers or machinery became significant. Summary here: http://www.bbc.co.uk/history/british/empire_seapower/agricultural_revolution_01.shtml
That they changed to serve the needs of a dominant minority and so sustainability hasn't been achieved is a related but separate question.

 

[belboid]

And, of course, you have evidence of that? It's never - ever - been observed.

actually, that is Industrial Metabolism 101, btw. A direct quote from Robert Ayres.

 

[love detective]

it was also modes of production and social organisation that changed

all of which are apparently irrelevant in Falcon's increasingly bizarre analysis

 

[Falcon]

So, around $20 trillion worth (out of say $30 trillion) of hydrocarbons in the ground and on oil company books that can't be pumped and burned without trashing the global climate.

Not exactly fictitious capital, because maybe we will actually burn that stuff and trash the climate, but equally, maybe we'll somehow avoid doing that.

Sort of like Schodinger's Cat

Not at all clear whether that's fictitious capital ('paper claims on wealth in excess of ... etc' or not. Question is still unresolved.

Well, even supposing we figured out how to avoid doing that, it would cost money to do it. And we can't afford it at its present price (economies seize up around $90/bbl, which is why we are having to print money to maintain the illusion of solvency). So we definitely couldn't afford the solution. And there is no difference, in any sense that matters, between oil you can't afford, and oil that isn't there.

So it's fictitious, whichever way you slice it.

 

[Falcon]

actually, that is Industrial Metabolism 101, btw. A direct quote from Robert Ayres.

What is? Please be sure to be precise - I know rather a lot about Robert Ayers...

 

[belboid]

What is? Please be sure to be precise - I know rather a lot about Robert Ayers...

The first two sentences.

Ayres, Robert U (1999), "...potential for confusion...", Turning Point: An end to the Growth Paradigm, London: Earthscan Publications, ISBN 1-85383-444-0, retrieved 22 November 2010 Paperback ISBN 1-85383-439-4

I hope that's precise enough.

 

[Falcon]

all of which are apparently irrelevant in Falcon's increasingly bizarre analysis

Love detective - you are a pre-Ptolomaic astronomer being invited to consider heliocentricity. Of course it looks bizarre. What would a paradigm shift feel like, do you think?

 

[love detective]

Different argument, butchers. The (untenable) argument in this thread is for the sustainability of certain money creation processes.

where has this argument been made and by whom?

 

[Falcon]

The first two sentences.

Ayres, Robert U (1999), "...potential for confusion...", Turning Point: An end to the Growth Paradigm, London: Earthscan Publications, ISBN 1-85383-444-0, retrieved 22 November 2010 Paperback ISBN 1-85383-439-4

I hope that's precise enough.

1999. Yes, perfectly precise. My annotated copy is next to me. Are you aware of how rapidly the field has developed in the last 5 years? Can I suggest:

Neumayer, E. (2000), ‘Scarce or abundant? the economics of natural resource availability’, Journal of Economic Surveys

Krautkraemer, J. A. (2005), ‘Economics of Natural Resource Scarcity: The State of the Debate’

Hall, C. & Klitgaard, K. (2006), ‘The need for a new, biophysical-based paradigm in economics for the second half of the age of oil’, International Journal of Transdisciplinary Research

Ockwell, D. (2008), ‘Energy and economic growth: Grounding our understanding in physical reality’, Energy Policy,

Haberl, H., Fischer-Kowalski, M., Krausmann, F., Martinez-Alier, J. & Winiwarter, V. (2009), ‘A socio-metabolic transition towards sustainability? Challenges for another Great Transformation’, Sustainable Development

and

Hall, C., Balogh, S. & Murphy, D. (2009), ‘What is the minimum EROI that a sustainable society must have?’, Energies

You will find comprehensive rebuttal of Ayres 1999 optimism on strong sustainability (I presume you understand the strong/weak sustainability problem?)

 

[love detective]

The (untenable) argument in this thread is for the sustainability of certain money creation processes.

where has this argument been made and by whom?

(i have plenty time on my hands by the way)