critique of loon theories around banking/money creation/the federal reserve

[butchersapron]

Hmmm.

 

[elbows]

With Adam Curtis I sometimes feel I have some kind of conceptual vertigo - the ideas are so diverse you have to leap from one to the other. Surviving Progress was different in that respect. It has some talking heads as well to underline ideas - Margaret Atwood for instance.

If you decide to watch it you can thank me afterwards for bringing it to your attention!

I don't mind leaping from one diverse idea to another, its trying to construct false bridges between them that I have a problem with.

I will watch Surviving Progress and I thank you for bringing it to my attention, although having glanced at a review I expect it will end badly. Apparently it goes all apocalyptic at the end but then suggests we could be saved by the internet. I have played with such ideas myself on this here forum from time to time, but I expect its rather easy to overstate the potential for either in a rather absurd way, so I expect to groan.

 

[el-ahrairah]

capitalism is legalized fraud. This is the reason that currencies are holding less and less value and also the main reason the economies are getting so bad.

corrected for you so it makes sense.

 

[SpineyNorman]

For anyone with an interest in these ideas I strongly recommend 'Surviving Progress'. A 90 minute documentary that was on BB4 reciently (and again on soon HD I think).

http://survivingprogress.com/

The film covers lots of ground but encompasses the negative effects of progress, or where human ingenuity creates systems which inevitably have negative consequences and often results in system collapse. The more complex and interconnected the system the greater and bigger the crash.

The progress trap of unrestrained capitalism is explored and how this is destroying human life support systems is examined. Or to put into the context of this thread how the interest on loans is being repaid by destruction of our natural habitat.

But the film is so much more than how I describe it. It reminds me a little of Adam Davies Curtis documentaries where lots of threads of thought are put together in a coherent whole.

Interest on loans is being repaid by the destruction of the natural habitat? Well I suppose it is but - and I might have misunderstood if so I apologise - that seems to imply that interest is the root cause. I reckon if we could somehow make capitalism work without interest the pace of the destruction of the environment wouldn't reduce at all. I'll give it a watch before I say it's shit though!

 

[elbows]

It might be better to look at broader questions such as 'why does capitalism require growth?' than try to deal directly with questions of interest, currency, money or banking. A lot of the people who get obsessed with banking, currency or money don't seem to have the first clue what money actually is, or what role it serves. The velocity of money doesn't seem to mean anything to them, and they want to obsess over the tokens used rather than economic activity, value, investment, return on investment and ownership/control.

And when it comes to interest rates, I would think that years of low inflation in many countries has further reduced the chances of people looking at the issues from all the required angles.

I would certainly love to be able to give a reasonable overview of things in a couple of short paragraphs , but as you can probably tell Im not capable yet. We need to be able to though, as I only see the stakes getting higher in the years to come, and if loads of people don't get it then we're in a lot of trouble.

 

[fredfelt]

I don't mind leaping from one diverse idea to another, its trying to construct false bridges between them that I have a problem with.

I will watch Surviving Progress and I thank you for bringing it to my attention, although having glanced at a review I expect it will end badly. Apparently it goes all apocalyptic at the end but then suggests we could be saved by the internet. I have played with such ideas myself on this here forum from time to time, but I expect its rather easy to overstate the potential for either in a rather absurd way, so I expect to groan.

It tried to be upbeat at the end of the film, but that line of enquiry was clearly embedded in the theme of the film - 'the progress trap'. So the implication was that we may well extend the system and make it more complex but we are just setting ourselves up for a bigger system collapse.

I found the discussion's of jubilee debt cancellation fascinating. When debt has been owned by the state it's been possible to maintain economic systems by the government cancelling debt. With historical examples it explained how jubilee's are only possible when the state owns the debt, but also examined the unintended consequences of debt cancellation - and how the collapse of the fertility of the arable land of Italy and falling productivity lead to the collapse of the Roman empire.

Moving to today we have our financial institutions owned by an oligarchy - the indebted countries have to mortgage / sell their their natural resources to the West to repay their debt - or at least keep on top of interest payments. And as the financial institutions keep the cash rolling in they can keep on giving out the loans.

The film makers portrayed the fall of the Roman empire in terms of the current 'credit crunch'. Any 'loon theories' offering critiques our current financial systems are backed up with human experience and previous collapses of empires. If anyone's interested I found an essay comparing the collapse of the Roman empire to where we are today http://www.safehaven.com/article/17839/no-august-surprise-just-a-modern-day-jubilee-debt-collapse

 

[butchersapron]

That text - the historical parts - is plagiarised, literally, just copied from the work of William Stearns Davis - which is sort of like mistaking Barbara Cartland for a worthwhile historian of the 20th century. He made stuff up! This is fiction:

A description of the panic reads like one of our own times: The important firm of Seuthes and Son, of Alexandria (read Bear Stearns), was facing difficulties because of the loss of three richly laden ships in a Red Sea storm, followed by a fall in the value of ostrich feather and ivory (fall in the value of real estate). About the same time the great house of Malchus and Co. of Tyre (Lehman Bros.) with branches at Antioch and Ephesus, suddenly became bankrupt as a result of a strike among their Phoenician workmen (unions) and the embezzlements of a freedman manager (Madoff). These failures affected the Roman banking house, Quintus Maximus and Lucius Vibo (Goldman, Merrill, JP Morgan, etc.). A run commenced on their bank and spread to other banking houses that were said to be involved, particularly the Brothers Pittius (Wells Fargo, etc.).

 

[fredfelt]

That text - the historical parts - is plagiarised, literally, just copied from the work of William Stearns Davis - which is sort of like mistaking Barbara Cartland for a worthwhile historian of the 20th century. He made stuff up! This is fiction:

Hmm. Is there anything you'd recommend along those lines?

 

[butchersapron]

The Class Struggle in the Ancient Greek World by G. E. M. de Ste. Croix.

 

[treelover]

Apparently, much of the freemen, conspiraloon, zeitgeist, occupy, etc fraternity are now going on about Agenda 21 being a new global conspiracy, A21 could have been a very positive development from Rio 92: lots of environmentalists effectively used its localist approch to make demnands on councils, etc, where do they get these ideas from...

 

[butchersapron]

Btw, you can download the book i mentioned above from here (pdf warning) - save yourself 35 quid.

 

[BigTom]

Apparently, much of the freemen, conspiraloon, zeitgeist, occupy, etc fraternity are now going on about Agenda 21 being a new global conspiracy, A21 could have been a very positive development from Rio 92: lots of environmentalists effectively used its localist approch to make demnands on councils, etc, where do they get these ideas from...

You do know that 21 is a triangle number don't you?

And you know what triangles look like? PYRAMIDS!

WAKE UP SHEEPLE!

 

[TruXta]

Look like pizza slices to me

 

[kabbes]

So I was wondering, does anyone know of a decent (preferrably Marxist, since I think Marx's theories explain why compound growth is essential for capitalism better than any other) critique of this crackpot shit? And if not does anyone have the patience/knowledge to write one out? Ideally I'd like something I can either link to, C&P or print out and give to people when I encounter this.

I've had a quick look through and I don't think this question has actually been answered.

Capitalism is about the owners of capital investing that capital, right? That's what it means. You have capital, you put it to work.

These days, the effect of that is expressed in terms of "return on capital" (RoC). If you make £10 profit from a venture that you have £100 of capital invested in, your RoC is 10%.

Required RoC is risk-based. Ventures more likely to return nothing, or to destroy your capital, have higher RoC targets.

All of this is embedded into our various investment systems, but it is all fundamental to capitalism. Sometimes it is about shareholders, in which the capital amounts to the net asset value of the enterprise that shares are bought in. Sometimes it is more direct, such a venture capitalism. But it all comes down to somebody owning capital and needing profit.

So we invest our £100 of capital and get £10 RoC. What do we do with that £10? From an investment perspective: we invest it. We need to find something else to invest £10 of capital in, that £10 also needs 10% RoC. And so it goes.

It's the requirement for RoC that drives the need for growth, then. It's nothing to do with fractional banking, which is just greasing the wheels of this capital investment. It's the capital investment itself that is doing it. The whole system relies on the idea that people will own capital and put that capital to work and that their incentive for doing this is a return. But that return is growth. The result is that capitalism requires growth.

 

[taffboy gwyrdd]

"I don't really know enough about the way modern banking works to debunk them and explain what's really going on."


Systemic fraud.
http://maxkeiser.com/2012/07/19/ritholtz-a-concise-list-recent-bank-fraud/

It's all very well to call some of these people "loons", some being more loon than others. But the phenomena is built on deliberate mass ignorance. When people find out they don't know what's going on they may well be too keen to swallow the first counter-establishment narrative, but it is the criminal and psychopathic establishment that pushes them that way.

And it takes quite severe lunacy to prop up a system which created many 100s of trillions of dollars in derivatives, to the extent that we will never get out of debt to the fraudsters without the kind of debt jubilee that was quite typical in older civilisations. This lunacy is the norm via mainstream media and politics, it is the far far greater issue.

These people launder money for terrorists and other mass murderers. The idea they didn't know they were is absurd.

Critique of varying shades of loon is fine, but lets not forget who caused the crisis and gains from it at the same time.

One last thing, fractional reserve does facilitate creation of money "from thin air". The clue is in the word "fraction". It's predicated on the generality that not everyone asks for their money back at once. It serves some useful functions but it has got way out of hand via such practices as re-hypothication.

 

[frogwoman]

How about a more general critique of capitalism, not just one part of it? Do you think the bankers and banks are the only ones to gain from the crisis and the only ones responsible for it?

 

[taffboy gwyrdd]

One more thing : Cyprus shows (as did argentina) that the IMF can and will collude with governments to steal money direct from bank accounts (also happened at a private level with the MF Global Scandal)

That's not lunacy to say so. It's what they do. It is the principal in practice that all private property is subject to sequestration by the state to hand over to private corporations at will. There's a word for that kind of government isn't there?

ETA: In Argentina, the money was stolen via changing dollar savings into Argentine currency savings at a stroke, same denomination.

 

[Random]

There's a word for that kind of government isn't there?

"Government"?

 

[frogwoman]

That's not lunacy to say so. It's what they do. It is the principal in practice that all private property is subject to sequestration by the state to hand over to private corporations at will. There's a word for that kind of government isn't there?

yes, it's called the capitalist state.

 

[taffboy gwyrdd]

How about a more general critique of capitalism, not just one part of it? Do you think the bankers and banks are the only ones to gain from the crisis and the only ones responsible for it?

I can and do critique capitalism generally. But, while I am reliably informed that my distinction is "bourgeois", I see the current crisis as more detrimental and far more a product of finance capital than of industrial capital.

In fact, one reason for downturn in production of real things is that making real things is too dull and cumbersome a means of producing "money" these days as compared to chucking numbers around on a screen and indulging in a range of self serving finance frauds.

 

[taffboy gwyrdd]

yes, it's called the capitalist state.

Would you call that synonymous with "state capitalism"?

 

[butchersapron]

yes, it's called the capitalist state.

Or the democratic state, the fascist state, the Communist state, the socialist state, the workers state, the islamic republican state and so on. taffboy thinks it only means fascist state i suspect.

 

[butchersapron]

Would you call that synonymous with "state capitalism"?

Of course not - there are many forms of capitalist state. What do you mean by state-capitalism anyway?

 

[Firky]

"Government"?

I think you just served a "pwned" as the internet would say.

 

[butchersapron]

I can and do critique capitalism generally. But, while I am reliably informed that my distinction is "bourgeois", I see the current crisis as more detrimental and far more a product of finance capital than of industrial capital.

In fact, one reason for downturn in production of real things is that making real things is too dull and cumbersome a means of producing "money" these days as compared to chucking numbers around on a screen and indulging in a range of self serving finance frauds.

I have never seen you off a critique of capitalism generally. Or even specifically, in fact i've never seen you indicate what you even think constitutes capitalism.

 

[frogwoman]

case in point - moldova and i suspect anywhere in the former soviet block, where people owning small businesses have had them confiscated and sold off to the mates of people in the government. the "communist" party did this (post 1995) btw. no conspiracy just gangsterism and the increased fact that the state in those regions is more and more intertwined with the interests of organised crime (although to be fair property confiscation of entirely innocent people by the state could happen anywhere)

 

[frogwoman]

Would you call that synonymous with "state capitalism"?

No I wouldn't. Not necessarily.

 

[Random]

No I wouldn't. Not necessarily.

Ok, you survive another day in the Socialist Party. Just one!

 

[SpineyNorman]

"I don't really know enough about the way modern banking works to debunk them and explain what's really going on."


Systemic fraud.
http://maxkeiser.com/2012/07/19/ritholtz-a-concise-list-recent-bank-fraud/

It's all very well to call some of these people "loons", some being more loon than others. But the phenomena is built on deliberate mass ignorance. When people find out they don't know what's going on they may well be too keen to swallow the first counter-establishment narrative, but it is the criminal and psychopathic establishment that pushes them that way.

And it takes quite severe lunacy to prop up a system which created many 100s of trillions of dollars in derivatives, to the extent that we will never get out of debt to the fraudsters without the kind of debt jubilee that was quite typical in older civilisations. This lunacy is the norm via mainstream media and politics, it is the far far greater issue.

These people launder money for terrorists and other mass murderers. The idea they didn't know they were is absurd.

Critique of varying shades of loon is fine, but lets not forget who caused the crisis and gains from it at the same time.

One last thing, fractional reserve does facilitate creation of money "from thin air". The clue is in the word "fraction". It's predicated on the generality that not everyone asks for their money back at once. It serves some useful functions but it has got way out of hand via such practices as re-hypothication.

Here's a tip - if you're trying to persuade people that proponents of loon theories aren't loons it's probably not a good idea to then link to Max Keiser propounding loon theories

 

[SpineyNorman]

In fact, one reason for downturn in production of real things is that making real things is too dull and cumbersome a means of producing "money" these days as compared to chucking numbers around on a screen and indulging in a range of self serving finance frauds.

This is demonstrable nonsense. You've got it completely back to front. Why did people start engaging in obviously dodgy and unsustainable financial practices? Why now, and not before?