ItWillNeverWork
Messy Crimbobs, fellow humans.
Ignored. 
critique of loon theories around banking/money creation/the federal reserve
- Thread starter SpineyNorman
- Start date
8ball
Decolonise colons!
Aside from critiques of some of the more crackpot stuff, I think one thing that is missing is a fairly unspun but solid and punchy interpretation of what actually happened - it makes it a bit easier to critique some of the crackpot stuff (some of which can look quite plausible at first) if you can give a better account of the evidence with something a bit more sane.
Can be hard to make something 'punchy' without oversimplifying, I suppose, but to someone who has become invested in an idea
I think there are limits to what you can do by pointing out the source also links to very dodgy things in a couple of easy hops. As a game, try getting to wacko stuff in as few hops as you can from wikipedia, the Beeb, NYT etc. - it's really easy.
savoloysam
Pigman's pigman's ha ha charade you are..
Brilliant this wank thread is just like global economics at work, fucking brilliant guys, brilliant.
8ball
Decolonise colons!
Cheers, I thought I was vaguely trying to meander topicwards...
savoloysam
Pigman's pigman's ha ha charade you are..
Sorry, as you were
butchersapron
Bring back hanging
Pickman's model
Starry Wisdom
this thread has greatly improved since dwyer's fuckwitted nonsense was excised from it.Ignored.
For Christ's sake, someone must be able to help.
stuff_it
Too skool for cool
I can provide temporary reliefe in the form of alcohol...
Pickman's model
Starry Wisdom
he should almost be put to sleep.
ItWillNeverWork
Messy Crimbobs, fellow humans.
In regards to the original topic, it strikes me that there are two underlying issues that need to be addressed. The first is on whether or not money is 'neutral' (i.e. has no impact on the real economy), or whether it in fact plays a concrete role in enabling production to take place. It's said by some that a recession can be triggered by a government increasing interest rates at the wrong time, choking off the money supply, and so bursting a bubble; which of course implies that money does have a real impact. Of course that doesn't tell us anything about why a bubble would have emerged in the first place.
A second issue that follows on from this, is the question of what comes first in the causal chain; does an increase in the money supply permit production, or does growth in production permit an increase in the money supply? For me this is a moot point because it is clearly both. The causation is circular; there is no beginning or end (I'm sure a Marxist would call this a dialectical relationship or something). If a firm can't borrow money then it can't invest in a new line of production; and if new lines of production are not succeeding in circulating money, no new credit can be advanced by banks.
Those are just a few random thoughts though. I'm not yet up to par with these things to have any solid answers.
A second issue that follows on from this, is the question of what comes first in the causal chain; does an increase in the money supply permit production, or does growth in production permit an increase in the money supply? For me this is a moot point because it is clearly both. The causation is circular; there is no beginning or end (I'm sure a Marxist would call this a dialectical relationship or something). If a firm can't borrow money then it can't invest in a new line of production; and if new lines of production are not succeeding in circulating money, no new credit can be advanced by banks.
Those are just a few random thoughts though. I'm not yet up to par with these things to have any solid answers.
ItWillNeverWork
Messy Crimbobs, fellow humans.
Additionally, from this way of looking at things it appears that there are two types of crisis possible. One that originates in the financial sphere (such as the current one), and one that stems from a bottleneck in the real economy (i.e. the 1970s). Or maybe not; I don't know.
SpineyNorman
Inappropriate content removed
In a way this is the crisis of the 70s, as it was never really resolved. At root the crisis of the 70s was about low profitability (increase in the organic composition of capital etc) and the crisis that would have been necessary to overcome this properly never happened - something on a similar scale to the great depression would have done it. Instead there was a political fix - corporation tax was cut, unions repressed, debt bubbles allowed to inflate - all of which served to inflate after tax profits to a level at which the economy could function (if the rate of profit is low nobody will invest - why would they? You get pockets of activity in more profitable sectors but equally low profit sectors either make no profit or make losses - nobody's gonna invest then).
But the underlying cause was never addressed and the crisis eventually manifested itself as a financial crisis. So in both cases it's a structural crisis of capitalism, not just a financial crisis. That's not to say that bad fiscal policy cannot cause a crisis on its own - I'm sure it could. Nor is it to say that 'bad' (for a given value of bad - in a way it wasn't bad as without it the economy would have collapsed years ago) fiscal policy wasn't a proximate cause of this crisis.
But the underlying cause was never addressed and the crisis eventually manifested itself as a financial crisis. So in both cases it's a structural crisis of capitalism, not just a financial crisis. That's not to say that bad fiscal policy cannot cause a crisis on its own - I'm sure it could. Nor is it to say that 'bad' (for a given value of bad - in a way it wasn't bad as without it the economy would have collapsed years ago) fiscal policy wasn't a proximate cause of this crisis.
ItWillNeverWork
Messy Crimbobs, fellow humans.
This is Andrew Kliman's analysis, right? I've skimmed through his book and it seems more convincing than David Harvey's (which on the surface appears plausible; but then so do all narrative-type explanations. The empirical bent of Kliman is a bit more robust in that regard). One thing that interests me about the whole 'law of the tendency of the rate of profit to decline', is whether or not a type of 'controlled' destruction of capital by government could take place to restore profitability. From Kliman:
When he says 'destruction of capital', I understand him to mean the bankruptcy of the first capitalist, and the purchase of his assets at rock-bottom prices by the second. But what if debts were periodically written off (I'm thinking of something like Steve Keen's 'modern debt jubilee' idea). Would it be possible to reset the system in this manner, restore profitability, and so overcome the need to destroy capital in such a socially damaging way? Once again, just random thoughts.
When he says 'destruction of capital', I understand him to mean the bankruptcy of the first capitalist, and the purchase of his assets at rock-bottom prices by the second. But what if debts were periodically written off (I'm thinking of something like Steve Keen's 'modern debt jubilee' idea). Would it be possible to reset the system in this manner, restore profitability, and so overcome the need to destroy capital in such a socially damaging way? Once again, just random thoughts.
Except we know that's not true, don't we?
Tony Pepperoni felt compelled to come out of lurking to point out that banks do indeed create money out of thin air. He gave us a pdf to look through. Let's have a sample:
From: The power to create money out of thin air - Ann Pettifor
What this means dear SpineyNorman is that banks - as the title of the pdf suggests! - create money out of thin air. It is done when they give out loans. That is how our money is created. It is that ridiculously simple.
May I point out that you clicked 'like' on Tony Pepperoni's post, so your position seems quite bizarre here.
SpineyNorman
Inappropriate content removed
Yeah - it's an analysis that was already floating about but Kliman presented a detailed empirical case for it, which we'd not had before (prior to reading Kliman I thought something very close, but not quite the same, as this - not really worth going into detail cos I was wrong). Destruction of capital in times of crisis works like that (and you also get physical destruction, as plant lies idle and siezes up, rusts etc) but physical destruction in war or natural disaster would serve a similar function.
I'm not sure what the answer to that second paragraph would be tbh - interesting question. I think it probably would but I'd have to have a long think about it and probably have a flick through the relevant chapters of Capital before I could make anything better than an educated guess. If he gets the time I'd be interested to hear what love detective reckons.
butchersapron
Bring back hanging
And why exactly do the jews do this?
SpineyNorman
Inappropriate content removed
Jazzz, please fuck off - the grownups are trying to talk now.
butchersapron
Bring back hanging
The answer is no because it requires competitive destruction not destruction by decree - which even to attempt would require the overcoming of competition and thus one of the driving forces of capital accumulation (not to mention its encouragement of reckless consequence free investment, which would then require some sort of centralised allocation and scrutiny/control/overseee).
littlebabyjesus
one of Maxwell's demons
What's wrong with that, though?
And it's not quite 'out of thin air'. First, they need to find someone willing to take on the debt - the money supply expanding in response to demand for money. Once created, the money represents an obligation - and repaying the debt fulfils the obligation, destroying the deposit the loan had created.
I don't see the need to go 'whooa, evil' about this process in and of itself. Carried out by, for instance, a system of mutual societies, it can in principle perform a valuable social function in which nobody is fooled or exploited at all.
ETA:
Where else do you think money could come from? On the other hand, the value that is attached to that money comes from the transaction of real things that the money was created to represent in the first place. No use creating equal and opposite + and - on a balance sheet if that money hasn't circulated in the real economy to represent value. Those figures on the page have no value without it.
And it's not quite 'out of thin air'. First, they need to find someone willing to take on the debt - the money supply expanding in response to demand for money. Once created, the money represents an obligation - and repaying the debt fulfils the obligation, destroying the deposit the loan had created.
I don't see the need to go 'whooa, evil' about this process in and of itself. Carried out by, for instance, a system of mutual societies, it can in principle perform a valuable social function in which nobody is fooled or exploited at all.
ETA:
Where else do you think money could come from? On the other hand, the value that is attached to that money comes from the transaction of real things that the money was created to represent in the first place. No use creating equal and opposite + and - on a balance sheet if that money hasn't circulated in the real economy to represent value. Those figures on the page have no value without it.
True. But then again, telling the usurer to eat his "obligation" on his cornflakes for breakfast fulfills it pretty effectively too.
No sorry SN, I would you to clarify:
1) Whether you now agree that banks create money out of thin air
2) if you do not, what is wrong with Ann Pettifor's description
3) Why you clicked 'like' on Tony Pepperoni's post / Ann Pettifor's pdf
4) If you clicked 'like' because you didn't really have a clue do you really claim to have a clue what you are talking about now?
thanks
Well I suppose it does. But then again, tearing the "obligation" into tiny little pieces and using it to decorate my Christmas tree seems a more attractive way of fulfilling it to me. You?
Blagsta
Minimum cage, maximum cage
So why the bank bailout?
SpineyNorman
Inappropriate content removed
I clicked 'like' because he actually offered information. I'm reading it now as it goes and although I'm going to wait until I've finished it to comment I really don't think it says what you think it says.
Why don't you go back to the Icke forums for a bit and talk about jewish fucking holograms or summat?
That's certainly one way of looking at it.
For myself however, I find the idea of fashioning the "obligation" into a conical shape and forcing it up the usurer's drainpipe a more appropriate means of fulfilling it.
Am I wrong to do so, do you think?
littlebabyjesus
one of Maxwell's demons
Well yes, we keep those promises that it suits us to keep and break those that it suits us to break. And sometimes, a system of promises has been made that cannot all be kept. Personally, I'd like to see promises made to pensioners, the unemployed, children, etc kept first. All that money does in the end is represent a promise. But as I said, without others willing to be party to that promise, banks can't just create money on their own.
Beat it Blagsta, you Nazi.
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