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

[Buckaroo]

He needed to get some sleep, bless his cotton socks. Off his tits with all that coffee and no sleep.

 

[Pickman's model]

I can think of a saxophonist he might like to do a duet with...

 

[littlebabyjesus]

Yeah I agree - apologies. I don't agree with Keen but it is a serious theory. But as I said, we can't really have this discussion with Dwyer and Jazzz on the thread.

When I have the time and energy to do it, I might start a thread on this. Keen's theories make testable predictions, and I must say that I find them very convincing, but I'd have to go back and read it again to expand on that.

Relating this to what Jazzz is saying, I think he isn't far from a reasonable view - there's just a bit missing from his puzzle. The important thing to remember is that it's no use creating money if you can't attach real value to it - and the process that attaches value to money is one that is rooted in real things and real people: even in a property bubble, you need two parties to agree on the exchange value of a real thing for money to represent it.

 

[butchersapron]

There's no use bothering with it at all if he attaches the stuff that he does to it and argues that it must be attached. He is as far from a reasonable view as it's possible to be.

 

[Blagsta]

What do you mean by "attach value to it"? What does money with no value attached to it look like?

 

[Pickman's model]

When I have the time and energy to do it, I might start a thread on this. Keen's theories make testable predictions, and I must say that I find them very convincing, but I'd have to go back and read it again to expand on that.

Relating this to what Jazzz is saying, I think he isn't far from a reasonable view - there's just a bit missing from his puzzle. The important thing to remember is that it's no use creating money if you can't attach real value to it - and the process that attaches value to money is one that is rooted in real things and real people: even in a property bubble, you need two parties to agree on the exchange value of a real thing for money to represent it.

i think the difficulty isn't that there's something missing from jazzzz's view, but that he continually bases his views on objectionable, questionable evidence: he's an intelligent gent but he's always using barking nonsense as the foundation of his world-view.

 

[Pickman's model]

What do you mean by "attach value to it"? What does money with no value attached to it look like?

the auld german hyperinflation money which now exists only as a curiosity.

 

[butchersapron]

When I have the time and energy to do it, I might start a thread on this. Keen's theories make testable predictions, and I must say that I find them very convincing, but I'd have to go back and read it again to expand on that.

Relating this to what Jazzz is saying, I think he isn't far from a reasonable view - there's just a bit missing from his puzzle. The important thing to remember is that it's no use creating money if you can't attach real value to it - and the process that attaches value to money is one that is rooted in real things and real people: even in a property bubble, you need two parties to agree on the exchange value of a real thing for money to represent it.

Value is a not process of agreement! It's one of power.

 

[Buckaroo]

What do you mean by "attach value to it"? What does money with no value attached to it look like?

Blagsta. Fuck off you Nazi.

 

[littlebabyjesus]

What do you mean by "attach value to it"? What does money with no value attached to it look like?

Nothing. It's just numbers. I'm not talking about anything more than circulation - so that money that Jazzz insists is 'created out of nothing' remains 'nothing' as long as it doesn't circulate. The person borrowing the money and the person depositing it back in the bank are not peripheral to the process - they are essential to it, they are the reason the process happens at all. I think this is the bit Jazzz is missing.

 

[Pickman's model]

Blagsta. Fuck off you Nazi.

oh dear. blagsta's as much a nazi - or even fascist - as you are.

 

[ItWillNeverWork]

Because that is how capital works. The creative destruction of capital in order to re-stablish the conditions of accumulation, not a gentleman's agreement to all go back to an equal start point. And you're now not on about capital destruction - you're on about something else. And there are problems with this suggestion as to where the tax from the productive sectors of the economy is going to come from when they aren't even investing due to the low rate of profit. I think you need to seperate the different part of what you're suggesting out.

I'm not sure I understand what you mean by some of this, so will do a more thorough read of Kliman when I get the chance. It's a shame Harvey doesn't seem to talk much about the LTRPF (at least not in the lectures I've watched so far), as he is very informative in other ways.

 

[butchersapron]

I'm not sure I understand what you mean by some of this, so will do a more thorough read of Kliman when I get the chance. It's a shame Harvey doesn't seem to talk much about the LTRPF (at least not in the lectures I've watched so far), as he seems very informative in other ways.

He thinks its largely irrelevant today.

 

[Buckaroo]

oh dear. blagsta's as much a nazi - or even fascist - as you are.

Oh dear! Just a joke mate. dwyer etc

 

[Pickman's model]

Oh dear! Just a joke mate. dwyer etc

there's been a strange vibe on the boards today

 

[ItWillNeverWork]

He thinks its largely irrelevant today.

Is there anywhere he explains why he believes this?

 

[Blagsta]

Nothing. It's just numbers. I'm not talking about anything more than circulation - so that money that Jazzz insists is 'created out of nothing' remains 'nothing' as long as it doesn't circulate. The person borrowing the money and the person depositing it back in the bank are not peripheral to the process - they are essential to it, they are the reason the process happens at all. I think this is the bit Jazzz is missing.

I don't get it.

 

[butchersapron]

Is there anywhere he explains why he believes this?

THE ENIGMA OF CAPITAL AND THE CRISIS THIS TIME

Essentially he thinks the growth of finance capital =growth of fictitious capital-->neoliberalism--> attacks on wages and social wage-->lack of effective demand-->fall in profits.

And btw, the law of the tendency of the rate of profit to fall is not the same as a fall in the rate of profit such as above - it's a tendency produced by a specific set of structural conditions, not just any conjunctural fall.

 

[TruXta]

there's been a strange vibe on the boards today

Strange week if you ask me.

 

[Pickman's model]

Strange week if you ask me.

there have been portents...

 

[ItWillNeverWork]

THE ENIGMA OF CAPITAL AND THE CRISIS THIS TIME

Essentially he thinks the growth of finance capital =growth of fictitious capital-->neoliberalism--> attacks on wages and social wage-->lack of effective demand-->fall in profits.

And btw, the law of the tendency of the rate of profit to fall is not the same as a fall in the rate of profit such as above - it's a tendency produced by a specific set of structural conditions, not just any conjunctural fall.

Cheers. I found something in the book too.

Marx himself felt that he had identified a critical means to explain the falling profitability that both Malthus and Ricardo had hypothesised. It was best explained, he argued, by the overall impact of labour-saving innovations on profit rates. Displacing labour, the source of making all new wealth, from production was bound to be counterproductive for profitability in the long run.

[...]

...it is hard to make Marx’s theory of the falling rate of profit work when innovation is as much capital or means of production saving (through, for example, more efficient energy use) as it is labour saving. Marx himself actually listed a variety of counteracting influences to a falling rate of profit, including rising rates of exploitation of labour, falling costs of means of production (capital-saving innovations), foreign trade that lowered resource costs, a massive increase in the industrial reserve army of labour that blunts the stimulus for the employment of new technologies, along with the constant devaluation of capital, the absorption of surplus capital in the production of physical infrastructures, as well as, finally, monopolisation and the opening up of new labour-intensive lines of production. This list is so long that it renders the neat explanation for a solid ‘law’ of falling profits as a mechanical response to labour-saving technological innovation more than a little moot. (Pg.94)

 

[SpineyNorman]

What do you mean by "attach value to it"? What does money with no value attached to it look like?

 

[butchersapron]

Cheers. I found something in the book too.

Massive historical debate over whether marx ever even formulated a law of the tendency of the rate of profit to fall as understood today or whether it was essentially a product of Henryk Grossman's work in the 20s (and then later by Paul Mattick Sr). And if he did, what he meant by it.

 

[SpineyNorman]

Value is a not process of agreement! It's one of power.

This is a great video that explains that concept as well as I've seen anywhere:





In fact all his videos are great!

 

[TruXta]

there have been portents...

Tell me more.

 

[Pickman's model]

Tell me more.

overheard recently:

Old man on bus
Threescore and ten I can remember well:
Within the volume of which time I have seen
Hours dreadful and things strange; but this sore night
Hath trifled former knowings.

His son
Ah, good father,
Thou seest, the heavens, as troubled with man's act,
Threaten his bloody stage: by the clock, 'tis day,
And yet dark night strangles the travelling lamp:
Is't night's predominance, or the day's shame,
That darkness does the face of earth entomb,
When living light should kiss it?

Old man
'Tis unnatural,
Even like the deed that's done. On Tuesday last,
A falcon, towering in her pride of place,
Was by a mousing owl hawk'd at and kill'd.

Son
And Duncan's horses--a thing most strange and certain--
Beauteous and swift, the minions of their race,
Turn'd wild in nature, broke their stalls, flung out,
Contending 'gainst obedience, as they would make
War with mankind.

Old Man
'Tis said they eat each other.

Son
They did so, to the amazement of mine eyes
That look'd upon't. Here comes our stop.

 

[DotCommunist]

two headed goat born unto a woman, a blood moon, strange froth upon my micturial output. Signs and wonders

 

[butchersapron]

This is a great video that explains that concept as well as I've seen anywhere:
<SNIP>

Cheers for the reminder, keep meaning to check these out.

 

[SpineyNorman]

THE ENIGMA OF CAPITAL AND THE CRISIS THIS TIME

Essentially he thinks the growth of finance capital =growth of fictitious capital-->neoliberalism--> attacks on wages and social wage-->lack of effective demand-->fall in profits.

And btw, the law of the tendency of the rate of profit to fall is not the same as a fall in the rate of profit such as above - it's a tendency produced by a specific set of structural conditions, not just any conjunctural fall.

He also mentions, I think in The Limits to Capital, that he accepts the validity of the Okishio theorem, which is IMO heavily flawed. It basically says that since labour saving tech also brings down the cost of fixed capital the organic composition doesn't actually rise (along with a load of maths that I don't understand). But IMO (and this is Kliman's take too) the problem with this is that the fixed capital was bought at the price it was back when it was purchased, not at the price it would cost when the most recent commodities were produced - it requires crisis to bring it down to a lower price (I know I'm being a bit lazy here conflating price and value but I'm a bit knackered and don't have time to make sure I get my terms right - think the general gist ought to be clear enough though).

 

[butchersapron]

Yes, Kliman has a very good simple explanation of this (which sounds minor but is key behind the whole approach of that school). It may be in the last book or an article, will see if i can find it on the laptop.

edit: got it, will upload in a sec.

A Value-theoretic Critique of the Okishio Theorem
edit2: even simpler: The Okishio Theorem