Why is the world in such dire economic straits, and what can we do about it?
POSTED BY: SignyM
UPDATED: Sunday, August 23, 2026 20:19
VIEWED: 10090
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So essentially - Outlaw Usury ?
Yanno, one of the unstated bitches a lot of western society has with Muslim culture, other than the obvious shit even *I* hold them accountable for, much of which is in defiance of their own friggin holy book...
Is Islamic Banking - because Usury is considered morally repugnant even where it's not downright illegal - that shitheads like Chalabi and Karazi don't hold with this is one reason we tried to install them as puppets without realizing that even by itself cements public opinion of them as criminals even without all the other shit they pulled.
Libya, for another example, and just how fast THAT is gonna go downhill and start lookin like all the other nations the IMF "helped", well, is obvious.
Oh yeah, and instead of bombing wedding parties maybe we should spare a couple for the IMF right after declaring them to be the economic terrorists that they truly are - but then that'd require admitting that they're the primary bagman for western corporations...
Again and again, when the truth comes it, it's always our so-called protectors who are the real danger to us, ain't it ?
Heads.
On Spikes.
And while it ain't gonna happen by my hand, it *IS* going to happen - no longer a matter of if, but only a matter of when.
Come on people, you've read history.
-Frem
I do not serve the Blind God.
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I think there's a difference between blaming people and blaming systems.
There will always be a greedy Freddie somewhere.
But I think people can set up systems that result in consequences completely independent of intentional agency. Wolfram demonstrated how a few simple rules repeated many times can create patterns far more complex than would be intuitively obvious. With our laws and cultural norms we may have create complex results.
Since the results of what we think are simple rules may be complex, rather than focus on our rules, I think we need to look at results. If the results aren't to our liking, we need to alter what we are doing.
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On continuing thought ... for example, take the banks - please! Oh, wait, ... back on track ... and rules for 'capitalization rates'.
One way to keep banks from creating 'funny money' is to require 100% capitalization. ie they can't expand the money supply beyond that which already exists.
Banks would then make their profit, albeit a much, much, MUCH smaller one than now, on the difference between interest paid to savers v interest required from debtors.
But that leads to a second problem. The drive is to MAXIMIZE profit. Under that restriction (100% capitalization leading to far lower profit margins) what investor in their right mind would invest in a bank? And there's a second problem and that's cultural. That rule might possibly work with the ordinary saver/ borrower in the west, but it wouldn't work in Japan where people save at prodigious rates but don't borrow. (Up until Fukushima where Japan's economy melted with the corium) Japan's banks paid negative interest rates to savers due to the problem of too many savers, and not enough borrowers - or in balance sheet terms, too much outlay (interest to savers) and not enough income (interest from borrowers).
So simple rules I think can neither run an economy, nor can they, IMHO, account for the greedy Freddy or Fannie who does have intentional agency and will sidestep and sideswipe whatever rules he or she can.
So, let's get rid of private banks, eh? After all they're problematic for the economy and create chaos when they act in their own investors' interest at the expense of the society.
Does a public bank recreate the same issues, or a raft of different ones? I simply haven't thought that far.
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FREM, it's easy to say anti-usury laws... usury is definitely a problem... but that is far too limited.
There is one thing that I have learned from history, and that is the drive towards centralized power is relentless. Whatever series of “donts” are devised, someone will find a way around them, just like credit default swaps were created to evade the regulations on both insurances and deposits (paltry as those regulations were!) So, I think we really need to be thinking three or four steps ahead, not just reacting to the excesses of the day.
I conducted a series of thought-experiments to each possible economic proposal to see how it would fare (economically) in the long-run. But if my previous post made heads hurt, this one even makes MY head hurt!
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The first problem seems to be with money... the marble analogy. Once money comes into being, it develops a life of its own. It can be hoarded, it can be loaned, it can be used to gain control. And if you have a marble-making machine... Well! So- let's control the creation of money: That was the first thought that came into my head. Banks are in business to create debt. They are allowed to make money on money... actually it's even worse than that, they are allowed to make money on money they DON'T EVEN HAVE. The government requires that banks have only ONE dollar of actual invested money for each FIVE dollars they loan out... that is called the capitalization rate. So banks are allowed in fact to create money. I would require 100% capitalization rates... you CAN'T LOAN MONEY YOU DON'T HAVE. Or even better, separate out savings and loans altogether... make banks just big mattresses for people's savings. If people want to invest, let them do their own damn investing on their own dime. This would certainly eliminate bank fraud, fraudulent loans, spurious money-creation, and a lot of the crap that has brought down financial systems many times in the last century.
But what about corporate bonds? Private loans? Government bonds? ANY form of loans with interest creates that 11th marble, in the expectation that the lender will get that 11th marble back in the form of interest... an 11th marble than doesn't actually exist. So, limit interest rates to the inflation rate.
But, there is still the problem of the stock market. The stock market epitomizes the worst of the worst of financialism. The “owners” (shareholders) of a company often don't know what a company makes, whether or not it is a better product than its closest competitors, how it can be improved, all they care about is “more”... will this company make more profit this year? Will it make more profit than it's nearest competitor? Can I sell this stock next year for more than I paid for it this quarter? They are the absentee landlords of our production system, squeezing money out of production, often to the point of degrading both the product and the facility. So, I would get rid of the stock market.
Oh, but then there still is the idea of “profit”. Freddie is still allowed to take out every tenth marble. So we have private companies run for profit which will – over time- net their individual owners an increasing amount of circulating money... er, marbles... the supply of which we have severely restricted by eliminating profit-based loans. Sooner or later, a few Freddies will have ALL the marbles. What then? Company scrip?
All right. Eliminate corporations altogether. We'll all work either as individual business-owners or in “cooperatives” where we will ALL be part-owners, and we will ALL decide what to do with our revenues at the end of the year. We still have the market... after all, we have to sell our products into the marketplace at competitive prices.... we still have to hire at competitive wages... but there will be actual workplace democracy, where the owners know the process, know the product, have an interest in long-term viability, and are able to access loans at the inflation rate, and everybody gets to have a piece of the pie at the end of the year, if they so choose.
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I wanted to reiterate that these are simply thought-experiments. We do need a lot of real reform, now.
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Quote:I don't see how this is a problem. Because, if we're not talking any 11th marbles, the majority of people who have traded labor or land or whatever they've sold to the expansionist SHOULD have gotten something worth JUST AS MUCH back.
Originally posted by SignyM:
Then they take their accumulated money and buy more land. Or more machines. Or better automation. And they make more money, and still being of an expansionist frame of mind they eventually take over the vast majority of production, and if they have invested in automation- which seems like a reasonable business decision- they will have once again created a small coterie of owners and a vast majority of people on the outside looking in.
Quote:Again, I don't see why investment for profit is a problem.
... we are still left with the irreducible problem of “investment for profit”. Or maybe the problem is “profit for investment”. Or perhaps the REAL problem is simply “investment”.
I have $10. I trade 5 for water, 3 for lemons, and 2 for sugar. I make lemonade, and I trade my 10 cups of lemonade for $2 each. If I sell all my cups, I double my money. Or you can say, I earn $10 profit as compensation for my idea, labor, and risk. What is the difference between this and spending the day helping you move in exchange for $10?
The problem is the worth of intangible products and services like "labor" and "invention" and "hope." As long as those things are marketable at all, someone will invent the 11th marble.
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Never be deceived that the rich will allow you to vote away their wealth. -- Lucy Parsons (1853-1942, labor activist and anarcho-communist)
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Quote:Our enterprising cooperative has just invested in a machine that will allow them to do twice the work with the same number of people. They will be able to produce at lower cost than their neighboring cooperatives, and make more sales. Some cooperatives in that sector go out of business, creating unemployment. Our enterprising cooperative then expands into other products or other geographic areas, and with their emphasis on labor-saving devices put even MORE people out of work.
I don't see how this is a problem. Because, if we're not talking any 11th marbles, the majority of people who have traded labor or land or whatever they've sold to the expansionist SHOULD have gotten something worth JUST AS MUCH back.
At its theoretical endpoint, there will be a small number of the original cooperative owners who own ALL of the productive capacity, and their procedures are very productive indeed... much can be made with little labor. But the vast majority of ppl who can't compete at that level of productivity will be unemployed, and also unable to buy anything.
And BTW, I am all for labor-saving devices! But there is one caveat to automation: If you tie the distribution of money to work, and then you automate everything there will be a lot of people with no way to earn money!
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I still favor the idea of edible currency with an expiration date.
-F
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I think the issue is when people collect $ without producing anything of value.
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All very complex stuff.
I wanted to add something about the marbles. It's not about the actual marbles, its about what you would be willing to exchange for the marbles. The great unknown variable.
Kids don't seem to play with them now days, but they were popular when I was a kid. When the game was at its absolute height of popularity, you'd do and give a lot for the marbles you wanted. And not all marbles are valued equally, you might swap a couple of aggies for a tom bowler, or there was craze for oxbloods, which meant they were particularly valuable.
Then the school banned marbles. Can you believe it? We'd drawn chalk circles all over the carpet or some other heinous crime. Then they were worth virtually nothing. You couldn't give them away.
That is economics in a nutshell. It's not about gold, or anything tangible, its about desire, fear, greed, optomism, pessimism, suspicion, rumours, bravado..... Its actually incredibly emotive and nothing much more. That's why if it didn't impact on our day to day lives, it would be an incredibly funny folly. The thought that the world runs on such smoke and mirrors is hilarious and frightening.
So solutions.... look to the countries that are not in crisis, and Australia is one of them, and see what works.
I'd like to see a return to having at least one nationally owned bank. I belong to a bank that never used to have to have to worry about share holder dividends, and didn't charge enormous fees and interest. Now considered acceptable now of course, in these days where any idea of a national owned anything is considered free market sacrilidge. But it did work for a long time.
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