Posts Tagged ‘Debt’

For anyone not familiar with the work of Ann Pettifor – one of the few to correctly call the coming of the financial crisis a number of years prior to it arriving, and one of the main proponents of the Jubilee 2000 campaign which cancelled a portion of third world debt – please search for her various articles, lectures and opinions online.

Associated with Keynesian economics and the Labour party, her views may be dismissed by some, however upon closer inspection, I was interested in her view on the creation of money, and what this meant for resolving the debt and economic problems facing the developing world.

She is principally part of the PRIME think tank/research group, which has a number of papers on its site proving an alternative voice on economic issues

The above lecture at the LSE discusses her latest book, ‘The Production of Money: How to Break the Power of Bankers’, and gives an insight into her theories.

What I wish to highlight, are the following;

  • The issue of commodity money, and how scarce resources should not be used as a basis of any monetary system
  • The recognition that a fiat monetary system, can and should be used for the benefit of the population – outside the control of private banks, but in the knowledge that an entirely man-made system should be used to achieve a level of prosperity in all societies
  • There are certainly many socialist aspects to these beliefs, such as exerting capital controls and spending money into existence in terms of health, education and social expenditure thus increasing national debt, however interest ideally should not be necessary when such a system is implemented
  • There are some similarities with what Positive Money are advocating, but it seems there are specific differences, as this discussion points out…

 

 

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Depending on when you want to mark the start of what has become known as the Financial Crisis or even the Great Recession..(take your pick, or make one up), or as I would refer to it, the shit storm created from the exuberance of one generation thinking they can out do the folly of previous generations and become gods amoung men, see point 25 in the link below

I guess they’re not really the Masters of the Universe, they’re maybe not even smart people, perhaps closer to the opposite despite their highly valued creditials

This month marks a particular 10 year anniversary of one such start date of the crisis…we’ll get another 10 year anniversary next year if you miss this one, that one being the big one – when Lehmans went down.

This link is similar to a number of articles circulating over this period around what went wrong and what has changed since then that will probably make it impossible to happen again….I won’t hold my breath

Whatever has happened, the most fundamental fact that should be lamented is that the world is more indebted than ever…national debts have ballooned, fiat currencies are more debased than ever and emergency interest rates are still prevalent.

This danger is ever present, waiting to fuel the next severe economic breakdown, because the greatest lesson from the fallout is that crashes of this extent will always happen, constantly…it’s just a matter of time and behaviour

Assuming one can get around the root of the matter (which you can’t since these are facts which have not been questioned, rather they have been accepted by the practitioners themselves throughout history), which is; Money is fictitious, no intrinsic value, it is fiat, it is always loaned into existence – all money is interest bearing, furthermore, money is of (created from) interest itself, consider the following points which I would like to highlight in order to put the concept of these debt products into perspective;

  • These creations are based/modelled on debt products. The conventional guise of this instrument is an interest bearing debt, the sharia equivalent must mimic all of these qualities, and perform for the same uses ie. it is the same product by a different name (= DECEIT)
  • All cash flows, or rather ‘Rent’/’Profit Share’ must be benchmarked against the prevailing risk free rate, or the yield must meet a company’s cost of capital requirements and therefore all cash flows, whatever their innocent sounding names, are embedded with interest. Remember, an interest rate is itself is comprised of the risk free rate, a risk premium and a profit margin. Without this, the whole reason behind ‘Islamic Finance’ goes out the window – it must meet a clients required return in comparison to other assets/products that can match yield available
  • These are still IOUs, adding to the proliferation of debt based financing  – in a system/world which is created of and from Debt. Again, remember that one of the needs which spurred creation of this product was the need to raise/take advantage of, surplus capital in a particular demographic/region considering that which was already available elsewhere, or not easily available rather. The status quo of building ever higher mountains of obligations still stands true.

I hope to be able to build upon this argument in future posts…..

https://www.khanacademy.org/economics-finance-domain/macroeconomics/monetary-system-topic/fractional-reserve-banking-tut/v/overview-of-fractional-reserve-banking

This praiseworthy organisation is known for providing free, all accessible learning for everyone on a range of core topics.

It does a sterling job of condensing hard to understand subjects, into bite size, digestible knowledge

Few areas have escaped its coverage, and I was fascinated to discover a number of sessions on Banking and Money.

The attached video is one of a three part series explaining how money is created by the private banks, something most people still know little about. This touches many key areas such explaining what Money is, how it actually works and raising valid questions about alternatives.

It doesn’t stop there, you can search for further tutorials on more how banks work, and again how they create money, as well as other technical aspects of the money supply, to name one example.

Its always good to see those of understanding laying bare these facts in a plain manner demonstrating just how easy it is to lift the veil which seems to cover these elements of a modern economy.

Too good not to share….you would think the public at large would notice something that big….guess not

There is only us people here…

Posted: February 14, 2017 in Monetary System
Tags: , ,

There are no such things as ‘Corporations’. These entities only exist on paper in legal form, in reality, companies are just people some of whom fulfill multiple functions; employees, customers, shareholders. Some customers are employees. Some are both that and shareholders….where are the incentives and who are the ultimate beneficiaries therefore? If you fine a company, or tax it, the customers and the employees are the ones that foot the bill.

There are no such things as ‘The State’. They are just legal entities, sometimes, not always, bound together by another legally binding piece of paper, called a constitution, but who are the governments, the police and the army…they are same people who pay taxes, vote and follow the law? If a government takes on debt, it’s the citizens who pay it off.

Any institution is made up of only people. Behind the logo, behind the image and the advertisements and the facade…there are only people

And what of ‘The Market’….no it is not some miraculous spirit, beyond the flaws of human behaviour….it is made up of irrational humans itself, subject to whims like anything else, sometimes herd mentality will run supreme, other times we may get genuine independent movement, however let us not be fooled that it is not subject to manipulation and power plays, just like any other area of human activity.

But here’s a preview: it comes down to the fact that the people “in charge” of the economy fundamentally misunderstand it. We call it the machine metaphor: thinking of the economy as a machine with levers and pedals and gauges that can be operated to make it run faster. Of course the economy isn’t. It’s much closer to a natural ecosystem, made up of the free decision-making of millions of people.

In the machine economy, you become a cog. The state becomes the operator. It’ll pull whatever levers it can to try and make the machine run the way it wants. If that destroys a cog, so be it – the machine itself is more important.

Nick O’Connor, MoneyWeek

Prices change expectations (or perhaps “beliefs” is a better word), which change behaviour. Behaviour changes prices, which change expectations/beliefs. On and on it goes.

John Stepek, MoneyWeek

These are all examples of constructs; created structures that man builds and then becomes oppressed by. Invisible to the eye yet all encompassing, let us not be fooled in believing in apparitions….. some people think that is what ‘religion’ is for.

Who are the clergy, the establishment, the monarchs…..they are just people too. The consume, defecate, procreate and expire

Do not fear that which we create and build with out own hands and minds.

Poor countries don’t need charity. They need justice.

Is this another deception with our perception of ‘The World’?

One of the most comprehensive reports into the real financial transfers into and out of the developing world shows that the extraction of wealth from the third world, much of it former colonies, continues apace.

Rich countries aren’t developing poor countries; poor countries are developing rich ones

How Poor Countries Develop Rich Countries

I find the fact that some $4trillion since 1980 is attributed to debt interest repayments fascinating. The scale of this particular transfer is testament to the continued servitude of many nations states.

When many times more is sent back in exchange for every dollar received in aid, does this not sound like a familiar profit making enterprise at work?

Reading the original report, I find this sentence especially on point…

Much improved statistical compilation and reporting is required in order to have a more adequate picture of global financial flows; a task that urgently needs to be undertaken collaboratively by the International Monetary Fund, World Bank, United Nations, Organization of Economic Cooperation and Development, and the Bank for International Settlements.

Is this a list of the usual suspect organisations?