Posts Tagged ‘Money Supply’

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

The extent of discussion around so called Helicopter Money is symptomatic of the wider issue that central bankers are truly at a loss around the issue of secular stagnation and the obsession to inject growth however possible.

Whilst the idea of money printing or quantitative easing is a reality for developed nations, no longer the preserve of failed states (or do we admit the first world is indeed a failed state?), the notion of money being made freely available to the pubic is still more fiction than fact.

However this article is worth a read, as it sets out how such a move could work and the considerations needed. I find it revealing in the workings of some aspects of monetary policy, however it does omit the amount of money creation performed by commercial banks, something which needs to be acknowledged on a wider scale

City AM – Helicopter Money

 

 

 

Please view this article on Central Banks’ attempts to harness aspects of Bitcoin’s technology for their own means of control

http://www.telegraph.co.uk/business/2016/05/03/central-banks-conspire-to-harvest-bitcoins-revolutionary-technol/

“Ironically, the technology that was meant to liberate money once and for all from the dead hand of the state may end up imprisoning it even further”

 

 

Explore the following link for Jim Rickards explanation of the Tiffin Dilemma which links the US Dollar to global trade and the also to the gold standard and currency preservation….

http://www.capitalandconflict.com/central-banks/triffins-dilemma-and-the-future-of-sdrs-2/

 

…three logical reasons to buy Swiss bonds on negative yields.

Of course there’s a problem here. And that’s the fact that these logical reasons are founded on us continuing to live in an utterly insane world.

Any situation can be viewed in different ways by different people…is the glass half full or half empty? But the theory, logic and even the mass statistics which can be used to support this, only serves to highlight the way in which any case can be argued and ultimately it is down to subjectivity. When we truly concern ourselves with an element of personal liberty and real freedom, who will then argue that my stance is better than yours?

Throw into the mix that there may be a general (a very loosely defined term) opinion about what is actually right or wrong, one can see that ultimately, you can make your choice and you will be judged by it.

As many commentators seek to prove/disprove competing theories of what is the fairest and most prosperous system of them all, consider the above quote in this piece by MoneyWeek where the current logic of the financial markets is put into context.

This was written regarding the recent selling of debt by some European governments for negative yields, whereby an investor will get back less than what they originally paid….and they willingly accept those terms…

The bond market keeps getting crazier – don’t get caught in the rout

Is this a new normal, or the just the pre-cursor to another major crisis? Experts haven’t been able to agree on the full impact of the massive stimulus packages, ultra low or negative rates and slowing emerging markets.

Under most text book senarios, the easy credit effected since 2008 should lead in the long term to high inflation, unless other parts of the economy are severly shattered and demand levels will never recover.

A couple of facinating articles shed some light on these changing trends and attempt an explanation;

…brink of a second credit crisis

…once in a generation transformation

How central banks have lost control of the world