Posts Tagged ‘Money’

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

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.

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.

One argument which is used to discredit any realistic attempt to return to a gold standard in todays environment of ever expanding money supply, is that currently there is too much money in the system and too little gold to be able to adequately replace one for the other.

Well, Jim Rickards has one answer for us to consider…..

It is true that at today’s price of about $1,300 an ounce, if you had to scale down the money supply to equal the physical gold times 1,300 that would be a great reduction of the money supply.

That would indeed lead to deflation. But to avoid that, all we have to do is increase the gold price. In other words, take the amount of existing gold, place it at, say, $10,000 dollars an ounce, and there’s plenty of gold to support the money supply.

The limiting factor here is not the commodity….but the price itself.

Basic supply and demand economics and its impact on price…..don’t let so-called experts make simple concepts seem impossible. We can’t change the quantity, so change the price! Guess that means the market does not give us a correct price signal in view of this?

I’ve done that calculation, and it’s fairly simple. It’s not complicated mathematics

A Fascinating and extremely pertinent view expressed by MoneyWeek in the following article

A question which has certainly been raised in discussions about the nature and indeed, the durability, of this cryptocurrency, one must decide whether this trend will fall victim to many of the faults of other fiat currencies or does it take of the allure of precious commodities which can potentially outlast humanity itself?

On the surface I cannot think of Bitcoin as anything other than pseudo-fiat, however we may never even know the authority behind it, even if it is everyone of those that use it – can we not fall victim to the same whims of the State? Any man made invention will have its deep flaws and cannot be assumed to be beyond manipulation.

However, I understand the commodity like nature of it too, but as Buffet once remarked about gold, you certainly cannot eat bitcoin, you can’t even touch it, so how much of a commodity can we really think of it as?

..if someone were to hack the algorithm behind a bitcoin, that might have the same effect as a central bank printing money: it could lead to a loss of faith and value. Now there’s an irony! Central bankers are to fiat currencies what hackers are to cryptocurrencies!

My research will continue….

Imaging rights? Monetising the right to use your likeness…even when you are dead….they say money never sleeps, well it doesn’t much die either

Muhammed Ali sold his rights while he was alive….but now he has passed, it will continue to be used. Much like the rights of Elvis Presley which have financially benefitted his estate long after his death.

The ability to recreate an actors image from CGI…most recently seen by the reimaging of Peter Cushing’s Star Wars character is also not a new thing, but something which is becoming increasingly believable and sophisticated, and therefore a potential market exists which can only become more lucrative for the living celebrities who have distinctly popular images.

This allows people to ‘trade’ on their own image, in life and increasingly, in death. Creating revenue streams beyond your physical presence, or even your own labour, in this life.

In an earlier blog, I mentioned how money defies the some of the basic laws of the created realm, notably the way it is created…out of nothing

It seems it can cheat death now too