A Different View Of Economics

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MSimon
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A Different View Of Economics

Post by MSimon »

http://classicalvalues.com/2016/07/a-di ... economics/

Excerpt:

Rising rates of technological advance are causing deflation.

As a recent economics article put it: Is The Fed Helping Robots Find Jobs? Yes it is. And it is a good thing because it helps reduce the cost of a given amount of output. At an accelerating rate. We have already done this with farming. Industry is well on the way. So what is a feller to do? Become an entrepreneur. Design new products.
Engineering is the art of making what you want from what you can get at a profit.

hanelyp
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Re: A Different View Of Economics

Post by hanelyp »

You have to remember that the idiots running central banks are neo-Kensenians for whom the very thought of even modest deflation is horridly terrifying. People running constant budget deficits are also terrified of deflation, for more reason. The people pushing minimum wage are equally clueless. People who live within their means, on the other hand, have no reasonable fear of modest deflation.

Changes in prices isn't exactly the same as change in value of currency, aka inflation/deflation.

In the long run the only monetary policy that works is preservation of the value of currency. The only fiscal policy that works is avoidance of debt without a viable plan to pay it back.
The daylight is uncomfortably bright for eyes so long in the dark.

MSimon
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Re: A Different View Of Economics

Post by MSimon »

hanelyp wrote:You have to remember that the idiots running central banks are neo-Kensenians for whom the very thought of even modest deflation is horridly terrifying. People running constant budget deficits are also terrified of deflation, for more reason. The people pushing minimum wage are equally clueless. People who live within their means, on the other hand, have no reasonable fear of modest deflation.

Changes in prices isn't exactly the same as change in value of currency, aka inflation/deflation.

In the long run the only monetary policy that works is preservation of the value of currency. The only fiscal policy that works is avoidance of debt without a viable plan to pay it back.
Given the deflating effects of technological change the only thing that can prevent deflation is helicopter money. Doing that through banks is economic suicide. The author of the piece I link to suggests giving the money directly to people.

You should read my piece and then all 14 parts of the piece I link to. The argument is very well made. Cogent and well supported.

Living within our means is fine in a stagnant economy. In an economy with a lot of unrealized technical potential it is a very dumb idea. But seriously - read all 14 parts of the article. That will help you get the full flavor.
Engineering is the art of making what you want from what you can get at a profit.

choff
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Re: A Different View Of Economics

Post by choff »

There are 100 million working age adults in the U.S. who aren't. More people work for the government than private sector. The whole military industrial complex/foreign policy very much constitutes a large scale make work project. The prison industrial complex/drug war is a large human warehousing/make work project. To top it off, 50 million jobs could be replaced with existing automation.

I very much suspect the reason Polywell doesn't get funded is because it would cause massive deflation. We are in a third agricultural revolution, and with DNA research, could be headed into a fourth. The world possesses the means to solve all it's economic problems in a way the even the poorest can afford. What's holds it back is an archaic, backward monetary and financial system. The central banks are doing everything in their power to fight deflation, because the drop in profits means bank loans don't get paid, stock values fall.

Helicopter money is a good idea, even guaranteed minimum income will become necessary. However, either one with debt based currency won't work, self defeating. Ben Franklin had it right over 200 years ago with credit based script currency. But don't worry, the central bankers will never be able to bring themselves to actually provide real money to the people most in need. What really drives economic policy is a deeply entrenched class warfare mentality in the .01%.
CHoff

hanelyp
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Re: A Different View Of Economics

Post by hanelyp »

Helicopter money is pathological, however you do it. It represents a transfer of value from producers to others (aka theft), devaluation of currency, and an overall corruption of the economy. Living beyond your means on any regular or ongoing basis is dysfunctional, and a road to ruin. The negative interest rates some major central banks are imposing are similarly a pathology.

Again, I'm not afraid of a bit of deflation. We've never seen real deflation in either intensity or duration to be a serious problem. This apparently endless ongoing inflation we've seen my entire life, however, is decidedly harmful to the economy.
The daylight is uncomfortably bright for eyes so long in the dark.

choff
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Re: A Different View Of Economics

Post by choff »

hanelyp wrote:Helicopter money is pathological, however you do it. It represents a transfer of value from producers to others (aka theft), devaluation of currency, and an overall corruption of the economy. Living beyond your means on any regular or ongoing basis is dysfunctional, and a road to ruin. The negative interest rates some major central banks are imposing are similarly a pathology.

Again, I'm not afraid of a bit of deflation. We've never seen real deflation in either intensity or duration to be a serious problem. This apparently endless ongoing inflation we've seen my entire life, however, is decidedly harmful to the economy.
If all employment is automated out of existence, then all wages are automated out of existence, and it follows all consumption has been automated out of existence. The only way for producers to survive is if those unemployed workers are provided with the currency to exchange for the producers products. The various western governments have been providing central banks with helicopter money since 2008 via QE without any inflation except for fine art and yachts. The banks are protected, everybody else is on their own.

The only question is how the helicopter money is produced, debt based via bond sales, or credit based. One only leads to more debt and more bond sales to pay for the debt, and endless cycle. It's been described as trying to drink yourself sober. You cannot pay down debt without reducing the debt based money supply. The other alternative is to create your currency debt free with no cycle attached(credit based, no bond sale).

How do you think those bonds are paid for by the banks that purchase them? They are granted a power called Seigniorage in the bank charter. That is to say, they create the currency out of nothing, why should the government give to private corporations a legal power it can keep for itself?
CHoff

hanelyp
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Re: A Different View Of Economics

Post by hanelyp »

If all employment is automated out of existence, the scarcity of human labor that defines so much in the existing economy no longer applies, and the relevant laws of economics radically change. But I see no sign of that happening in the near future. Even if the vast majority of jobs are automated away, finite productive capacity still applies, and the "basic universal income" needs to reflect that limit. Helicopter money, dropping into the economy from nowhere, remains pathological. People owning shares in the productive capacity makes more sense, but risks the abuses of communist management.
The daylight is uncomfortably bright for eyes so long in the dark.

choff
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Re: A Different View Of Economics

Post by choff »

Why should it be a small group of private corporations are allowed to create the currency and not everybody else? They have no more rights under the constitution to that authority that any other private citizen. How is this equality under the law.
CHoff

Diogenes
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Re: A Different View Of Economics

Post by Diogenes »

hanelyp wrote:You have to remember that the idiots running central banks are neo-Kensenians for whom the very thought of even modest deflation is horridly terrifying. People running constant budget deficits are also terrified of deflation, for more reason. The people pushing minimum wage are equally clueless. People who live within their means, on the other hand, have no reasonable fear of modest deflation.

Changes in prices isn't exactly the same as change in value of currency, aka inflation/deflation.

In the long run the only monetary policy that works is preservation of the value of currency. The only fiscal policy that works is avoidance of debt without a viable plan to pay it back.

Sanity. This.
‘What all the wise men promised has not happened, and what all the damned fools said would happen has come to pass.’
— Lord Melbourne —

MSimon
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Re: A Different View Of Economics

Post by MSimon »

When banks issue money there is debt. If the government issues money - no debt.
Engineering is the art of making what you want from what you can get at a profit.

hanelyp
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Re: A Different View Of Economics

Post by hanelyp »

choff wrote:Why should it be a small group of private corporations are allowed to create the currency and not everybody else? They have no more rights under the constitution to that authority that any other private citizen. How is this equality under the law.
For all the rhetoric of the Federal Reserve being privately owned, functionally it is an unaccountable branch of government. The way they manipulate interest rates and the money supply is nothing short of abusive. The monetary theory they cite to justify their action is pure bunkum. A precious metal backed currency, while not completely free of difficulties (see California gold rush, Spain plundering gold from the Americas, potential of mining gold from asteroids) is far more resistant to acute and ongoing abuse than fiat currency. Among the benefits of a commodity backed currency, a plurality of private institutions could issue paper or electronic notes redeemable for the commodity.
The daylight is uncomfortably bright for eyes so long in the dark.

choff
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Re: A Different View Of Economics

Post by choff »

Being private corporations, the Federal Reserve bank exec's are duty bound to maximize profit for their shareholders. This can be in conflict with the Fed's stated goal of a safer, more flexible, and more stable monetary and financial system. It makes more sense to use insider information on interest rate and loan policy changes to concentrate all wealth in the hands of the shareholders.

Back to the automation question. The U.S. should be able to put off the day of complete unemployment via shorter work weeks and earlier retirement. The U.S. could boost it's export economy by getting legal and health care costs down to 10% GDP with universal coverage, same as it's overseas competitors. Doesn't matter public or private so long as it allows the export market to compete. Under the current financial regime the opposite takes place.
CHoff

hanelyp
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Re: A Different View Of Economics

Post by hanelyp »

The biggest problem with medical costs in the US is consumers being insulated from the costs of their usage by 3rd party payers, aka "insurance". Single payer universal coverage does nothing to address that problem. Unless it's heavily rationed, taxes / deficit spending to pay for it would be every bit as ruinous as the current mandates, if not more so.

But reversing the ill conceived legal and policy positions that push the cost to employ someone skyward would do a great deal to reduce unemployment and restore the economy.
The daylight is uncomfortably bright for eyes so long in the dark.

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