Direct Democracy Ireland Launches Today

yore

KyussBishop wrote: »

If these things are factored into the market long before they become policy, that's directly saying money creation doesn't create inflation, but that it's an effect of market perception.

Sorry, I never addressed this part. Your conclusion is too simplisitic. To put it in basic terms printing money just for the sake of it (to devalue a currency or quantitative easing) is generally not a good thing. It's only done if it really needs to be done. So the market is not perceiving that they might decide to do this things, it is perceiving whether or not they will have to!
There are different theories on market efficiency. That means the amount of imformation known and incorporated into market prices already. But the idea is that the market is continually assessing the situation and if the market knows that the ECB is going to have to print a trillion Euros in a few months, that will be priced into things now. It does not mean that the market perception "causes inflation".
The market usually gives signals for major events/decisions in advance and there are many examples of this. If you want an example, you can think of your famous "bailout". The shares of Irish banks had tanked dramatically in the months leading up to the bailout. Yet when the Anglo boys went up to givernment buildings they gave the books to say that that it was a liquidity problem and not solvency. The market was right and the government/"expert" advisors/audited books were wrong. The market didn't cause it. It may have hastened it, but didn't cause it.

KyussBishop

yore wrote: »

Sorry, I don't understand what you are saying with this argument. It seems to come out of the blue and then you call it ridiculous yourself. Moral hazard occours with an asymmetric risk/return payoff. For example, if you know that you can get a loan from your friend to go down the bookies and spend the day betting it in the knowledge that if you can't pay the loan back, your friend will let you away with it and give you another one tomorrow. If you win at the bookies, you keep the winnings, and if you lose all the money, you don't lose anything. And in anticipation of your next point, no, these evil "bondholders" aren't speculative gamblers. The bondholder is the friend that lent you the money expecting it back in good faith.

I know what moral hazard is, and your basic argument was that 'giving governments money' is a moral hazard, which is ridiculous.
The money wouldn't even be going to government either, it would be going straight into a job guarantee program, just like EU funding an infrastructure project.

The bondholder took a risk in investing, and it is precisely a moral hazard to bail out the bondholder when his investment turns sour, because you promote risky investments by giving people the idea that they will be bailed out (just like the way 'too big to fail' banks are a moral hazard; they cause too much economic damage if not bailed out, so expect one and thus engage in more risky/destructive behaviour).

yore wrote: »

See above for an explanation of the term "moral hazard". When someone says that printing money to give to Greece for example creates a moral hazard, they don't mean the act of the printing itself is bad. It just means that it creates an atmosphere whereby people who do not follow the rules (talking about Greece here) know they can't lose and so might as well take risky gambles. I don't see any logic that could link an EU infrastructure project to "moral hazard" unless the EU were jumping in to clean up and complete private sector projects that the private sector companies messed up and were allowed to walk away from without consequences.

Right so you've just said a job guarantee (which can be synonymous with an infrastructure project, quite easily), funded by printed money, has no moral hazard.

yore wrote:

Sorry, I never addressed this part. Your conclusion is too simplisitic. To put it in basic terms printing money just for the sake of it (to devalue a currency or quantitative easing) is generally not a good thing. It's only done if it really needs to be done. So the market is not perceiving that they might decide to do this things, it is perceiving whether or not they will have to!
There are different theories on market efficiency. That means the amount of imformation known and incorporated into market prices already. But the idea is that the market is continually assessing the situation and if the market knows that the ECB is going to have to print a trillion Euros in a few months, that will be priced into things now. It does not mean that the market perception "causes inflation".
The market usually gives signals for major events/decisions in advance and there are many examples of this. If you want an example, you can think of your famous "bailout". The shares of Irish banks had tanked dramatically in the months leading up to the bailout. Yet when the Anglo boys went up to givernment buildings they gave the books to say that that it was a liquidity problem and not solvency. The market was right and the government/"expert" advisors/audited books were wrong. The market didn't cause it. It may have hastened it, but didn't cause it.

So if you weren't saying inflation was tied more to market perception than money supply, then that brings us back to this question:
If the EU put €10 billion into a job guarantee program, how much inflation will we get? What about €100 billion, or even a trillion?

yore

KyussBishop wrote: »

I know what moral hazard is, and your basic argument was that 'giving governments money' is a moral hazard, which is ridiculous.
The money wouldn't even be going to government either, it would be going straight into a job guarantee program, just like EU funding an infrastructure project.

No. I never said that. That's silly. "Giving governments money" is not a moral hazard. However having a system where a country can choose to balance it books or not when it knows that they will receive a no-strings attached lump of free printed money creates one. Giving the money itself is not a bad thing. Ireland benefitted massively from EU money, as have other countries.

I don't know where you are going with the second part because I never talked about anything like that. This started when anopther poster suggested that anyone with a mortgage should receive a discount on their mortgage proportionate to the per capita amount that the "Troika" gave us in loans.

KyussBishop wrote: »

The bondholder took a risk in investing, and it is precisely a moral hazard to bail out the bondholder when his investment turns sour, because you promote risky investments by giving people the idea that they will be bailed out (just like the way 'too big to fail' banks are a moral hazard; they cause too much economic damage if not bailed out, so expect one and thus engage in more risky/destructive behaviour).

The moral hazard is created by letting the banks getting "too big to fail" in the first place. Protecting "Too big to fail" banks was not done to protect "bondholders" in some conspiracy to keep rich people rich. It was to protect the overall system. The problem was the banks were let get into those situations in the first place. Note that the owners (shareholders) of the banks, took full hits in most of such cases. Lehmans went to the wall. Would it have been correct to let all the Irish banks go to the wall? I would not like to be in the country if that happened! If you think it is bad now, you have no understading of that scenario. As I saw one poster on here before mention, when Ulster Bank went offline for a week, there was huge trouble. imagine a scenario where there was no money in the ATMs and you could not withdraw any of your savings in any manner. That is, the fraction of your savings that you would get back. What you call "savings" is actually a loan of your money to the bank. It is like having a smaller version of a "bond". This is why senior bonds are ranked level with deposits. Burning the "bondholders" would also entail burning depositors. Of course you could have a 100k guarantee cap or something to that effect. But senior bondholders are no more gamblers than the person who tries to deposit their savings in the bank that offers them the best interest rate.

KyussBishop wrote: »

Right so you've just said a job guarantee (which can be synonymous with an infrastructure project, quite easily), funded by printed money, has no moral hazard.

No. I never mentioned a job guarantee. I said an infrastructure project is not a "moral hazard". Again that's silly.
I gave a hypothetical example of where it could theoretically be, if it was a project that was originally given to a private sector company but they were allowed to walk away scott free after messing it up. But the project itself wouldn't be gthe moral hazard, the willingness to jump in and clean up the mess of the other company would lend itself to moral hazard.

KyussBishop wrote: »

So if you weren't saying inflation was tied more to market perception than money supply, then that brings us back to this question:
If the EU put €10 billion into a job guarantee program, how much inflation will we get? What about €100 billion, or even a trillion?

I don't know? How much money is in circulation? That might be a crude estimate before ignoring multiplier effects which would increase inflation and improvement of the economy in general, which would strengthen the Euro and have a decreasing effect.
I don't even know what you mean by "job guarantee program"? What is that? One where you guarantee that employers can't sack their employees? That's a crazy idea. Sure all the employers would just say "I can't afford to pay KryussBishop his million a year....oh, but the government guarantees your job so I guess they can cover your wages and I can keep it for free". I'm only being slightly facetious here.

I never said anything about inflation being tied to market perception. You said that there had been no effect of 1trillion Euro on inflation. I gave you a graph of some FX rates. FX rates contribute to inflation. For example, for the first one I gave you, it will cost you 1.6 times the Euro amount today that it would have cost you to buy Yen about 3 years ago. On a simplistic basis, that Japanese stereo that the manufacturer charged 100 Euro (i.e 16000 Y) three years ago, will cost about 160 Euro (still 16000 Y) today. You then wanted me to point out the times that corresponded to printing the money and I said that these are factored into the market in advance of it happening. That's all. Yes, there are lots of other factors coming into play but I never stated that money supply was the only one. It would be generally accepted to be a large contributary factor. (I anticipate that you may well point to the case of the USA to offer some counter arguments but the USA is a special case given the dollars perception around the world as the global reserve currency.)

This thread isn't about macroeconomic theory. I'm not going to talk any more about this.

KyussBishop

yore wrote:

No. I never said that. That's silly. "Giving governments money" is not a moral hazard. However having a system where a country can choose to balance it books or not when it knows that they will receive a no-strings attached lump of free printed money creates one. Giving the money itself is not a bad thing. Ireland benefitted massively from EU money, as have other countries.

That's a false dilemma though; that is not a problem that exists.

yore wrote:

The moral hazard is created by letting the banks getting "too big to fail" in the first place. Protecting "Too big to fail" banks was not done to protect "bondholders" in some conspiracy to keep rich people rich. It was to protect the overall system.

Since when was protecting bondholders important for the integrity of the system? That just compounds the moral hazard even more, beyond the initial moral hazard of letting the banks get too big.

Burning the bondholders is definitely not the same as burning the depositors.

yore wrote:

I don't know? How much money is in circulation? That might be a crude estimate before ignoring multiplier effects which would increase inflation and improvement of the economy in general, which would strengthen the Euro and have a decreasing effect.
I don't even know what you mean by "job guarantee program"? What is that? One where you guarantee that employers can't sack their employees? That's a crazy idea. Sure all the employers would just say "I can't afford to pay KryussBishop his million a year....oh, but the government guarantees your job so I guess they can cover your wages and I can keep it for free". I'm only being slightly facetious here.

A job guarantee program is creating temporary jobs, through public money (in this case printed), to soak up the unemployed part of the workforce.

yore wrote:

I never said anything about inflation being tied to market perception. You said that there had been no effect of 1trillion Euro on inflation. I gave you a graph of some FX rates. FX rates contribute to inflation. For example, for the first one I gave you, it will cost you 1.6 times the Euro amount today that it would have cost you to buy Yen about 3 years ago.

The Yen isn't representative of inflation though; in fact, they are a perfect representation of market perception when it comes to currency, because Japan has a 200% debt to GDP level when it comes to public debt, showing countries can run enormous deficits and still retain a strong currency.

yore wrote:

This thread isn't about macroeconomic theory. I'm not going to talk any more about this.

Fair enough, best to leave it there as it has been brought quite off topic.

Esel

Afaik, there is a certain degree of direct democracy available at a local level.

For instance, if a majority of householders on a particular street indicate that they want the name of the street changed, the local council will implement the change.

Am Chile

A few months later after the launch of ddi they seem to have to growing fast in membership-from what I have seen on facebook they now have a good few branches in a few different areas-not bad for a new party only a few months old-there are a lot of other left parties around years that dont the same number of branches ddi presently has.

smurgen

Am Chile wrote: »

A few months later after the launch of ddi they seem to have to growing fast in membership-from what I have seen on facebook they now have a good few branches in a few different areas-not bad for a new party only a few months old-there are a lot of other left parties around years that dont the same number of branches ddi presently has.

I would be a supporter of this idea.Having lived in Switzerland and seen how the system operates it seems to give real power to the people.Even if things go wrong or are messed up the blame lies squarely on the public and there are no scapegoats.

Scofflaw

Am Chile wrote: »

A few months later after the launch of ddi they seem to have to growing fast in membership-from what I have seen on facebook they now have a good few branches in a few different areas-not bad for a new party only a few months old-there are a lot of other left parties around years that dont the same number of branches ddi presently has.

I'm in favour of direct democracy, but a little concerned about the Freeman links DDI has.

cordially,
Scofflaw

Phoebas

I don't get why we need a whole new party to try and get a single policy implemented. A political campaign / pressure group might be a better way.

Looking at their website, the idea of direct democracy is just one of their policies.
Here are a couple more:

2. Launch a full independent, international legal review of the bailout, which we hold to be an odious debt and illegal under international law.

Hardly a 'policy' at all and they don't spell out what the scope of the review would be, how the reviewers would be selected and exactly how it would be 'independent'. DDI seem to be certain that the bailout is unlawful, so I'd like to be sure that they aren't just proposing to get the state to pay for the legal advise that they want to see.

But wait...

3. Suspend all payments relating to the bailout, capital and interest, pending the results of the legal review.

They are going to default pending the result of the legal review. Isn't that pre-emptive and surely this is contrary to their central policy of direct democracy? Shouldn't they be offering a referendum on something as serious as a default if they are to remain true to their ideals?

Their policies continue in this vein - halt the sale of any state assets, halt all repossessions etc and a series of reviews of everything and anything (I suppose these are just 'holding' policies until they can get their act together).

I think I'll pass.

Robbo

Scofflaw wrote: »

I'm in favour of direct democracy, but a little concerned about the Freeman links DDI has.

cordially,
Scofflaw

In their latest missive regarding the Court of Appeal, they revert to type and refer to the "BAR" as being the enemies of lay litgants. This of course being part of the standard Freeman spiel that the entire courts system is some vague Monarchist/Maritime law conspiracy and BAR stands for British Accredited Registry.

It should be noted that the proposal they appear to be backing for dealing with the Supreme Court (the Master of the High Court's pre-hearing guilotine system) backlog would most likely result in more lay litigants being denied their day in the Supreme Court and quicker reposessions.

Were any of those here who are members polled or consulted on this line they're taking?

Sierra Oscar

Robbo wrote: »

Were any of those here who are members polled or consulted on this line they're taking?

Indeed, how did Direct Democracy arrive at the official party position that now sees them advocating a NO vote in the Appeal Court referendum. Was there a poll held amongst members or the likes?