Alternative Fiscal Policy / Political Ideology

Wanderer78

Graham wrote: »

I'm not convinced it's possible to prepare for a crash in a way where the preparations don't actually bring about a crash in their own right.

Stop spending, reduce borrowing, sell quickly if you need to.... Self fulfilling prophecy.

good point, but id have to disagree to a point. its becoming clearly obvious, 'the market' truly is not capable of providing us with our actual needs. we should at this stage be trying to prevent as much homelessness as possible, we re performing dreadfully at this task.

if we stop spending, it reduces the 'velocity' of money, not always a good thing. id agree with some commentators, theres already too much debt out there, in particular private debt, i.e. we re potentially walking ourselves into a debt fueled nightmare.

johnp001

Wanderer78 wrote: »

good point, but id have to disagree to a point. its becoming clearly obvious, 'the market' truly is not capable of providing us with our actual needs. we should at this stage be trying to prevent as much homelessness as possible, we re performing dreadfully at this task.

The reason that needs are not being provided is because there is no real 'market' due to the massive level of government intervention in the areas of building, credit provision etc..

Wanderer78 wrote: »

if we stop spending, it reduces the 'velocity' of money, not always a good thing. id agree with some commentators, theres already too much debt out there, in particular private debt, i.e. we re potentially walking ourselves into a debt fueled nightmare.

I agree there is too much private debt but currently it seems likely that at least some of the private debt will be repaid. This is in stark contrast to sovereign debt, Ireland and many other countries are carrying immense levels of debt and are still borrowing despite the cost of interest payments on the debt being at historic lows. There is no way that Ireland's, Greece's, Italy's etc sovereign debt is ever going to be repaid it is just a question of how long they can keep on rolling it over.

Wanderer78

johnp001 wrote: »

The reason that needs are not being provided is because there is no real 'market' due to the massive level of government intervention in the areas of building, credit provision etc..

i think its important to realise, 'the market' and its capabilities are nothing but a figment of our imaginations, theres sufficient evidence to show, it is not capable of providing us with our actual needs, this is supported by both peer reviewed and none peer reviewed research

I agree there is too much private debt but currently it seems likely that at least some of the private debt will be repaid. This is in stark contrast to sovereign debt, Ireland and many other countries are carrying immense levels of debt and are still borrowing despite the cost of interest payments on the debt being at historic lows. There is no way that Ireland's, Greece's, Italy's etc sovereign debt is ever going to be repaid it is just a question of how long they can keep on rolling it over.

ive included a graph(hopefully) that debunks your above statement, our public debt is not where our debt problems are! we re walking into a private debt nightmare!

johnp001

Wanderer78 wrote: »

ive included a graph(hopefully) that debunks your above statement, our public debt is not where our debt problems are! we re walking into a private debt nightmare!

I don't think the graph debunks my statement although I agree that we are walking into a private debt nightmare, the unfortunate situation is that we are also walking into a public debt nightmare.
Ireland has a much larger proportion of impaired loans than most countries and this is a problem with the private debt but the majority of the individual loans are being paid down. Irish private debt is above average for the eurozone but not the highest in the region.




The government debt is not being paid down though, Irish public debt per citizen is by far the highest in the EU and the third highest in the world. Even though interest rates are as low as they can be expected to get which minimises debt servicing costs, the government is still borrowing to fund expenditure rather than running a surplus to reduce the debt load. In the future the proportion of non-working age population (which are an expense to government accounts) will increase relative to taxpaying population so if the debt cannot be paid down now it never will be.

Arthur Daley

You are spot on Johnp001. But the dog whistle goes off once this point is raised widely. It is advocating 'austerity' and none of the political parties will countenance this. They are doing a disservice to the people, but the people are well trained to be obedient and dislike 'austerity' also.

It used to be called paying your way, and being prudent. God be with the days.

Wanderer78

Arthur Daley wrote: »

You are spot on Johnp001. But the dog whistle goes off once this point is raised widely. It is advocating 'austerity' and none of the political parties will countenance this. They are doing a disservice to the people, but the people are well trained to be obedient and dislike 'austerity' also.

It used to be called paying your way, and being prudent. God be with the days.

'expansionary fiscal contraction' is well debunked at this stage in my opinion, id agree with commentators that say, governments are not the same as households, they actually dont need to balance their books, in fact by doing so, can and does cause great harm to society, but of course the eu is not designed for this to be possible, which i do believe could be one of the major causes of its downfall.

johnp001

Wanderer78 wrote: »

'expansionary fiscal contraction' is well debunked at this stage in my opinion, id agree with commentators that say, governments are not the same as households, they actually dont need to balance their books, in fact by doing so, can and does cause great harm to society, but of course the eu is not designed for this to be possible, which i do believe could be one of the major causes of its downfall.

Are you a believer in Modern Monetary Theory (MMT)? I only heard about it recently but what i heard seems to be along the lines of your post. The discussion on it I heard was from an Austrian school economist who was fairly critical but I intend to read about it further.

Wanderer78

johnp001 wrote: »

Are you a believer in Modern Monetary Theory (MMT)? I only heard about it recently but what i heard seems to be along the lines of your post. The discussion on it I heard was from an Austrian school economist who was fairly critical but I intend to read about it further.

im aware of it but i dont truly understand it, even though ive been at a public debate with stephanie kelton on the panel, explaining it to some degree. if you do find some interesting things on this, i would be very grateful if you could forward them onto me. steve keen is a little critical of the mmt movement, and i suspect he could be right. i believe mmt followers believe governments can effectively print as much money as they want, and by using controlling measures, this has little or no negative effects on an economy. keen believes this is untrue, and i suspect he is correct. id also agree with american economist jim rickards regarding this matter, i.e. money and its supply is ultimately down to 'confidence', lose that confidence and basically, you re screwed. this could occur by extensively printing money, just as the current qe process is doing, hence the growing anxiety over its continuation. but i will part agree with those that say we need to stop this nonsense of balancing the books, its highly dangerous for all. i would class our most recent approaches to dealing with these issues as 'clearly' failing, but we re not acknowledging this. i personally believe this is appearing in our own country particular in relation to our 'housing crisis'. i do truly agree with people such as steve keen, we re currently watching the failure of economic and political ideologies such as neoliberalism and neoclassical theory, its over, but we dont truly know what to do next, and our political institutions have defaulted to, more of them same! this has the potential to cause catastrophic social problems for the future.

Arthur Daley

It may be a bit premature to write the tombstone of classical liberalism, or Monetarism. Especially since the core concepts have been totally hijacked over the last twenty years, by big govt. and the Central Banks.

Capitalism without bankruptcy is Religion without Hell.

Graham

Mod Note:

a friendly reminder that this is the A & P forum. There are forums for both economics and politics should anyone wish to continue the discussion around alternative economic and political ideologies.

Wanderer78

Graham wrote: »

Mod Note:

a friendly reminder that this is the A & P forum. There are forums for both economics and politics should anyone wish to continue the discussion around alternative economic and political ideologies.

i can understand this warning but this topic is actually deeply political and economically based, its impossible to have a restricted debate on the matter without mentioning these topics, the debate becomes effectively meaningless but i will respect your wishes. thank you

Cally Caleigh

Wanderer78 wrote: »

i.e. money and its supply is ultimately down to 'confidence'

Agree with this and criticisms of mmt.
What is currently happening now and over the last number of years is confidence in government/central bank backed currency is suffering, probably as a consequence of the 2008 crash and subsequent recession exposing how vulnerable the 'print unlimited amounts of money' financial system is.
This is resulting in huge investment of dollars/euros/sterling/etc into 'real' tangible assets like property, as evident from all these REITs popping up in Ireland the last 5 years and rocketing house/rent price rises despite strict central bank lending rules.
You can't 'print' houses and apartments at the click of a button on a computer like the central banks do with money.
Land has to be acquired and physical supplies bricks, plaster, wood, pipes, glass are needed and the human labour of builders, plumbers, electricians, carpenters all needs to be considered.
This is why property has historically been a good long term investment and a large element of the portfolio of the world's wealthy.

Wanderer78

Cally Caleigh wrote: »

Agree with this and criticisms of mmt.
What is currently happening now and over the last number of years is confidence in government/central bank backed currency is suffering, probably as a consequence of the 2008 crash and subsequent recession exposing how vulnerable the 'print unlimited amounts of money' financial system is.
This is resulting in huge investment of dollars/euros/sterling/etc into 'real' tangible assets like property, as evident from all these REITs popping up in Ireland the last 5 years and rocketing house/rent price rises despite strict central bank lending rules.
You can't 'print' houses and apartments at the click of a button on a computer like the central banks do with money.
Land has to be acquired and physical supplies bricks, plaster, wood, pipes, glass are needed and the human labour of builders, plumbers, electricians, carpenters all needs to be considered.
This is why property has historically been a good long term investment and a large element of the portfolio of the world's wealthy.

the majority of 'money' is in fact printed by banks in the form of loans, a common misunderstanding of money and banking.

ittakestwo

Wanderer78 wrote: »

ive included a graph(hopefully) that debunks your above statement, our public debt is not where our debt problems are! we re walking into a private debt nightmare!

Has private debt not fallen each year for the last 10 years?

Arthur Daley

ittakestwo wrote: »

Has private debt not fallen each year for the last 10 years?

Certainly Mortgage debt has reduced in the last ten years. Apart from the non payers, mortgage debt would not seem to be totally unmanagable. So if there is a problem with private debt? it is concenttated in Non mortgage debt.

Wanderer78

ittakestwo wrote:

Has private debt not fallen each year for the last 10 years?

Yes we re deleveraging, this in turn causes it's own problems, but as you can see from a previous graph I've posted, it's much larger than public debt, and this is what is mainly spoken about by our political class. It's also important to realise the issues younger generations have regarding income and the potential to grow that income over time, this is less than older generations, basically they re screwed if we keep continuing as we are.

Arthur Daley

Do you know if you have IFSC operations included here? Where is most of the private debt? Is it Corporate? Apple, big pharma resident here etc. with limited read across to the domestic housing market.

Graham

Mod Note

Folks, I've moved the alternative fiscal policy discussion into it's own thread and moved to a more appropriate forum.

KyussB

If you want to know stuff about MMT, ask away, as I know a fair deal about it (I think it would be fair to say, I'm the only person on Boards to have extensively studied it). I've consistently run into trouble discussing it (its well outside the 'overton window', here - and it's not long before it gets shut down), so I'm not going to spend much time at it.

I'd be interested in reading Steve Keen's criticisms of MMT - it's definitely not about printing indefinitely, it states that when your economy is below maximum output (loosely defined as being at Full Employment), then there is room for spending using created money, without it having to cause excessive inflation - so it's definitely not unlimited, it's just the limit is different to what people traditionally think.

MMT wouldn't completely disregard the idea of 'confidence' in a currency being important - but it states that the grounding of a currency, is that the government can force you to pay tax in the countries currency - forcing everyone to obtain it, which is a big part of what leads to it being the dominant currency.


It's actually a ridiculously hard topic to study (and almost impossible to discuss), because it challenges so many common conceptions about economics - and its main academic proponents, could do a better job explaining it to non-academics.

recedite

Would I be right in thinking that MMT would require an intelligence or an AI to oversee it. Whereas traditional "market forces" capitalism tends to work away on its own, with the bankers riding it like a rodeo?

Wanderer78

recedite wrote: »

Would I be right in thinking that MMT would require an intelligence or an AI to oversee it. Whereas traditional "market forces" capitalism tends to work away on its own, with the bankers riding it like a rodeo?

ive always liked joe stilglitz's saying, 'markets dont operate in a vacuum'

recedite

Wanderer78 wrote: »

markets dont operate in a vacuum

They don't. But on the question "Would they operate better in a vacuum?" the jury is still out.
Anyway, they are to a large extent self regulating mechanisms (or could be if they were left alone).

MMT on the other hand, is the careful management of a system.
Moving to it would possibly be like the move people once made from hunter gatherer society to early agricultural society.
At the end of the day, they were still eating animals and plants. One system requires careful management, but provides vastly improved benefits.

The other is a bit "hit and miss", but is still reasonably useful as a fall back position whenever chaos reigns.

KyussB

Heh - MMT's observations about how economies work, don't really change the current view of the economic system in more than a subtle way - private banks still give out loans and need to be regulated, 'market forces' still dominate etc. - the capitalist/market system is pretty much the same.

The big change is its observations about how government finances work - that public spending is limited by inflation, not by tax income - it argues it's safe to print and spend, but you must stop when 2-4% inflation is reached.

That's one of the simplest ways of putting it. Don't think of it as a big overhaul of the entire economic system - think of it as a subtle change that frees up government spending.

It does advocate policies that go further, but this is the core of it - its observations don't require a gigantic overhaul.

Wanderer78

recedite wrote: »

They don't. But on the question "Would they operate better in a vacuum?" the jury is still out.
Anyway, they are to a large extent self regulating mechanisms (or could be if they were left alone).

MMT on the other hand, is the careful management of a system.
Moving to it would possibly be like the move people once made from hunter gatherer society to early agricultural society.
At the end of the day, they were still eating animals and plants. One system requires careful management, but provides vastly improved benefits.

The other is a bit "hit and miss", but is still reasonably useful as a fall back position whenever chaos reigns.

ha-joon chang has some interesting input into the idea of markets, one being, 'the myth of free trade'!

'self regulating mechanisms', strangely reminds me of most religions!

Geuze

Wanderer78 wrote: »

ive included a graph(hopefully) that debunks your above statement, our public debt is not where our debt problems are! we re walking into a private debt nightmare!

Be careful.

Assets and liability data in Ireland is often affected by the IFSC.

Wanderer78

Geuze wrote:

Assets and liability data in Ireland is often affected by the IFSC.

Yea I'd say its difficult to get accurate data in most countries regarding these issues, some more so than others, i.e. data sets would have large margins of error in cases, but I've become completely convinced, mainly from commantators previously mentioned, there's something fundamentally wrong with our whole view on debt, in particular private debt, current trends are unsustainable and potentially dangerous for us all

Wanderer78

i think this keen talk explains a lot of what ive been trying to explain

Wanderer78

live stream from positive money, seems to be audio issues though

https://www.facebook.com/pg/PositiveMoney/videos/?ref=page_internal

VonZan

Wanderer78 wrote: »

Yea I'd say its difficult to get accurate data in most countries regarding these issues, some more so than others, i.e. data sets would have large margins of error in cases, but I've become completely convinced, mainly from commantators previously mentioned, there's something fundamentally wrong with our whole view on debt, in particular private debt, current trends are unsustainable and potentially dangerous for us all

Private debt isn’t an issue if it’s manageable. Unfortunately unnecessary private debt is a natural consequence of a heavy regulated capitalist society. The problem is that the financial services trade in a product that doesn’t exist and the largest financial institutions in the state trade in Mortgage lending which is heavy regulated and hard to convert into cash when the loan underperforms or fails. You can’t regulate the economy and then expect the economy to sort it own problems out. Eventually the debt or amount required to make the banks solvent is nationalised and then we don’t fix the problems in fear of stopping the already stagnated cash flow from the banks back into the economy. Then we create new debt again to fix all of the problems initially created by debt. It’s a vicious circle if you can’t regulate the debt economy effectively and we aren’t big enough on own to change the way our economy works.

Wanderer78

VonZan wrote:

Private debt isn’t an issue if it’s manageable. Unfortunately unnecessary private debt is a natural consequence of a heavy regulated capitalist society. The problem is that the financial services trade in a product that doesn’t exist and the largest financial institutions in the state trade in Mortgage lending which is heavy regulated and hard to convert into cash when the loan underperforms or fails. You can’t regulate the economy and then expect the economy to sort it own problems out. Eventually the debt or amount required to make the banks solvent is nationalised and then we don’t fix the problems in fear of stopping the already stagnated cash flow from the banks back into the economy. Then we create new debt again to fix all of the problems initially created by debt. It’s a vicious circle if you can’t regulate the debt economy effectively and we aren’t big enough on own to change the way our economy works.

I'd partly agree and strongly disagree with you, the majority of debt(money) is in fact being created by banks in the form of loans, this has in fact occurred in most recent times due to 'deregulation' of the financial sector from events such as the abolitionment of the glass steagall act (1999) etc. This is very evident in the graph I posted recently. These issues are largely due to 'deregulation' of the financial sector, which has released almost demonic forces within our societies causing our financial sector to behave in a predatory and parasitic manner, this is evident in most recent events such as the operation of financial institutions such as vulture funds etc.