Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

The consequences of Bitcoin

1…34689…11

Comments

  • #152
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    Spending which (by itself) causes excessive inflation, before reaching full economic output, is a distributional problem with where the money is being spent, not a problem of money creation.

    Yes and I would have nothing against rational investment in schools which even if it causes inflation now can be offset by changes in other policy to put downward pressure on prices. Such investment by itself will cause inflation though and it will cause it now.


  • #153
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    Yes and I would have nothing against rational investment in schools which even if it causes inflation now can be offset by changes in other policy to put downward pressure on prices. Such investment by itself will cause inflation though and it will cause it now.
    It doesn't have to really, because you can just design the investment program intelligently to ameliorate that.

    Any amount of investment is going to cause a greater demand on certain resources, and if you pre-announce the project in advance (even setup contracts in advance), you can get production ramping up early so that you avoid resource/supply-squeezes (which would contribute to inflation).

    'The markets' do this all the time without any government help, and the 'inflation' in a certain assets prices, due to increased demand, is just a signal to produce more; in other words, the markets will do their magic in solving the problem, by efficiently allocating resources.


    It's really entirely just a distributional and logistical problem - if the resources and ability to produce them are there (and ability to ramp-up production...), a lot of the inflation is because you're not doing things as efficiently as you could be; just give the markets the right signals/incentives to sort it out for you.


    Essentially, any inflation from that will be caused by reconfiguration of production within the economy, and that has to be done anyway - holding employment and economic output back to such a huge extent, out of a fear of that, wouldn't be a rational thing to do.


  • #154
    SeanW
    Registered Users, Registered Users 2 Posts: 9,430 ✭✭✭SeanW


    recedite wrote: »
    Lets take a real example of such a public bank; the European Investment Bank in conjuction with the ECB (which is mandated to keep inflation at or below 2%) Possibly something that has the potential to evolve to fulfill this role;


    So the bank is influenced by technocrats, not gombeen politicians.

    Lets look at a real loan by the bank; EUR 100m to the Irish government for capital investment in schools across Ireland over the next 2 years.
    Ok, so there is limited scope for monetary debasement to do more good than harm - i.e. spending money on useful stuff like school buildings, railway projects and other things that would make our economies more competitive. And as a side effect, these things also provide temporary jobs. Problem is that there's a harmonised limit IMO between the amount of money than can be usefully spent and the amount of money you can print before causing inflation.
    Will this newly created money cause inflation in the current economic climate? I don't think so.
    It will always have negative consequences. It's basic economic law - if there is more of something, the value of each individual piece is reduced. So when you debase the currency, either nominal prices go up to reflect the lack of scarcity of the currency, or nominal prices stay the same which means that producers are recieving less real wealth for their goods and services.

    The latter applies doubly to poor people on fixed incomes, pensions, minimum wage etc.
    On the investment side, the next generation of citizens will be better educated and more productive than they would otherwise have been.
    True, but only if the money that you printed is very well spent. And that is subject to the law of diminishing returns. Today you build classrooms. (Very high ROI) Tomorrow you build roads and railways. (Good ROI). Next year you're paying people to dig ditches and fill them in again, as was done by the WPA in the Depression (utterly pointless).
    Interest repayments can be ploughed back into the general EU budget, thereby reducing the amount paid over to the EU annually by the taxpayers of individual states.
    It is no longer the case that interest on money borrowed from the central bank is returned to the borrowing nation-state as central bank profit, because unlike the United States and the U.K, Japan etc. Ireland no longer has her own currency and is instead part of the Euro, so if we borrow from the ECB, the money we pay in interest is part of the ECB profits and shared out among the other nations. So we gain by not borrowing (taking the interest payments from other countries) and lose by borrowing (paying interest that ends up on other nations accounts)
    Meanwhile private banks could continue to lend to businesses, but in this brave new world they would only lend out whatever money they already had, and therefore could not bring down an economy by creating asset bubbles, and afterwards losing multiples of their own net worth.
    No argument there but if the government is still allowed to debase the currency, then the private banks are still unable to return a real reward to their savers.

    https://u24.gov.ua/
    Join NAFO today:

    Help us in helping Ukraine.



  • #155
    recedite
    Closed Accounts Posts: 13,989 ✭✭✭✭recedite


    SeanW wrote: »
    It will always have negative consequences. It's basic economic law - if there is more of something, the value of each individual piece is reduced.
    Yes, but when a lot of building workers are unemployed, their wages do not rise significantly when outside money is brought in as a stimulus. Not until a labour shortage kicks in. The significant effect is; more economic output, more tax collected, less social welfare paid out.

    The important thing is that this money gets gradually withdrawn from the economy again, as the govt. pays back the loan to the public bank. No debasement of the currency can occur then.
    SeanW wrote: »
    It is no longer the case that interest on money borrowed from the central bank is returned to the borrowing nation-state as central bank profit
    According to this, the Irish Central Bank, despite being a sort of zombie central bank, would in theory get 1.1% of any profits earned by the ECB. Presumably then they would pass on some % of this to the Irish govt. (after deducting their own costs and bonuses).
    What I meant was that the ECB should instead just plough any profit directly back into the general EU budget, thereby reducing the annual subscription costs of the member states.


  • #156
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SeanW wrote: »
    Ok, so there is limited scope for monetary debasement to do more good than harm - i.e. spending money on useful stuff like school buildings, railway projects and other things that would make our economies more competitive. And as a side effect, these things also provide temporary jobs. Problem is that there's a harmonised limit IMO between the amount of money than can be usefully spent and the amount of money you can print before causing inflation.
    There's a limit, yes, and that's full economic-output/employment (which happens to be exactly where we want to get to).
    SeanW wrote: »
    It will always have negative consequences. It's basic economic law - if there is more of something, the value of each individual piece is reduced. So when you debase the currency, either nominal prices go up to reflect the lack of scarcity of the currency, or nominal prices stay the same which means that producers are recieving less real wealth for their goods and services.
    You are falsely assuming no change in the size of the economy here, which is wrong; the spending is aimed at increasing economic output.
    SeanW wrote: »
    The latter applies doubly to poor people on fixed incomes, pensions, minimum wage etc.

    True, but only if the money that you printed is very well spent. And that is subject to the law of diminishing returns. Today you build classrooms. (Very high ROI) Tomorrow you build roads and railways. (Good ROI). Next year you're paying people to dig ditches and fill them in again, as was done by the WPA in the Depression (utterly pointless).
    There is no restriction like that at all, because any money spent pumping up the private economy (which much of public spending does, since it goes to wages), is automatically letting 'the markets' reallocate spending into more efficient areas, no matter the level of efficiency of public spending.

    You can just give people money if you want, instead of making them work for it, and it's still going to help pump up the private economy, but that would be an enormous waste of productive potential of unemployed people, who could be providing some kind of economically beneficial role.


  • Advertisement
  • #157
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Regarding 'debasement':
    This is largely based on gold-standard era thinking. With a fiat currency, the currency valuation (among other factors not mentioned) depends upon economic output, and economic activity in the rest of the world, which plays a critically significant part in your currencies valuation.

    You can have 'debasement' (if you want to call it that), by the rest of the world economies stalling, and keeping your own running at 100%. In this crisis, we have (effectively) stalled our economy to the same level the rest of the world has, which has retained valuation.

    The question is: Do you want to do this, when it is such an enormously massive waste of labour potential, and causes enormous harm to your economy and society?
    The pretty obvious answer is no, because if the resources are there to keep your economy ticking over, you should be using them and avoiding the above harm; if the rest of the world is stupid enough to stall their economies like that, that should not mean you follow the same path of stupidity, out of worry of your currencies valuation.


  • #158
    SeanW
    Registered Users, Registered Users 2 Posts: 9,430 ✭✭✭SeanW


    KyussBishop wrote: »
    There's a limit, yes, and that's full economic-output/employment (which happens to be exactly where we want to get to).
    Only you'll cause inflation long before you get to that point. Especially if the reason for less-than-full employment has to do with structural problems.
    You are falsely assuming no change in the size of the economy here, which is wrong; the spending is aimed at increasing economic output.
    No, I'm suggesting that if you go to the extreme of paying someome to dig a ditch then fill it up again, the effect is temporary but the money is gone: i.e. you print money, to pay the worker, he spends the money and after its gone, the worker is in the same position as he was before, only the money cannot be recalled because it rightly belongs to whoever the worker spent the money with.
    You can just give people money if you want, instead of making them work for it, and it's still going to help pump up the private economy, but that would be an enormous waste of productive potential of unemployed people, who could be providing some kind of economically beneficial role.
    That's very true, but unless you have something useful to be done, like infrastrtucture construction, or roadside maintenance etc, you might as well pay people to go back to education or indeed do nothing. But again, there's a limit to how much money you can print to do that - no matter what if you print enough money the laws of supply and demand WILL assert themselves - possibly with a vengance.

    https://u24.gov.ua/
    Join NAFO today:

    Help us in helping Ukraine.



  • #159
    hatrickpatrick
    Registered Users, Registered Users 2 Posts: 17,798 ✭✭✭✭hatrickpatrick


    Valmont wrote: »
    In ignoring these facts of reality, the economics propagated by Kyussbishop rank alongside money trees, underpants gnomes, and genie lamps. Unfortunately for us these alternatives are not fictional.

    To think there is a way to print money that wouldn't raise prices is like thinking you can stand in a bucket and lift yourself up. It comes as no surprise then that most rebuttals to these simple facts are based on mind-bogglingly complex and indecipherable arcane econometric formulas, designed, essentially, to prove that 2 + 2 ≠ 4. Meanwhile, we all get robbed.

    Hypothetically speaking, what would happen if new money printed was put into the economy as hard currency and not as a loan from a bank with interest?
    I'm not saying I have an answer, I've just always found this an utterly absurd concept of how money should be circulated, causing constant inflation by expecting every business to pay more money back to the bank than was used to open it. The only way to do this is for the bank to loan more money to someone so it gets into circulation, and that seems like a sure-fire way of causing inflation to me.

    How is this system actually justified, theoretically speaking? Are there any "pros" of it at all?


  • #160
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    KyussBishop wrote: »
    Regarding 'debasement':
    This is largely based on gold-standard era thinking. With a fiat currency, the currency valuation (among other factors not mentioned) depends upon economic output,and economic activity in the rest of the world, which plays a critically significant part in your currencies valuation.

    Most of your interludes regarding the gold standard are strange, firstly it is irrelevant and then you are wrong if you say modern currency is valued differently. The value for any currency is determined by what it can be exchanged for which is dependent on the supply and demand for both the currency and economic goods and services. Maybe your problem is with the specific word 'debasement' which referred to a lesser content of base metal being used in coin to inflate the money supply, which is fair enough, the term monetary inflation might be better and more current.


  • #161
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    hatrickpatrick wrote: »
    How is this system actually justified, theoretically speaking? Are there any "pros" of it at all?

    The system emerged from fraud of goldsmiths, the fraud was legalized and regulated, after re-occurring booms and busts the diagnosis was the monetary base was not flexible enough not that the pyramid expansion of credit on top of the base money was the problem. A central bank only made it more flexible as long as pooling banks gold reserves could stave off a bank run. Gold convertibility was the limit on flexibleness. Gold convertibility for private individuals was first to go then for nations.

    What is the justification for it? It's worked even if in a stop start boom bust manner, and there are little alternatives.


  • Advertisement
  • #162
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SeanW wrote: »
    Only you'll cause inflation long before you get to that point. Especially if the reason for less-than-full employment has to do with structural problems.
    Inflation is a resource problem - if inflation occurs in sectors of the economy where the physical resources are available, then that is a signal to the markets, to ramp-up production in that area of the economy (thus restructuring the economy).

    That is something that needs to be fixed anyway, whether the private sector does it with help or not - and that's all the more argument to get spending within inflation targets now, so this restructuring happens faster (because you're not going to fix this, by keeping the private sector starved of money).
    SeanW wrote: »
    No, I'm suggesting that if you go to the extreme of paying someome to dig a ditch then fill it up again, the effect is temporary but the money is gone: i.e. you print money, to pay the worker, he spends the money and after its gone, the worker is in the same position as he was before, only the money cannot be recalled because it rightly belongs to whoever the worker spent the money with.
    The money isn't 'gone', money doesn't just disappear, it is in the private sector (a badly money-starved private sector).
    SeanW wrote: »
    That's very true, but unless you have something useful to be done, like infrastrtucture construction, or roadside maintenance etc, you might as well pay people to go back to education or indeed do nothing. But again, there's a limit to how much money you can print to do that - no matter what if you print enough money the laws of supply and demand WILL assert themselves - possibly with a vengance.
    As long as there are the physical resources available to be used, you have all the physical supply and demand you need - when money becomes the artificial supply constraint (as it is in the private sector), that's where your supply and demand problem is, and if the economy is too loaded with debt to borrow more of its own accord, you have the option to assist with non-debt-based money.


  • #163
    SeanW
    Registered Users, Registered Users 2 Posts: 9,430 ✭✭✭SeanW


    hatrickpatrick wrote: »
    Hypothetically speaking, what would happen if new money printed was put into the economy as hard currency and not as a loan from a bank with interest?
    I'm not saying I have an answer, I've just always found this an utterly absurd concept of how money should be circulated, causing constant inflation by expecting every business to pay more money back to the bank than was used to open it. The only way to do this is for the bank to loan more money to someone so it gets into circulation, and that seems like a sure-fire way of causing inflation to me.
    That's actually a large part of it, in the current ponzi-scheme system, all money is debt and indeed there is no way for it ever to be paid back.
    https://www.youtube.com/watch?v=Kz6xG2YtyyE


    That's part of what I like about BitCoin. Not only is the final BTC supply limited to BTC21,000,000, but the coins are "mined" i.e. anyone can start bitcoin mining today, prove having done X amount of hashing work, and get bitcoins. So someone pays you 100 Euro, someone somewhere had to have borrowed it and unpayable interest is accruing on that, whereas if someone pays you 1BTC they may have mined it themselves or they paid someone (who paid someone etc etc) who did the mining.

    https://u24.gov.ua/
    Join NAFO today:

    Help us in helping Ukraine.



  • #164
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    hatrickpatrick wrote: »
    Hypothetically speaking, what would happen if new money printed was put into the economy as hard currency and not as a loan from a bank with interest?
    I'm not saying I have an answer, I've just always found this an utterly absurd concept of how money should be circulated, causing constant inflation by expecting every business to pay more money back to the bank than was used to open it. The only way to do this is for the bank to loan more money to someone so it gets into circulation, and that seems like a sure-fire way of causing inflation to me.

    How is this system actually justified, theoretically speaking? Are there any "pros" of it at all?
    It's based on neverending economic growth, which is (in the long run) physically impossible, so it will crash and burn in the end (or well, crash and burn many many times before it ends, enriching a small few while leaving the less-well-off to suffer the consequences, as we see today).

    It's not actually justified at all, is just the way it is. Eventually we are going to have to switch over to a 'steady-state' economy anyway, even if just to stop runaway climate change (the greater economic growth expands into future centuries, the more energy/heat we mandatorily have to pump into the atmosphere as power generation ramps up with it - and this, by the laws of physics, involves some inefficient heat loss into the atmosphere - so it has to be stopped at a steady-state at some stage).


  • #165
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    Most of your interludes regarding the gold standard are strange, firstly it is irrelevant and then you are wrong if you say modern currency is valued differently. The value for any currency is determined by what it can be exchanged for which is dependent on the supply and demand for both the currency and economic goods and services. Maybe your problem is with the specific word 'debasement' which referred to a lesser content of base metal being used in coin to inflate the money supply, which is fair enough, the term monetary inflation might be better and more current.
    The massive worldwide difference is that we are not in a fixed exchange-rate system with the rest of the world (outside of Europe), as countries on the gold-standard were.

    Fixed exchange rate vs floating exchange rate is an enormous difference.

    Monetary inflation isn't even what is being argued, it is changes in the external valuation of currencies that is being pointed out as 'debasement', even though that external devaluation depends as much upon what the rest of the world is doing, e.g. if the rest of the world decimates their economic output, and you keep your economic output at 100%, that is going to 'debase' your currency, even though you are doing nothing different.


    People posting about this subject need to focus more on the actual physical resources available to world economies, as it's one of the better ways of cutting through the inaccurate black/white narrative (regarding money, inflation, currency valuation, 'debasement') that a lot of economic theory encourages.

    The key to a proper understanding of inflation is physical resources, not 'money' (which is just a tool for allocating those physical resources).


  • #166
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    The system emerged from fraud of goldsmiths, the fraud was legalized and regulated, after re-occurring booms and busts the diagnosis was the monetary base was not flexible enough not that the pyramid expansion of credit on top of the base money was the problem. A central bank only made it more flexible as long as pooling banks gold reserves could stave off a bank run. Gold convertibility was the limit on flexibleness. Gold convertibility for private individuals was first to go then for nations.

    What is the justification for it? It's worked even if in a stop start boom bust manner, and there are little alternatives.
    The alternatives are already known - the instability of that (this) system is the ever-expanding private debt it causes, so you need non-debt-based money creation (i.e. public spending through money creation), to correct that, along with other debt-alleviating policies.


  • #167
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    KyussBishop wrote: »
    The alternatives are already known - the instability of that (this) system is the ever-expanding private debt it causes, so you need non-debt-based money creation (i.e. public spending through money creation), to correct that, along with other debt-alleviating policies.

    That is quite a comment. Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives. Different alternatives will continually emerge and shape the evolution of the current system.


  • #168
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    That is quite a comment. Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives. Different alternatives will continually emerge and shape the evolution of the current system.
    Sorry but just because the alternatives/solutions disagree with your ideology, doesn't mean it's an unresolved problem - the idea that the problem is unresolved is mainly used as FUD to fool people into thinking that the current economic situation "just can't be helped".

    None of it is an economics or theoretical problem anymore (all of that is solvable), it's almost all a political problem now, with conservative factions (using arguments like your own) trying to resist any reform in economic teaching/practice, and other (generally less well funded) progressive factions trying to push for sorely needed reforms (such as very basic things, like recognizing endogenous money).


  • #169
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    KyussBishop wrote: »
    Sorry but just because the alternatives/solutions disagree with your ideology, doesn't mean it's an unresolved problem

    If they disagree with my ideology that does not mean that they are viable solutions either. You've made a non-point to defend the naive notion that MMT has the problem solved.
    with conservative factions (using arguments like your own) trying to resist any reform in economic teaching/practice, and other (generally less well funded) progressive factions trying to push for sorely needed reforms (such as very basic things, like recognizing endogenous money).

    Huh, what argument have I made that would resist change in economics?


  • #170
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    Originally Posted by KyussBishop View Post
    The alternatives are already known - the instability of that (this) system is the ever-expanding private debt it causes, so you need non-debt-based money creation (i.e. public spending through money creation), to correct that, along with other debt-alleviating policies.

    So the solution to ever expanding debt is not to limit its expansion in the first place but alleviate it by printing or key-stroking money into existence for the state to spend. This is not a new idea, only you claim the state will have a much wiser bunch of technocrats to run things smoothly, boost production and limit inflation. Seriously take a look around you, where are these ever so wise state technocrats ready to run your scheme?


  • #171
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    If they disagree with my ideology that does not mean that they are viable solutions either. You've made a non-point to defend the naive notion that MMT has the problem solved.
    You can't provide an argument against it that isn't completely political.

    It's not even 'theory' (despite the name); once you accept endogenous money, then you can't avoid being forced to accept practically all of the foundations of MMT, because a lot of the rest is just accounting/balance-sheets, and tracking flows of money (and the effects of that), which is true as a matter of basic accounting (because all Assets minus Liabilities, have to sum to zero).
    SupaNova2 wrote: »
    Huh, what argument have I made that would resist change in economics?
    The idea that that monetary/banking system is not understood, and will not be for some time, when the solutions have been out there for 30+ years.


  • Advertisement
  • #172
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    So the solution to ever expanding debt is not to limit its expansion in the first place but alleviate it by printing or key-stroking money into existence for the state to spend. This is not a new idea, only you claim the state will have a much wiser bunch of technocrats to run things smoothly, boost production and limit inflation. Seriously take a look around you, where are these ever so wise state technocrats ready to run your scheme?
    Creating debt-free money does limit the expansion of private debt, because money creation has to come from either 1: Debt-based money, or 2: Debt-free money, and the limit to money creation is the inflation target for the economy (so if you add debt-free money, then you won't be able to create as much debt-based money, before hitting the inflation target).

    Naturally, I'd prefer a much reduced expansion of private debt (I don't agree for instance, that private banks should have the ability to create money and demand interest at all), but so long as you have any private debt, the interest payments are going to create a situation where the Private-Debt:Money ratio keeps growing over time (with 'Private-Debt' becoming multiples of 'Money', creating an ever greater burden on the private economy until it seizes up), unless you either:
    1: Write-down/off debt, 2: Grow the economy forever so you can keep rolling-over private debt, or 3: Create non-debt-based money to tip the ratio away from 'Private-Debt'.


  • #173
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    There actually is a very good related article here, which I just spotted:
    http://www.guardian.co.uk/commentisfree/2013/jul/29/think-you-know-what-debt-is


  • #174
    hatrickpatrick
    Registered Users, Registered Users 2 Posts: 17,798 ✭✭✭✭hatrickpatrick


    SupaNova2 wrote: »
    That is quite a comment. Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives. Different alternatives will continually emerge and shape the evolution of the current system.

    They won't as long as everyone continues to use the word "reform" in relation to our financial system. It implies fixing problems with the existing system of currency instead of accepting that the system itself is the problem and needs to be overhauled altogether.

    I'm not saying Bitcoin is a perfect or even long term viable solution, it's too new and there are already too many flaws for that to be true, at least at the moment - but the reason I support it is simply that for once, for the first time in my life in fact, someone has actually created a system of money which does not rely on perpetual debt creation in order to facilitate trade. Once that concept is out there, surely it's only a matter of time before more people start asking "How does money get created in mainstream currencies, anyway?" and realising that we need to simply get rid of it altogether and come up with a new way of doing it.


  • #175
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    hatrickpatrick wrote: »
    They won't as long as everyone continues to use the word "reform" in relation to our financial system. It implies fixing problems with the existing system of currency instead of accepting that the system itself is the problem and needs to be overhauled altogether.

    I agree you won't see the reform you are looking for but changes will be made, usually little is done until it has to be. The euro itself is part of an evolution, it is the first fiat currency not subject to the whims if a single nation state, that might not have been the evolution some wanted but it is evolution nonetheless. The next evolution will probably occur in response to government bonds going to ****.
    I'm not saying Bitcoin is a perfect or even long term viable solution, it's too new and there are already too many flaws for that to be true, at least at the moment - but the reason I support it is simply that for once, for the first time in my life in fact, someone has actually created a system of money which does not rely on perpetual debt creation in order to facilitate trade. Once that concept is out there, surely it's only a matter of time before more people start asking "How does money get created in mainstream currencies, anyway?" and realising that we need to simply get rid of it altogether and come up with a new way of doing it.

    I have nothing against bitcoin also, but the more popular it becomes the more you will see governments moving to shut it down or limit it. Governments don't want to lose any of their privilege to a freely adopted private currency.


  • #176
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    KyussBishop wrote: »
    once you accept endogenous money, then you can't avoid being forced to accept practically all of the foundations of MMT.

    Can you describe your version of endogenous money that would force me to accept your stimulus with inflation targets. And If the inflation target is 2% there is little difference to what we have now, the ECB is doing just that.
    The idea that that monetary/banking system is not understood, and will not be for some time, when the solutions have been out there for 30+ years.

    I said they are not "fully understood". Saying they are is the extraordinary position to take here.


  • #177
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    I agree you won't see the reform you are looking for but changes will be made, usually little is done until it has to be. The euro itself is part of an evolution, it is the first fiat currency not subject to the whims if a single nation state, that might not have been the evolution some wanted but it is evolution nonetheless. The next evolution will probably occur in response to government bonds going to ****.
    The Euro isn't an 'evolution', it's a bastardized devolution to gold-standard-like fixed exchange rates, that is greatly worsening the economic crisis for Europe.

    You can't have a sovereign government without sovereign currency, because control over the countries currency, is inseparably critical to politics in the country, because whoever controls money controls the governments purse-strings, and has enormous undemocratic control over government policies in the bad times.

    Ironically, the Euro does far more to increase the likelihood of bonds going to shít, simply because countries don't have control over their own currency.
    A country in control of it's own currency, can never involuntarily default on its debt/bonds, due to the ability to create money.
    SupaNova2 wrote: »
    I have nothing against bitcoin also, but the more popular it becomes the more you will see governments moving to shut it down or limit it. Governments don't want to lose any of their privilege to a freely adopted private currency.
    And who gains privilege? For a currency that has deflation locked-in, with no way to redistribute wealth once the final Bitcoin is mined, you have guaranteed upward concentration of wealth, for people who already hold Bitcoins - that's a 'sure thing' for wealthy interests looking to extract wealth from the rest of the Bitcoin economy, from doing nothing, and gives them the privilege/power government used to have.

    That's is what all of the elimination-of-sovereign-currency ideology is all about (particularly when combined with massive economic deregulation fraud-enablement):
    It's for giving enormous political/societal power to private interests (over the rest of society), who manage to fraudulently game the private economy enough, to get significant control over money (that's why bankers/financiers own us and governments today - they have control over the money and monetary system).


  • #178
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    SupaNova2 wrote: »
    Can you describe your version of endogenous money that would force me to accept your stimulus with inflation targets. And If the inflation target is 2% there is little difference to what we have now, the ECB is doing just that.
    There are no different 'versions' of endogenous money, the core concept is incredibly simple (the fact that banks create money through extending loans, and that the money multiplier is a myth), and a lot of the rest is easily built up just by examining the flows of money between centrals banks, banks, and the public/private/external sectors accumulative 'balance sheets' (the concept of 'sectoral balances' is one of the most useful and clear/lucid ways of understanding macroeconomics out there).

    You're not open to convincing either so I'm not going to try - you've stated yourself, that you don't have any solutions (because you state not enough is known to have any now), and your only argument for rejecting the solutions presented is that 'government' is involved in them. That's it.
    SupaNova2 wrote: »
    I said they are not "fully understood". Saying they are is the extraordinary position to take here.
    No, you said this:
    "Systems of money and banking have not been solved, the nature of the current one is not even fully understood let alone the possible workable alternatives"

    You are wrong on all counts. We have descriptions of the macro-economy written from the ground-up, specifically to take into account empirical realities such as 'endogenous money', i.e. specifically for accurately describing the monetary system (hence 'Modern Money'), and which do a far better job of providing descriptions and predictions of the effect of policy choices, than any other competing macroeconomic descriptions.

    From that, all the alternatives we need are easily constructed, and the only disagreements you can come up against them are that they involve government (and ideological denial centered around that).


    You know full well that money creation can be used up to the point of full economic-output/employment (but not if it involves private debt), without exceeding inflation targets, and that any inflation before that point is a distributional problem of where money is spent, and a sign of the private economy reconfiguring itself (you know, because you have absolutely no argument against it), and in the face of that the only argument you have left is 'but it involves government'.

    Since you have no argument against it either, you know inflation is a physical resource problem not an abstract 'money' problem, and any average joe can see the massive amount of labour, material and productive resources laying idle throughout Europe - the combining of which would grow the economy and avoid inflation - yet it is held back by 'money', because creating 'money' would supposedly create runaway inflation beyond inflation targets (two mutually contradictory positions - it doesn't create runaway inflation when spent growing the economy).

    It's a ridiculous ideological position, that blinds you to the readily available solutions out there.


  • #179
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    KyussBishop wrote: »
    The Euro isn't an 'evolution', it's a bastardized devolution to gold-standard-like fixed exchange rates, that is greatly worsening the economic crisis for Europe.

    Its not worsening the economic crisis for Europe, some countries are doing quite well, the currency is not the problem, no difference in the economics of it than how Texas shares a currency with California. Simply put the PIGS ****ed up big time, and most of the blame lays firmly at home for each of the respective countries.

    According to you the PIGS must like pain, or are they just ignorant that its "been solved"? Or to take the ultimate basket case Greece, do they just know that sticking with the Euro is there best option? The re-introduction of the drachma would bring chaos, starting with a run on banks ending in hyperinflation. The hyperinflation riots would make the austerity riots look like playground stuff.
    You can't have a sovereign government without sovereign currency, because control over the countries currency, is inseparably critical to politics in the country, because whoever controls money controls the governments purse-strings, and has enormous undemocratic control over government policies in the bad times.

    Greeks would curse that sovereignty if they had their drachma back.
    Ironically, the Euro does far more to increase the likelihood of bonds going to shít, simply because countries don't have control over their own currency.
    A country in control of it's own currency, can never involuntarily default on its debt/bonds, due to the ability to create money.

    Yeah but the bonds still go to **** just in a different manner and you sacrifice the currency to do it.


  • #180
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    KyussBishop wrote: »
    There are no different 'versions' of endogenous money, the core concept is incredibly simple (the fact that banks create money through extending loans, and that the money multiplier is a myth).

    I'm aware that banks loan money/credit into existence, can you expand on how the money multiplier is a myth(I may agree)?

    Also how I jump from knowledge of both to accepting wide-scale stimulus using debt free money creation?
    You're not open to convincing either so I'm not going to try - you've stated yourself, that you don't have any solutions (because you state not enough is known to have any now), and your only argument for rejecting the solutions presented is that 'government' is involved in them. That's it.

    Government will be involved in any solution. So no my argument isn't that government are involved in your solution, it is that government is incapable of carrying out your solution the way you envisage.

    We have descriptions of the macro-economy written from the ground-up, specifically to take into account empirical realities such as 'endogenous money', i.e. specifically for accurately describing the monetary system (hence 'Modern Money'), and which do a far better job of providing descriptions and predictions of the effect of policy choices, than any other competing macroeconomic descriptions.

    Okay money is loaned into existence, now how do these MMT guys predict better than any other macroeconomic view? Do you have some examples of someone versed in MMT that might show this superior insight that the ECB are so ignorant of?


  • Advertisement
  • #181
    SupaNova2
    Registered Users, Registered Users 2 Posts: 515 ✭✭✭SupaNova2


    KyussBishop wrote: »
    You know full well that money creation can be used up to the point of full economic-output/employment (but not if it involves private debt), without exceeding inflation targets, and that any inflation before that point is a distributional problem of where money is spent, and a sign of the private economy reconfiguring itself (you know, because you have absolutely no argument against it), and in the face of that the only argument you have left is 'but it involves government'.

    Yes I know full well money spent on worthwhile projects can put downward pressure on prices at some point in the future. And your reply is if government invests in the wrong projects causing inflation, they invested in the wrong project. Fine I agree. And I think this is what would likely happen.
    and any average joe can see the massive amount of labour, material and productive resources laying idle throughout Europe - the combining of which would grow the economy and avoid inflation - yet it is held back by 'money', because creating 'money' would supposedly create runaway inflation beyond inflation targets (two mutually contradictory positions - it doesn't create runaway inflation when spent growing the economy).

    It's all a nice story. I consider myself an average Joe and while I can see idle labour throughout Europe what idle material and productive resources are you referring to?
    It's a ridiculous ideological position, that blinds you to the readily available solutions out there.

    My position, is that it isn't solved, it has nothing to do with ideology. I can only assume you bring it up so often because you can't defend or explain your position.


Advertisement