Why Government Debt? And What Are The Alternatives?

[Buffy]

This quote from a longer article on a different topic ("No. Sorry. You're Not a 'Constitutional Conservative'", Josh Marshall, Talking Points Memo, 1/15/15), is a very brief background on some of the points I've made above: the US went into this debt and borrowing mechanism at its founding with eyes wide open and for very good reasons:

 

One of Hamilton's (and at least very early on Madison's) core ideas was to use a national debt (and a central bank) to bind the men of wealth to the embryonic state. This was the thought behind Hamilton's ingenious logic to have the federal government assume the revolutionary debts of the states. Not only was this a necessary inducement to get the states to ratify the Constitution. It was, as Hamilton realized, a positive good in itself.

 

By investing the country's elites, the men of wealth as they were then called, in the future of the federal state (both literally and metaphorically), they could ensure its survival and growth. The wealthy and powerful wouldn't conspire against the state if they were the beneficiaries of the state's debt obligations. Both men looked to the example of Great Britain and how it had used its national debt to create the first modern fiscal state - with an ability to borrow, tax and spend in ways that no other state of the day could.

 

The brilliance of the effort was that they realized that creating a strong state required strong protections to harness and contain the state's power. That's where Hamilton needed Madison because it was a concern the former was not nearly as sensitive to as the latter. But it was almost entirely - and rightly - the rights of individuals that he was concerned with.

 

 

This is tied to something I say all the time: "if you owe the bank $100 the bank owns you, but if you owe the bank $1 million, you own the bank." China's enormous long positions in US Treasury notes means that they are LESS likely to want to muck with our economy because they'll lose their investment.

 

 

A national debt, if it is not excessive, will be to us a national blessing, :phones:

Buffy

[pgrmdave]

No. Sorry. You're Not a 'Constitutional Conservative'

On a side note, I maintain that you cannot claim to understand the Constitution if you cannot explain the issue at hand in Marbury v Madison, why it was decided the way it was, and the impact that's had on US history.

[BrettNortje]

The way I see , debt is where you lend money from some other entity, then pay them back. this leads to credit, and, this is how money grows, as, there is more money now with interest being created. if you want an alternative to debt, you need your money represented by assets or resources.

 

So, if you have a dam full of water, you could take all that water and put a price on it. you could say that the people will owe you that much money, and create money for the state based on that water. this is just a simple example.

 

If you really want to make more money for the state you could even tax things not sold? this will make sure that shops only buy what they need, and, then the rest gets given away or something, to the poor of course. it is pointless to destroy things not sold - think of some album going platinum then going for cheaper each week or month? it is just a loose theory of mine, completely open for debate, of course, but it works in the music industry.

[AnssiH]

 

Well when the entire money supply is created as debt from private banks, you can pretty much guarantee that "by and large" the governments using that money supply are in debt to private banks...

That's at best a misrepresentation of what the money supply is. A somewhat fundamental assumption running through your arguments in this thread is that the "assets" of the banks are fully owned and controlled by them: "it's their money so they have the power/control" is what you seem to be saying. But the fact is that the vast majority of the funds they have are broadly held for individuals and corporations. Even the Walton family is spit in the ocean to the aggregated assets of the banks. Even if they were able to avoid government action against them to prevent them from taking actions detrimental to the government, they could easily see all of those assets (where they get their power from, right?) disappear overnight in a run on the bank due to some bad PR. That's exactly what made Lehman Brothers go "poof" in the matter of a week.

 

Hmm, I'm not really sure why do you feel what I said is a misrepresentation of money supply. The governments are in a debt race because taking in debt is beneficial for them individually, and they can take in debt from independent private banks (i.e. Fed) whom have been granted the power to create more money at will. And since the money supply is created via selling bonds to those banks, those same banks will collect interest with the money they have power to create. In the US, some of that profit gets negated (as far as I understand), some does not. In the Fed website they are saying something like "Fed is not a profit seeking organization", but at the same time they do pay 6% dividends, so...

 

But it is not about profits as much as it is about power. The power to control the entire money supply. There is power that comes from the fact that increasing the money supply keeps sucking out value from everybody else's pockets, and more importantly those banks get to be in charge of the entire moneytary policy. Not the government. Of course the theory is that this is more healthy than letting the government run the monetary policy (as argued by the bankers themselves), but also a plain fact is that the public has got very little control over who gets to run the monetary policies, and these people do not answer to the government at all.

 

The main thesis of the OP though is that this mechanism can be seen as a game theoretical result. I don't think any individual "Illuminati" type of party could ever be fully in control, these things happen pretty much due to every player of the system looking after their own interest, but that does not yield optimal outcome for the entire system. However, there is a grain of truth in the idea that people are purposely held stupid; there are definitely a lot of things that are easier to control when people don't understand how systems work. The problem is, with no knowledge you also cannot criticize the beliefs of the powers-that-be, and you cannot criticize any conflicts of interest if you don't understand how they arise.

 

We already have a constant stream of cases like these hitting the news, and you can be sure not all cases ever see the light of day.

 

As a practical matter, the banks can't legally nor in a way to maintain a successful business do things to control the government. What they *have* been able to successfully do is *bribe* their way to getting legislation that's good for them passed, but that's hardly dictating what the government does, and is a situation that is one Teddy Roosevelt (Elizabeth Warren?) away from coming to a screeching halt.

There is certainly truth in that, but it's also worth raising the point that there are two categories of banks; those who run the monetary policies, and those who are players within the economy. Although the actual owners of these two categories of "banks" are typically the same institutions or people, the banks themselves operate with different goals and purposes. The Federal Resrve banks have an incentive in "not crashing the economy", and the smaller banks have the incentive to make as much profit as possible.

 

The latter ones also do have the power to crash the economy if they are left on their own devices; if each bank is allowed to just try and maximize their own profit with no government regulation. That is also a text-book case of prisoner's dilemma, and the fact that in the US the banks can so easily argue for less government regulation says something about the financial connections between people in the government, and the banks themselves.

 

You seem to be implying that there's somehow some kind of difference between the debt that's held intergovernmentally and that which is held privately. The thing that happens in big stable democracies though is that the government *dictates* the terms of the debt: there's no ability to "call in the debt" early or demand better terms or jack up rates at will because the market is so broad and the risk (beta) of the debt is so low, that demand keeps the rates the government sets on that debt low.

They dictate the terms of the bonds they sell, but they are still selling it, when in need of more money, to an institution that will just create money to buy it, and still collect the interest rate which will be payed back by the tax payers. That creates value into the pockets of the owners of the economy, not into building infrastructure for everyone.

 

Now the thing that keeps that risk low is that the amount of debt is actually NOT ballooning if you measure it in the right way. The debt Cassandras always will show you the first graph shown here:

 

 

 

 

The first graph is the debt in dollars, adjusted for inflation, but even adjusted it indeed looks like it's going through the roof. The problem is that the government's debt relative to the overall growth of the economy--which translates directly into the amount of taxes it can levy to *pay* for that debt--shows no such problem as shown in the second graph which shows debt as a share of the Gross Domestic Product. Now that huge uptick at the end of that second graph is proof of the fact that the bizarre Republican theory that lowering tax rates will increase government revenues: a major initiative of the Bush Administration taken brilliantly at the same time that the country took on two wars and pumped the defense budget through the roof.

Yeah that and also the fact that 2008 crisis - also created by unregulated practices of profit seeking banks - forced Fed to pump in more money into the system; that's taken in as interest bound debt.

 

So, A) no there really isn't a debt "race" (strong economies are staying within normal debt-to-GDP ratios, and weak ones can't get the credit line to do so unless they get backing from other *governments* to guarantee the loans),

I would completely argue against this one. The debt race is as real as it is in a ballooning housing market. Of course more secure buyers can take in more debt, but that does in fact suck out value from everyone else's pockets (your money buys a smaller house), and everyone are forced to take in as much debt as they dare. That is a very definition of a debt race, and it does contain positive feedback loops where some players will inevitable fall, and the whole system will experience crashes of various degree when ran unregulated.

 

Obviously the idea of the game is that less secure players cannot get infinite amounts of debt just like that. That doesn't remove the inherent and unnecessary risks of the system, which will hurt a lot of innocent people.

 

I'm not saying I know what would be a less risky way to run an economy. I just want to raise the fact that there are very real and very serious risks with the international debt race, and in the past years these have been clearly amplified to new levels.

 

It's unquestionably easy to be paranoid about this, and the risks actually are real, it's just that if there's a meltdown it's most likely going to be due to stupidity rather than conspiracy.

Now this I pretty much agree with. I think the inability to not see the prisoner's dilemma situations are symptoms of stupidity, this is a core point in my arguments.

 

-Anssi

[AnssiH]

Bitcoin is an attempt at making all of these exchanges easier to control, and more profitable for the controler.

Actually the whole idea behind Bitcoin is that it's a decentralized cryptocurrency, meaning no individual party can create more money for political purposes. The amount of money in Bitcoin economy raises steadily as long as there is "money to be decrypted", and then it won't change anymore. That means no one can suck out value out of your pocket by creating more money.

 

It is quite interesting paradigm, but I doubt it would ever completely replace debt-based money, because there's just too much power in creating debt-based money. Meaning, there is always some party bound to start creating money as debt, as long as they can make people perceive that money as yielding low enough investment risks.

 

Certainly it is also easy to track, but this is already true to such a high extent in modern economy (very very very small percentage exists as physical cash) that I don't think there's much more power to be extracted from that feature.

 

-Anssi

[AnssiH]

This quote from a longer article on a different topic ("No. Sorry. You're Not a 'Constitutional Conservative'", Josh Marshall, Talking Points Memo, 1/15/15), is a very brief background on some of the points I've made above: the US went into this debt and borrowing mechanism at its founding with eyes wide open and for very good reasons:

This is exactly an example of one of the first things I said in the OP;

I also find it peculiar that the defenses I can find never really touch the real problem behind government debts. It seems to be that everyone defending the debt system is only focused onto the business of their own country, and not thinking about this phenomena as a global issue.

Meaning everyone are missing the prisoner's dilemma; the fact that while everyone's own country certainly gets value out of generating debt, the entire global system is inherently unstable, and this causes value of the economy to be trickled to the small group of individuals running the system itself.

 

We seem to be agreeing on a lot of those mechanisms, but you don't seem to think it's a big enough problem to pay attention to, and that those who do fall deserved it due to something they did wrong. Nothing wrong with the game? Also I think it is clearly downplaying the problems of the game to say that Lehman Brothers fell because of bad PR. They fell because of irresponsible profit-seeking practices that went on unregulated, and they ended up hurting innocent people whose only crime was they belonged to the same economy.

 

I think it's clear that as long as the rules of economy are these (dictated by the fact that money is debt-based), it is clear there are going to be crashes that can topple over entire countries, and innocent people will be getting hurt.

 

-Anssi

[Buffy]

Meaning everyone are missing the prisoner's dilemma; the fact that while everyone's own country certainly gets value out of generating debt, the entire global system is inherently unstable, and this causes value of the economy to be trickled to the small group of individuals running the system itself.

 

...and this is fundamentally wrong on two points:

The same phenomenon that was promoted by Hamilton and Madison works at the next level up of International finance, and I mentioned it: if the Chinese have an investment in us, they're less likely to muck up our economy, so this *creates* stability rather than creating a Prisoner's Dilemma where there's strong motivation to do the wrong thing.

As I also described, the notion that *all* benefits accrue to a "small group of individuals" is a myth: the vast majority of all the money in the "evil banks" is *our* money, mostly through mechanisms like mutual funds or government held debt.

 

So,

 

We seem to be agreeing on a lot of those mechanisms, but you don't seem to think it's a big enough problem to pay attention to, and that those who do fall deserved it due to something they did wrong. Nothing wrong with the game? Also I think it is clearly downplaying the problems of the game to say that Lehman Brothers fell because of bad PR. They fell because of irresponsible profit-seeking practices that went on unregulated, and they ended up hurting innocent people whose only crime was they belonged to the same economy.

 

no, I see this as a counter-intuitive "feature" of the system that *creates* stability in economies. Spreading wealth and interdependency of the various players is what ensures that everyone has an investment in everyone else's financial well-being. But that is actually just a side benefit to the fact that debt is inherently good when taken in appropriate amounts because it enables the development of public and private assets that improve the well-being of all. This does *not* have to imply growth for those who prefer we head to Zero Population Growth, but rather improving quality of life for all.

 

What I worry much more about is wealth and income inequality, which has very little to do with government debt, except insofar as one of the key drivers of this inequality (see Piketty) is reductions in taxes on the wealthy driven partly by these "debt-is-evil" arguments that get illogically transmogrified into Grover Norquist's "shrink-government-until-you-can-drown-it-in-the-bathtub" argument. The rich get richer because they're allowed to keep all of their money these days, instead of actually paying their full share of the benefits brought about by *having* a stable economy in addition to all the infrastructure (a stable currency, transportation, labor force, security, etc).

 

I think it's clear that as long as the rules of economy are these (dictated by the fact that money is debt-based), it is clear there are going to be crashes that can topple over entire countries, and innocent people will be getting hurt.

 

If you've been paying attention, the world economies have been getting  far more stable. We haven't had huge bouts of inflation since probably before you were born (boy the 70s were fun! Stagflation!). The recent problems with countries like Greece and Italy and Ireland--all ostensibly first world countries--were caused by asset bubbles in *private* investment debt that were unsustainable, and that governments being the last backstop against economic collapse had to take on, and all were unwilling--due to a very recent shift in government attitudes toward wealth--to make the prime beneficiaries pay for, precisely because those benefits were broadly based.

 

So, did "the rich" benefit from the government bailing out AIG, or avoiding prosecuting the likes of CItibank, JP Morgan and Bank of America? Sure, but it also kept afloat the California Public Retirement System (CalPERS), one of the largest managed union funds in the world, along with millions of individuals like you who had mutual funds or other investments in Real Estate Investment Trusts.

 

And in Europe, people are comparing the Euro Community's infatuation with "Austerity" and the US's significant (even though most reasonable economists argue, not nearly big enough) stimulus program and seeing that the very modestly Keynesian approach in the US has been much more successful in improving its economy compared to starving the Greeks and the Irish.

 

So, seeing that we've got similar roots in both "problems," the way to fix this undue influence of wealth in government and inadequate taxation has everything to do with progressive government reform, and very little to do with fixing the "symptom" of "debt-based economies."

 

I'd argue that's not so much "belittling" the problem but recognizing debt for what it is: an economic factor that has huge benefits but needs to be managed responsibly in order to avoid problems. To the extent that that management can get out of whack and accrue undue benefits to the wealthy requires political will and organization to fight, not just saying that the whole thing is evil.

 

I quite frankly think its amazingly absurd that extremists on both the left and the right want to throw the baby out with the bath water (with folks like Grover wanting to drown it first with homicidal glee), and I have every interest in arguing against both views.

 

 

It is in justice that the ordering of society is centered, :phones:

Buffy

[AnssiH]

The way I see , debt is where you lend money from some other entity, then pay them back. this leads to credit, and, this is how money grows, as, there is more money now with interest being created. if you want an alternative to debt, you need your money represented by assets or resources.

Well, if you are referring to the creation of the money supply, note that debt-based money supply is not created by borrowing from an instance that has got money, but it is created by allowing an independent instance to create money, and with that money purchase government bonds and receive the interests bound to those bonds.

 

Governments can of course also create interest-free money by themselves, and they have done so very many times in the history. Any money, be it fiat money, or precious metal coins, or something redeemable in fixed resources, is at the end of a day a product to invest on. If a government can create "money" that a lot of people want to invest on, they get power to direct resources with that money.

 

When you have different types of money involved in one economy, everyone will "invest on" the type of money that is perceived as most valuable. This creates a very dynamic system whose behavior is dictated by game theory.

 

United States is still legally allowed to issue "United States Notes", which differ from "Federal Reserve Notes" exactly in that issuing the former does not require payment of interest to the owners of the Federal reserve. This is what the notes that JFK issued look like, and they are still valid;

http://theeconomiccollapseblog.com/wp-content/uploads/2011/12/United-States-Note-JFK-1963.jpg

 

Historically there has been problems with governments becoming too tempted to print interest-free money at any time they want (because they generate value to themselves by doing so), creating mistrust to the said money (because if you own that money, you can never tell when more money will be printed on a whim, sucking value out of your pocket), creating loss of perceived value, and hyperinflation.

 

The US notes authorized by JFK (just few months before he died by lead poisoning) were redeemable in silver, and I would think having free choice over notes that are redeemable in silver, or notes whose value is merely tied to petrodollar monopoly, a lot of individuals at least would prefer the silver choice. On the other hand, having a resource based money doesn't get you very far in global debt race; it just is not flexible enough against pure debt-based fiat currencies.

 

I'm not really sure why the US government is not exercising its right to issue interest-free money since its value could still be tied to petrodollar monopoly. Perhaps this is simply because the interest-bound obligations guarantee a somewhat reliable upper limit to how much money a government can create at any time, which creates more trust to the said currency.

 

Overall, if you check out this wikipedia article;

http://en.wikipedia.org/wiki/United_States_Note

you can get a good idea of how varied the money creation has been and what kinds of problems and arguments it has faced over the history of US money.

 

At the end of the day, money really is just a resource control mechanism, and it would be desirable to have currency that is stable and fair to the entire economy. Historically that has been very difficult goal to achieve.

[Buffy]

I'm not really sure why the US government is not exercising its right to issue interest-free money since its value could still be tied to petrodollar monopoly. Perhaps this is simply because the interest-bound obligations guarantee a somewhat reliable upper limit to how much money a government can create at any time, which creates more trust to the said currency.

 

It's because there's no need to. If you have demand for very low-interest notes, you get the money that way with zero probability of raising inflationary expectations, which can be more expensive than paying interest!

 

The last link you mentioned on the United States Note actually has a hard to understand paragraph that does contain the answer even if the arbitrage that comes from low interest rates goes to zero (or negative): there is an obscure priority on the payments on the two types of notes that make the Federal Reserve Notes more desirable, and because in normal circumstances the two are fungible, people would just trade them back to the government eventually anyway, thus taking them out of the Money Supply.

 

 

The chief value of money lies in the fact that one lives in a world in which it is overestimated, :phones:

Buffy

[BrettNortje]

It's because there's no need to. If you have demand for very low-interest notes, you get the money that way with zero probability of raising inflationary expectations, which can be more expensive than paying interest!

 

The last link you mentioned on the United States Note actually has a hard to understand paragraph that does contain the answer even if the arbitrage that comes from low interest rates goes to zero (or negative): there is an obscure priority on the payments on the two types of notes that make the Federal Reserve Notes more desirable, and because in normal circumstances the two are fungible, people would just trade them back to the government eventually anyway, thus taking them out of the Money Supply.

 

 

The chief value of money lies in the fact that one lives in a world in which it is overestimated, :phones:

Buffy

 

Maybe they could generate money for goods? i mean, the state could buy all the 'rubbish' from the people? like old sound systems or something? they could melt it down and recycle it. there is so much junk lying around. for example, the state could enforce a scrapping of non road worthy cars, making money for the owners. i know there is about two hundred dollars for an any car to be scrapped, yes?

 

If the state wants to generate money for the people, the people will suffer via inflation. if the state generates money for themselves, they will be better off paying off the debt, generate a lot more, pay off more debt - writing it off, of course.

 

Now, if you want to make money for people without making them stop working, you need to offer them lump sums. if the state was to offer say Joe Jones a little bit of cash, then he could buy something cool he needs. if they offer them a salary, they won't work. if it is a once off thing, they will be able to spend it and return to work, also generating tax money and pumping money into the economy.

[ErlyRisa]

 (very very very small percentage exists as physical cash) that I don't think there's much more power to be extracted from that feature.

 

-Anssi

 

Your living in lala land: I presume your an innersuburbanite office worker that was handed thier job on a silver plater.

The cash economy is exactly what governement (and the inner suburbanite) has been trying to destroy... but they have another thing coming:

...you guys in the city need food b/c you haven't got anywhere to grow it! - see how you go when those living out of the cash economy stop supplying you.

 

ie. I highly doubt you can eat newspaper articles, or powerpoint presentations. ---> most of what is done in the upper echelon of soceity is pointless: it is the ones on the outskirts running the country...and if they are cornered into a position where you guys are siphoning from them without any reward, they will stop growing base sustenance.

 

My reccomendation for those stuck in the city, and think Facebook advertising is actually an enterprise...that you all start to learn advanced chemistyr and biology, and learn to grow food straight out of your own.

 

 

Bitcoin is just another level of abstraction: making it even more difficult to be able to live independant of government and brainwashed office clerks.

-Stick that up your Neo.

[Eclogite]

Moderator Advice: Around these parts, whether we come from the country or the city, we don't suggest anyone stick anything up anything that is part of them, or in their possession. If I see further suggestions along these lines from you I'll stick you in a place we call suspended members.

 

Personal advice: Calling Buffy an "innersuburbanite(sic) office worker that was handed thier(sic) job on a silver plater(sic)" is simultaneously the most amusing and the most foolish thing I've seen anyone post this year.

[ErlyRisa]

Moderator Advice: Around these parts, whether we come from the country or the city, we don't suggest anyone stick anything up anything that is part of them, or in their possession. If I see further suggestions along these lines from you I'll stick you in a place we call suspended members.

 

Personal advice: Calling Buffy an "innersuburbanite(sic) office worker that was handed thier(sic) job on a silver plater(sic)" is simultaneously the most amusing and the most foolish thing I've seen anyone post this year.

 

You guys are the ones that pushed me toward this forum, so as that

the KING has an avenue of honour.

 

Of course you I presume need the comedy in whatever sece, and hence published to your hearts content.

 

I hope that the material that is my robotic existaence has amused you all, and your children and childrens childrens wallets for all eternity.

 

I would advice that all of you learn too let go...and try to steer this bull somewhere else.

 

If you want me to reverse engineer the universe: Fine ---> but next time use some sence...not your disposition to what you think reality should be in your eyes.

 

--I thankyou for opening mine, but well and truly, I do not like your planet. You robbed me of all that is good.

 

The only thing that you can do is provide an ethical method of death, or work as hard as you can to find a method for me too leave the planet.

[Eclogite]

In what way could we push you towards this forum? Did one of the moderator team suggest you join? I am curious.

 

I am even more curious as to what prompted your rather incoherent response to a very simple warning: do you routinely tell people to "stick it up your....." ? It is impolite and not acceptable behaviour.

 

Now, I sense you are trying to say something that is important to you. I am willing to listen. However, you need to be much more cogent than your last post.
 

Of course you I presume need the comedy in whatever sece, and hence published to your hearts content.

I don't know what a "sece" is. I've tried to imagine all sorts of typographical errors that might explain it, but I remain bemused. And I don't participate here for the comedy, though the occassional lighthearted comment, given or received, does not go amiss.
 

I would advice that all of you learn too let go...and try to steer this bull somewhere else

You may be offering good advice, but it is poorly expressed. Let go of what? And what is the bull? This forum? This thread? Something else?

 

The mod team is a pretty varied group in terms of age, history, employment and the like. It seems unlikely that your advice will be apt for all. What do you think?

 

--I thankyou for opening mine, but well and truly, I do not like your planet. You robbed me of all that is good

I am sorry to hear that. It is your planet too. I should be interested to know how I have robbed you of all that is good. If you can explain to me how I did that, perhaps I can return some of it.

[ErlyRisa]

In what way could we push you towards this forum? Did one of the moderator team suggest you join? I am curious.

 

 It is your planet too. I should be interested to know how I have robbed you of all that is good. If you can explain to me how I did that, perhaps I can return some of it.

 

Before I reply to what's in the blurb, I'll type a little more banter for all too ponder. PS the word is scene.

 

1. How is it that you would make the assumption that I am referring to sticking whatever. The comment(s) need your imagination in order to make that ontondra. ie. The comment in itself does not exist. YOU made the comment.

 

2. It's interesting that after so many years (or the perception of continual banter) that you seem to know Buffy but not me.

 

3. I hardly ever read anyone's posts fully: I, like YOU skim over alot of it aswell....I quoted someone other than Buffy, and I am unsure why Buffy seems to be the main quoter and qouted member.

 

4. I am NOT a member of this forum. All I know is that it occupies my time, and to me is a simple way of cataloging thoughts, and not having to run my own server. If said server does go down: Whatever value that I have included is completely and utterly up too Discover magazine to keep or destroy. (but we all know I have been reading Pop Sci for all my life - sadly it has lost it's value...and no, I won't be purchasing NatGeo to make fun of the funeral scene: I think that scene is only available for download by the professionals that can remember that moment - It was funny)

 

5. I now know what communism is. Sadly the internet is now the biggest and the ultimate case for it. Amazingly enough I did not see this growing up - the internet was supposed tobe my saviour.

 

6. If you are a professional psychologist and would like too see if I took any interpretation to Buffy stating "Did anyone say something" , in this thread, and are trying to gauge reaction via whatever means at your disposal. Then I guess this statement can answer that question for you (and said friendly observers and cohorts)

 

7. It was an interesting experiment too see if I would remember Paige ,  AND the association deemed with the hell that is my life. It is time too let go, and let him build his spaceship - too his dying breath, I thankyou for the tools available: I think I have enough reading material todo the rest myself, in the meantime I will try too procure a new language; but of course this would only be possible if I were treated more like Genie (the Feral Child - and I am sorry too quote her in those words (because for all I know, she is watching too))

 

8. Too have created an entity that has too account for all known demographics as advertised - Interesting experiment, I think It would be better to be the observer though, and justifying the experiment...where do I begin? - I am no longer fit for this world (unless you all want to die and leave it too me, I'm fine with that) (Oh: Thanks for taking the Trash out -> Frederwick)

 

9. The irony of it being "Discover" "Magazine" ...where's the gun (neg) ...Do something new KING (pos) , I would have rathered Spotswood (Malcolm), but of course that flopped aswell. (we had too see mums property and put a Veil over you)

 

 

and too reply.

 

Robbed: Once raped there is no going back.

Pushed: You tell me, it's your world. - My profile is a simple lookup, and we didn't want me mixing in the Physics forum until all the episodes of the Big Bang Theory were written...how is that going by the way: Is DD going tobe in the finale? or is he still asking for too much money? or maybe the word clone should be taken out of the english dictionary?

 

I ready to destroy the world: b/c that is the only way I can live in it anymore. If the office workers want to band together, than I suggest watching the Hunger Games religously and to take notes on how to live that lifestyle, I will be jumping the gun and going it on my own...and the reward (which to me seems cheap) that I await, is my redheaded robot to help me dig for minerals I will need on my trip to another galaxy as afar away from here as possible...with any luck I will figure out FTL along the way and outrun the last 100yrs of Humans broadcasting my existence to the entire universe. Hopefully when I get to the crest I can convolute it (there's that word again) ---> and we all know what that means....

 

I FINALLY GET TO BE THE OBSERVER

[Eclogite]

Before I reply to what's in the blurb, I'll type a little more banter for all too ponder. PS the word is scene.

Convention would refer to "the post", not "the blurb". Saying "the blurb" is ambiguous as you might be talking about something else. Do you find people have trouble understanding you? If so you need look no further. If you were seeking to appear mysterious and arty you missed the mark. If there was some other purpose it too is obscure.

 

1. How is it that you would make the assumption that I am referring to sticking whatever. The comment(s) need your imagination in order to make that ontondra. ie. The comment in itself does not exist. YOU made the comment.

It was no assumption. You clearly stated "Stick that up your Neo". If you did not mean to be rude then don't use rude phrases. This is very simple, so you should understand it.

 

By the way, it is entendre, not ontondra.

 

And let us be very clear. The comment was typed by you. It was your comment. No amount of sophomore rhetoric will change that.

 

2. It's interesting that after so many years (or the perception of continual banter) that you seem to know Buffy but not me.

Buffy's posts make sense and are interesting.

 

 

4. I am NOT a member of this forum.

You are a member of this forum. If you were not a member you would not be able to post.

 

 

5. I now know what communism is. Sadly the internet is now the biggest and the ultimate case for it. Amazingly enough I did not see this growing up - the internet was supposed tobe my saviour.

I have no idea what you are talking about and suspect you don't either.

 

6. If you are a professional psychologist

I am not. Like all humans I am an amateur.

 

7. It was an interesting experiment too see if I would remember Paige ,  AND the association deemed with the hell that is my life. It is time too let go, and let him build his spaceship - too his dying breath, I thankyou for the tools available: I think I have enough reading material todo the rest myself, in the meantime I will try too procure a new language; but of course this would only be possible if I were treated more like Genie (the Feral Child - and I am sorry too quote her in those words (because for all I know, she is watching too))

No, the attempt at artiness is still not working. The effort to create an air of mystery fails also.

 

8. Too have created an entity that has too account for all known demographics as advertised - Interesting experiment, I think It would be better to be the observer though, and justifying the experiment...where do I begin? - I am no longer fit for this world (unless you all want to die and leave it too me, I'm fine with that) (Oh: Thanks for taking the Trash out -> Frederwick)

 

9. The irony of it being "Discover" "Magazine" ...where's the gun (neg) ...Do something new KING (pos) , I would have rathered Spotswood (Malcolm), but of course that flopped aswell. (we had too see mums property and put a Veil over you)

All in all, that's twenty minutes of my life gone for ever.

 

Pushed: You tell me, it's your world. - My profile is a simple lookup, and we didn't want me mixing in the Physics forum until all the episodes of the Big Bang Theory were written...how is that going by the way: Is DD going tobe in the finale? or is he still asking for too much money? or maybe the word clone should be taken out of the english dictionary?

**** man, there are five plausible meanings to that concatenation of free range thinking. Why do you bother? Communication is meant to be a two way street. You keep digging up the road and erecting barricades.

 

-> and we all know what that means....

No, only you. Only you.

 

Bon voyage and don't eat the yellow snow.

[AnssiH]

...and this is fundamentally wrong on two points:

The same phenomenon that was promoted by Hamilton and Madison works at the next level up of International finance, and I mentioned it: if the Chinese have an investment in us, they're less likely to muck up our economy, so this *creates* stability rather than creating a Prisoner's Dilemma where there's strong motivation to do the wrong thing.

I'm not suggesting that other players in the game have an incentive to create instability, of course they don't. Anyone having invested into some economy obviously has got incentive to keep that economy stable. Whether that investment is via debt or just via owning some currency makes no difference at all.

 

The companies that caused the 2008 crash had every incentive in keeping the economy stable, of course. Their each action was aimed to create as much value for themselves as possible, and that includes keeping the economy running. The fact that every player has got that incentive doesn't make the system stable, if everyone are also trying to maximize their own profit. That's the prisoner's dilemma I'm alluding to.

 

I.e. no nation can refrain from taking in debt and remain competitive within the same economy, as long as the competing nations are improving their ownerships with debt mechanisms from private institutions. At the same time, if no one was taking in debt, the relative ownerships of resources would not shift. Every country would still have all the same people and raw resources available to them. Money is not a resource in itself, it is just a resource guiding tool. The only difference would be that there's no value getting sucked into the owners of those private institutions; it would not create interest flow into private institutions.

 

Exactly the defences you cite for the US government taking in debt, are the reasons why every single government is forced to take in debt as much as they dare. If that's not a debt race, I don't know what is.

 

Of course I'm not also suggesting that "let's just stop taking debt" is a solution to that problem. Some different system for controlling common resources would have to be created. Maybe it is possible to device a global system that is inherently stable, able to absorb instabilities...? Who knows.

 

I'm sure everyone agrees though that that would be quite desirable goal.

 

As I also described, the notion that *all* benefits accrue to a "small group of individuals" is a myth: the vast majority of all the money in the "evil banks" is *our* money, mostly through mechanisms like mutual funds or government held debt.

I am not suggesting banks own the value they are holding in their accounts. I have said though that we are spending a considerable percentage of our taxes into paying the people who run the global monetary systems (instead of building common infrastructure), and due to the interest flows more and more percentage of the value of the entire economy keeps trickling down to the people that either handle your money, or create your money. And furthermore it is your money that goes poof when the associated funds collapse. Of course it is still true that anyone at the receiving end of the interest flow also has got an incentive to keeping the economy from collapsing.

 

It is just a plain fact that in the modern global economy, the highest earning people and industries - with quite comfortable margin - are those which do absolutely nothing productive; they people controlling finances and money systems. They sell nothing of actual value, they just collect value from the money game via various mechanisms. Although they do create new industries by wanting to buy ridiculous luxury items. Like these types of people;

 

no, I see this as a counter-intuitive "feature" of the system that *creates* stability in economies. Spreading wealth and interdependency of the various players is what ensures that everyone has an investment in everyone else's financial well-being. But that is actually just a side benefit to the fact that debt is inherently good when taken in appropriate amounts because it enables the development of public and private assets that improve the well-being of all.

But surely national debt is not required to create incentive for stability, as anyone investing into the same economy in any way has got the same incentive.

 

Of course I agree that debt-based system enables the development of assets and improvement of common well-being; that's why the system exists. That doesn't remove the fact that it is an unstable method of doing so, and there ought to be globally stable ways of achieving the same goal. Or do you mean you are quite convinced there can be no better ways of doing this?

 

As I stated before, I have no idea what would be that better way, but I do think it is an interesting problem worth thinking about, and I would not accept what we have now is the best system we could ever come up with.

 

What I worry much more about is wealth and income inequality, which has very little to do with government debt, except insofar as one of the key drivers of this inequality (see Piketty) is reductions in taxes on the wealthy driven partly by these "debt-is-evil" arguments that get illogically transmogrified into Grover Norquist's "shrink-government-until-you-can-drown-it-in-the-bathtub" argument. The rich get richer because they're allowed to keep all of their money these days, instead of actually paying their full share of the benefits brought about by *having* a stable economy in addition to all the infrastructure (a stable currency, transportation, labor force, security, etc).

Well this sounds like something I agree with fully. Except I'm not sure how the "reductions in taxes for the wealthy" are driven by "debt-is-evil" arguments. Can you elaborate?

 

One more contributing factor to the rising inequality is that moneytary policies are not taking into account the technological advancements, allowing manufacturing companies to operate with less and less work force. The owners of the companies get richer due to increased output with smaller overhead, while the common people get more unemployed.

 

If you've been paying attention, the world economies have been getting  far more stable. We haven't had huge bouts of inflation since probably before you were born (boy the 70s were fun! Stagflation!). The recent problems with countries like Greece and Italy and Ireland--all ostensibly first world countries--were caused by asset bubbles in *private* investment debt that were unsustainable, and that governments being the last backstop against economic collapse had to take on, and all were unwilling--due to a very recent shift in government attitudes toward wealth--to make the prime beneficiaries pay for, precisely because those benefits were broadly based.

I would characterize these problem a bit differently though. Greece for one was actually not even honest about how much public debt it had despite the fact that they were required to by EU regulations (apparently the government had been instructed by some global financial institutions about how to hide some if its debt). When the investors become suspicious, this created a positive feedback loop via raising interests.

 

http://andrewgavinmarshall.com/2011/07/15/167/

"...When the government came to power, they inherited a debt that was double that which the previous government had disclosed. This prompted Greece’s entry into a major debt crisis, as the debt was roughly 127% of Greece’s GDP in 2009, and thus, the costs of borrowing rose exponentially..."

 

The unwillingness to just default the loans is a curious aspect of these things. There's interesting speculation about it here;

http://www.forbes.com/sites/timworstall/2011/06/16/explaining-the-greek-debt-crisis/

 

Certainly as long as the rest of the nations always just borrow more money from the central banks in order to keep the falling nations afloat, that can always be done until the end of time. But every time you do, you also increase the flow of "value" to the central banks. At least US Federal bank is already just nullifying some of that flow. For the obvious reason that eventually it would just cause the system to collapse.

 

So, did "the rich" benefit from the government bailing out AIG, or avoiding prosecuting the likes of CItibank, JP Morgan and Bank of America? Sure, but it also kept afloat the California Public Retirement System (CalPERS), one of the largest managed union funds in the world, along with millions of individuals like you who had mutual funds or other investments in Real Estate Investment Trusts.

Yeah, certainly there are powerful arguments to be made about "it had to be done". I think the system is rotten when things are left to slide into "too big to fail" category.

 

I especially liked the AIG's lawsuit where they claimed the bailout they received was unfair... I don't know about you, but I think it just shows how these people view the game as all about maximizing profit, no matter how absurd the moves are you need to make...

 

I quite frankly think its amazingly absurd that extremists on both the left and the right want to throw the baby out with the bath water (with folks like Grover wanting to drown it first with homicidal glee), and I have every interest in arguing against both views.

Well I do agree with this one, although I would throw the national-debt-baby out with the water in a heartbeat if only I actually knew of better ways to recreate the positive effects of it. I do think that in an optimal system not a penny of national value is spent in increasing the personal fortunes of people who just run the money game in profit-seeking manner. I think rather it should all be spent in creating common services and infrastructures benefiting everyone.

 

-Anssi