Socialism for the rich, free market darwinism for the poor & middle class
- Thread starter Cutten
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cool
was also thinking, with such a loose credit facility, a country can get caught in a vicious cycle of credit in place of growth, and the inflationary effect on savings makes that dependency even more self-fulfilling
was also thinking, with such a loose credit facility, a country can get caught in a vicious cycle of credit in place of growth, and the inflationary effect on savings makes that dependency even more self-fulfilling
I disagree.. consider that there's no theoretical or practical limit yet evident in the extent of our current technology. Moore's Law is holding. Quantum computing looks promising, nuclear fusion is on the horizon, medical science is as advanced as it's ever been and advancing still further...
Economic value growth is directly tied to technology, and fractional reserve banking directly drives technological development. That value growth is slowing now is because of greed and the desire to concentrate wealth, a desire to keep the technology locked up in the hands of a few rather than share the windfall. There seems to be a deeply embedded philosophy in our culture that if you don't spend 8 hours (minimum) each day doing "work" (loosely defined), you're not pulling your weight and don't deserve a happy life.
The fundamental question is, with more technology to do work and produce value, do we all want to work less or have everyone working the same amount and have massive inflation (because of unpaid machine labor)?
We keep inventing ever more sophisticated robots to work for us. They make value, and that value concentrates in the hands of their owners. At some point, we have to get over the Protestant work ethic and say enough is enough, we're all just going to work less and enjoy the fruits of our technology. (This has already happened to some extent, with novel innovations like the "weekend" slowly creeping into society.)
Fractional reserve lending is one key component of allowing ever more sophisticated technology to develop, which translates into less and less actual work for humans to do. There is no techological reason why technical growth has to slow right now in our "mature" economy - with nuclear power and computers, we could have completely automated and clean food production in 20 or 30 years. Food would be free. Not cheap; free.
But that goes against the deeply ingrained idea that everyone has to be working constantly in order to not be a freeloader...
So you think expanding the monetary base above GDP growth helps create value? Explain why please. Let's say we double the monetary base tomorrow - how does any value accrue from that? If you are right, then why have money supply growing at 10% per annum? Why not slash rates and provide money at 0.1% to banks? If moderate money supply growth is good for economy growth, then surely huge money supply growth is even better? Let's expand the money supply 1000 fold per year and get 400% GDP growth?
Are you aware that since the creation of the Federal Reserve, real US GDP growth has been almost half the rate of growth in the 19th century? Switzerland was on the gold standard until a few years ago, it didn't seem to have a problem growing spectacularly during the last 2 centuries. Britain was on the gold standard during the 18th and 19th century and saw huge economic growth. It went off gold just before WWI - look what happened to the economy after that.
Stop being so patronising. Of course we are aware of what would happen to the banking sector - large portions of it would go belly up. So what?
Wall Street went bust in 1907. The US did just fine in the next 20 years after that recession cleared out the system. Almost every brokerage in Japan went bust in the 1966-67 crisis. The next 20 years in Japan was the biggest boom of the 20th century.
In the 1990s Japan tried a different tactic, and bailed out the banks. The result was a 13 year long depression. In the 1930s the US did a similar thing - same result. Isn't that a coincidence? Letting the system "fail" works out really well, historically, whereas trying really hard to bail it out has bad results.
You are being short-sighted - you think that averting recession in the next 18 months is critical. What is critical is putting the US economy on a sound footing, by wiping out speculative excess and destroying every marginal player in the banking and financial sector. 18 months of pain will give 18 years of great prosperity over the longer run, just like it did in every other case where a crisis was allowed to run its course. Haven't you read your Schumpeter - creative destruction and all that?
Trying to prop up the system will have the same result it had in 1932, the 1970s, 1992, 1995, 1998, 2001-02 - the continuance of further bad lending practises and unsound speculation, resulting in another bubble and yet another bust a few years down the line. Isn't it about time to end that cycle? All you offer is more of the same, bailing out the fat cats yet again, so we can get the same BS in 3-4 years - again.
Do you really expect different? I mean this same crowd still wants to cramerize social security and fears working for a living more than about anything else. I don't get too worked up over them because it's what I expect of them -- and its all they know, after all -- but I do get steamed with their apologists.
I, for one, am shit-scared of working for a living. 
Nobody is going to get voted in by teling the people what they don't want to hear, so the 'you can keep your house Harley SUV Widescreen' electoral pledges will be made.
The American dream used to be something that was open to you (as opposed to closed off by birth, race etc) IF you worked for it. Now it is an entitlement that you claim by signing on the dotted line of a credit agreement - at least for a while..........................
The American dream used to be something that was open to you (as opposed to closed off by birth, race etc) IF you worked for it. Now it is an entitlement that you claim by signing on the dotted line of a credit agreement - at least for a while..........................