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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: skinowski who wrote (623324)	1/25/2017 9:06:24 AM
From: unclewest	Read Replies (2) \| Respond to of 794358

Incredible thought processes in those posts...Thank You both Opened my eyes a little wider....but $ has never been my primary focus...

To: skinowski who wrote (623324)	1/25/2017 10:25:25 AM
From: prometheus1976	2 Recommendations Recommended By pheilman_ skinowski Read Replies (1) \| Respond to of 794358

thomas jefferson Quotation: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.... I believe that banking institutions are more dangerous to our liberties than standing armies.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." https://www.monticello.org/site/jefferson/private-banks-quotation

To: skinowski who wrote (623324)	1/25/2017 10:31:42 PM
From: frankw1900	1 Recommendation Recommended By prometheus1976 Read Replies (2) \| Respond to of 794358

The reason depressions are deflationary is that folk are paying down bank debt, which destroys money. At such a time folk have no interest in taking out loans, which creates money. Or perhaps it's worth taking one more step back, and figure out what created that situation. Excessive credit? Easy money causing misallocations? Okay, I owe the following to the late Ahhaha of SI and to Steve Keen who both predicted 2008 crash youtube.com Second order answer to your questions is 'yes.' These are symptoms. First order. It is intrinsic to capitalism when we look at it from the point of view of systems control theory that it is unstable. Best example is the credit/money creation system. The bank loans you $1000. It does not do this by lending money deposited there by some other person nor by lending it from its reserve. It does it by making two entries in its ledger - a debit to you and an asset to the bank. (An asset because you pay the bank interest). In your ledger you enter $1000 credit and a $1000 liability to the bank. The transaction between you and the bank created $1000. If you look at the bank as a money factory then the interest you pay it is its mark up on the product. The only thing stopping the bank from creating an unlimited amount of money is the common sense of bankers, the income restrictions of borrowers, and whatever law might be regulating the multiple of its capital it is allowed to loan. The problem for bankers is that a loan is a wasting asset because the customers pay back principal and interest payments decline to Zero. So there is always pressure to sell more credit.... The other problem for all of us, including bankers, is that economic activity and growth and money creation is dependent on credit formation. After an economic bust folk are pretty careful about taking on credit. Economic conditions appear treacherous and they are careful to take on good business risks where income will cover several times interest and principal payments. Same goes for bankers. As time goes on and folk have had success they take on more risky ventures, and eventually a lot of loans are made for speculative reasons and Ponzi financing becomes more and more common. The economy heats up, huge amounts of money are created but eventually incomes restrict much further loan making and the economy slows down and has a financial crash. Then there is a recession or depression or stagnation depending on how severe the crash and the degree and type of government intervention. The recession, depression or stagnation will continue until enough private debt has been paid and folk have enough surplus income to pay and service new debt. And we start over. Start a recovery. Sort of. However, at the start of each recovery the ratio of private debt/GDP is higher than at the start of the previous one.... So from systems control theory POV this credit cycle lacks feedback. Such feedback could be, for instance, regulation forbidding banks making loans for speculation in stocks and real estate, no margin loans, serious restrictions of ratio of mortgage payments to income, restrictions on mortgage backed securities and banks' dealings in derivatives, and so forth. This is really barebones. There's nothing here about interest, and the advantage of those having lots of assets over those with few. I have to say Paul Krugman would think the above is nonsense. So I'm feeling fairly confident I've got it about right. In other words, it could be argued that we are in a depression - which is papered over via government spending. It can equally be argued we would have been in a depression without the government spending. Incidentally, since most of the borrowed dollars are (probably) spent on consumption, they end up in the accounts of a variety of providers of goods and services. Yes. (Which may be the source of the several trillion dollars held by corporations overseas). Maybe some of it. Who knows? Money is like oil - totally fungible. In other words, government borrowing is the vehicle for income inequality. Present level of income inequality is due to outsourcing, (Globalism), which decreased the share of national income available to at least 80% of citizens.