[Prev] [Next]   [Index]   [Thread Index]

02759: Re: [WDDM] Economics and Change

From: Joseph Hammer <parrhesiajoe(at)gmail.com>
Date: Mon, 17 Jan 2011 14:00:43 -0800
Subject: Re: [WDDM] Economics and Change

The current position of the Fed on inflation is exactly what you are expounding. Central banks currently say that their money is non-inflationary. Why?

All loans are "self-liquidating". All of them, fiat or non-fiat, gold standard or salt standard. That is the nature of a loan.

Because all the loans they give out are self-liquidating... as soon as the loan is repayed, the inflation is destroyed. This is true of the Fed as well as Binary economics.

During the loan, however, there is real inflation. The current balance of outstanding loans is always a multiple of the base, even though in the future, that money will be paid back and hence, deflated/withdrawn from circulation. BUT, before that money is paid back, even more money is printed. It is a self reinforcing cycle. There is always more printed than paid back, and so there is always a constant, steadily increasing inflation.

We can just take people's stuff and give it to other people we feel are deserving... that's a more honest way to steal from people. At least they will understand what is happening so they can fight back. I'm all for equality and all that... even redistribution, but I want it above the board. No complex systems and no misunderstandings. We say to RichMan#36, "You have one billion dollars... society voted that no one should have that much power, so we are taking 90% of it."

Fiat money is morally wrong and it destroys the structure of production. You could replace your binary interest free central bank with a really good counterfeiter and the effect MUST be the same. If we had a counterfeiter handing everyone money at 0% interest, do we really think that would result in prosperity? It's a verbal and intellectual shell game.

If you hand someone a fiat dollar, 100% of the value in that dollar is stolen from people who have dollars in their pockets. It cannot be otherwise. Under some conditions, I would be fine with this theft, but the side effects of fiat money are observable, consistent and catastrophic.

There are places where we could put a billion dollars that would result in a return of 20% per year.  We need to fund ALL of those before we start looking at things that will return 15%. We can divide ownership of the capital so we are ALL seeing that 20% return, but we must attempt to fund the most productive projects or we will continue to limp along at 1% growth. Killing interest rates leaves no rational way for the 20% investment to acquire more than "It's share" of resources, even though it would benefit all.

On further inspection, Binary economics seems to be a cousin of communism. The goals are the same. They both attempt to distribute capital evenly. They both force the entrepeneur to give up profits. They both disregard interest and usuary as evils.

The theory, as far as I can discern, doesn't directly mandate a system of decision around who gets money. Here, I am curious. If everyone wanted to borrow one million dollars next year, would they all be able to (Keynesian)? Or would they all get an equal share of a predicted amount of new money (Monetarism)? All at Zero interest, of course... like Japan.

Pj

On Mon, Jan 17, 2011 at 1:13 PM, <Joshua N Pritikin> wrote:
On Mon, Jan 17, 2011 at 01:01:48PM -0800, Joseph Hammer wrote:
> Binary economics prints new money unbacked by anything of value.

The only money printed is backed by self-liquidating bills of credit.

For example, a loan for equity shares in a large, stable business that
pays dividends is self-liquidating because the dividends can be used to
pay back the cost of acquiring the shares.

In other words, in binary economics, the central bank's job is to
advance credit against the future value of an investment.

This affords to every individual the opportunity currently enjoyed only
by those who have savings to invest.

> On Mon, Jan 17, 2011 at 12:56 PM, <Joshua N Pritikin>wrote:
> > On Mon, Jan 17, 2011 at 12:40:17PM -0800, Joseph Hammer wrote:
> > > There are several problems with Binary economics, but chiefly, they
> > > disregard the role of interest as a primary coordinator of resources.
> > >
> > > They say, "Print money from a central bank at zero interest to hand to
> > > people to invest." This sound good, but it is destructive to society.
> > First,
> > > printing money does not increase the supply of goods available for the
> > money
> > > to buy. The value of the new money is stolen from those who already have
> > > money in hand. The loss shows up as inflation... the dollar in your
> > pocket
> > > buys less.
> >
> > That is not an accurate characterization of binary economics.
> >
> > Please try to understand the proposal before you turn to criticizing it.
> >
> > First advanced by Louis Kelso, binary economics holds that (1) labor and
> > capital are equally fundamental or "binary" factors of production, (2)
> > technology makes capital much more productive than labor, (3) the more
> > broadly capital is acquired with the earnings of capital the faster the
> > economy will grow.
> >
> > Binary economics is not inflationary. This is easy seen if you would
> > bother to study the proposal for more than ten seconds.
> >
> > http://papers.ssrn.com/sol3/papers.cfm?abstract_id=928752
> >
--
American? Join the effort toward National Initiative, http://ni4d.us

[Prev] [Next]   [Index]   [Thread Index]