Silk Road forums
Discussion => Philosophy, Economics and Justice => Topic started by: KintaroBC on April 19, 2013, 02:06 am
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Professor Fekete identified the marginal productivity of debt, which while noted by other economists fell negative in 2007. It's basically how many dollars of GDP are created for every new dollar of debt: http://www.professorfekete.com/articles/AEFTheMarginalProductivityOfDebt.pdf
Simply, without more debt the system would collapse under defaults but new debt wasn't adding anything to the economy or making anything so defaults happened... and deflation.
The marginal productivity of debt is usually a few points under the rate of interest.
Jewish bankers agree.
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Professor Fekete identified the marginal productivity of debt, which while noted by other economists fell negative in 2007. It's basically how many dollars of GDP are created for every new dollar of debt: http://www.professorfekete.com/articles/AEFTheMarginalProductivityOfDebt.pdf
Simply, without more debt the system would collapse under defaults but new debt wasn't adding anything to the economy or making anything so defaults happened... and deflation.
The marginal productivity of debt is usually a few points under the rate of interest.
Jewish bankers agree.
Well, I would agree, except ATM there isn't any other kind of money. Debt-based-money is ALL money. Bitcoin is a bit different, but it isn't really 'money' as such, but is traded more like a commodity and is only used as an intermediate exchange medium for the purposes of anonymity. But I would agree that using debt as currency is foolish for all kinds of reasons, and is definitely the primary reason we have to constantly 'grow' our economies.
My understanding of it is a little like this; imagine that ALL debt is paid back, so there is no currency and no debt. So we're back at a T=0 kind of point. I have a farm and some seeds and grow some crops. You have a farm and some livestock. So at this basic level I would want to buy some meat and you would like to buy some vegetables. Forget for a minute that we could simply exchange them (a barter economy) because I'm trying to model in a microcosm what happens in the macrocosm. But there's no money, however we both know that we will be able to exchange our goods for money, so borrow funds using our goods/businesses as collateral, to keep is simple we both borrow $10 each at 10% interest. So I have $10, but owe $11, and so do you. I buy $10 worth of goods from you, you buy $10 worth of good from me. We then pay back our loans, but each still owe $1 each. How do we pay the interest? Well, we have to sell an extra $1 of goods each, then some more for 'profit'. But who too? There is no other currency, so someone has to borrow money, say to start a pie business, and buys from both of use and then adds value (buy combining our goods into pies) and sells on. But whoever he sells on to also has borrow (between them) enough to cover the loan + interest + profit. So they then have to create a business to pay their loans + interest and convince others to borrow... blah blah blah and on and on... But it only 'works' if the money borrowed creates 'wealth' or 'value' - when you borrow to buy a house at inflated values or an HDTV it all starts to break down... not that it really worked before, but it worked better...
What we don't have is a way of having currency as wealth - a way to mark the amount of wealth I have and spend that. So, tokens to represent the amount of vegetables I have and the amount of meat you have, that we can then exchange for our goods. Or, in SR terms, to represent the amount of weed I have to sell and the amount of MDMA you have to sell so we can exchange them. It's a tricky problem, though I have a few ideas I may try to develop...
I don't get the last sentence; are you saying that because I agree I must be a Jewish banker, or that there are Jewish bankers who agree with this? What do Jewish bankers have to do with it these days - Wall St seems to be filled with coked-up WASPs....
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Professor Fekete identified the marginal productivity of debt, which while noted by other economists fell negative in 2007. It's basically how many dollars of GDP are created for every new dollar of debt: http://www.professorfekete.com/articles/AEFTheMarginalProductivityOfDebt.pdf
Simply, without more debt the system would collapse under defaults but new debt wasn't adding anything to the economy or making anything so defaults happened... and deflation.
The marginal productivity of debt is usually a few points under the rate of interest.
Jewish bankers agree.
Well, I would agree, except ATM there isn't any other kind of money. Debt-based-money is ALL money. Bitcoin is a bit different, but it isn't really 'money' as such, but is traded more like a commodity and is only used as an intermediate exchange medium for the purposes of anonymity. But I would agree that using debt as currency is foolish for all kinds of reasons, and is definitely the primary reason we have to constantly 'grow' our economies.
My understanding of it is a little like this; imagine that ALL debt is paid back, so there is no currency and no debt. So we're back at a T=0 kind of point. I have a farm and some seeds and grow some crops. You have a farm and some livestock. So at this basic level I would want to buy some meat and you would like to buy some vegetables. Forget for a minute that we could simply exchange them (a barter economy) because I'm trying to model in a microcosm what happens in the macrocosm. But there's no money, however we both know that we will be able to exchange our goods for money, so borrow funds using our goods/businesses as collateral, to keep is simple we both borrow $10 each at 10% interest. So I have $10, but owe $11, and so do you. I buy $10 worth of goods from you, you buy $10 worth of good from me. We then pay back our loans, but each still owe $1 each. How do we pay the interest? Well, we have to sell an extra $1 of goods each, then some more for 'profit'. But who too? There is no other currency, so someone has to borrow money, say to start a pie business, and buys from both of use and then adds value (buy combining our goods into pies) and sells on. But whoever he sells on to also has borrow (between them) enough to cover the loan + interest + profit. So they then have to create a business to pay their loans + interest and convince others to borrow... blah blah blah and on and on... But it only 'works' if the money borrowed creates 'wealth' or 'value' - when you borrow to buy a house at inflated values or an HDTV it all starts to break down... not that it really worked before, but it worked better...
What we don't have is a way of having currency as wealth - a way to mark the amount of wealth I have and spend that. So, tokens to represent the amount of vegetables I have and the amount of meat you have, that we can then exchange for our goods. Or, in SR terms, to represent the amount of weed I have to sell and the amount of MDMA you have to sell so we can exchange them. It's a tricky problem, though I have a few ideas I may try to develop...
I don't get the last sentence; are you saying that because I agree I must be a Jewish banker, or that there are Jewish bankers who agree with this? What do Jewish bankers have to do with it these days - Wall St seems to be filled with coked-up WASPs....
An economist Keith Weiner has a solution to the problem involving gold bonds, allowing payment of debt in gold (and anything including Bitcoin). Gold extinguishes debt and keeps circulating, so it's accurately described as an extinguisher of debt.
I certainly don't want to return to barter which requires a coincidence of wants.
The jewish bankers thing was a joke, but bankers are bond speculators. This all started in WWI when the Federal Reserve bought bonds that the treasury sold to the market, the market puts the price up and feeds them to the Fed. So basically bad accounting processes and a corrupt monetary system is sponsored by banks which are buried in bonds.
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Here are a couple of videos on money creation and the banking system.
https://www.youtube.com/watch?v=3HdmA3vPbSU
https://www.youtube.com/watch?v=_dmPchuXIXQ
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Not sure if I'm following correctly but couldn't it be argued that stocks fill this?
For example, oil stocks trade at a speculative premium. A major portion of the price of of an oil stock is based on future prediction that known reserves (which have not yet been drilled) will at some point be drilled and the oil will be extracted and sold.
So the price of the stock contains that asset, right?
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Unintelligent management of the worlds resources