What now - with a bit of background info!

emordnilap · Post by **emordnilap** » 30 Sep 2008, 13:24

Shoppers are tightening their belts as the economy fails to grow

Well, it had to happen sometime.

Andy Hunt · Post by **Andy Hunt** » 30 Sep 2008, 13:27

emordnilap wrote:
Shoppers are tightening their belts as the economy fails to grow
Well, it had to happen sometime.

Next quarter: good news! Growth has resumed.

Except it's 'negative growth' now.

Vortex · Post by **Vortex** » 30 Sep 2008, 13:29

Except it's 'negative growth' now.

Ever heard of complex numbers?

We are going to need some new banknotes ... maybe even imaginary ones!

Aurora · Post by **Aurora** » 30 Sep 2008, 13:42

That'll do nicely sir.

SunnyJim · Post by **SunnyJim** » 30 Sep 2008, 14:10

Why all this talk of inflation and printing money? All I can see at the moment is huge amount of dollars disapearing from the economy. 1 trillion dollars wiped off the value of shares in the US just yesterday! Trillions wiped of the value of houses. That's what write downs are; money disapearing. The US NEED to print or make money. Otherwise they risk deflation and the situation they had in the depression, where people wanted to work, and materials sat in yards etc, but there wasn't enough money in the system to make it all work. No one would buy anything as continuing deflation made stuff continually cheaper. Inflation and deflation both 'run away'. i.e. the financial system is unstable. Think of it as a pencil on its point. You must balance money supply against the real economy. Start to let deflation or inflation take hold and the pencil starts to fall....

btw can you use shares as collateral against a loan in the US?

syberberg · Post by **syberberg** » 30 Sep 2008, 16:24

SunnyJim wrote: btw can you use shares as collateral against a loan in the US?

Given the way things are, they'd probably accept internal organs and gold teeth...

RenewableCandy · Post by **RenewableCandy** » 30 Sep 2008, 17:04

Vortex wrote:
Except it's 'negative growth' now.
Ever heard of complex numbers?

We are going to need some new banknotes ... maybe even imaginary ones!

Genius!! Then instead of exponential growth we'll have growth going round in circles...

Ludwig · Post by **Ludwig** » 30 Sep 2008, 17:23

SunnyJim wrote:Why all this talk of inflation and printing money? All I can see at the moment is huge amount of dollars disapearing from the economy.

All this money that's disappearing shouldn't be there in the first place. That is the problem. It was conjured out of thin air as loans. It is not backed up by any physical collateral. It represents nothing but expectation of future growth.

SunnyJim · Post by **SunnyJim** » 30 Sep 2008, 21:19

Ludwig wrote:
SunnyJim wrote:Why all this talk of inflation and printing money? All I can see at the moment is huge amount of dollars disapearing from the economy.
All this money that's disappearing shouldn't be there in the first place. That is the problem. It was conjured out of thin air as loans. It is not backed up by any physical collateral. It represents nothing but expectation of future growth.

Yeah I know. But a gold tied currency doesn't make any more sense either. Why should the 'real economy' be represented by how much gold has been found. Madness!

It should disapear, but if too much disappears and the real economy is under represented then people that want to work can't find jobs, and stuff sits in yards unused because no-one has the money to pay for it. Money must match work done in our economy. How we handle the real economy shrinking is another discussion however. Banks cannot expect to make money from interest then.... Money must disappear, and money sat in investments must find its way back to the real economy. Too many people were doing nothing and making money from their capital, e.g. BTL landlords, bond holders, shareholders etc. The will have to work for a living again, and stop expecting their tennants, tax payers, employees etc to pay for their lifestyles.

SunnyJim · Post by **SunnyJim** » 30 Sep 2008, 21:27

n.b. By work I mean actually produce or do something. Not simply charge rent for use of their capital, property or assets.

SunnyJim · Post by **SunnyJim** » 30 Sep 2008, 21:34

Mitch · Post by **Mitch** » 30 Sep 2008, 22:51

O.K. Jim, do I get this right? "currency" should be measured in energy, or "watts". If a person can deliver 100 watts an hour, and it takes him 16 hours to make a chair - then that's the value of the chair? The wood he used has no value, since he didn't "make" it, but it "cost" him, (or some-one else), energy to find it and transport it - so the "value" of the wood would be how much energy was used to get it to the chairmaker? If this was applied - and ALL energy was "valued" at the same price as human labour, then the true value of all goods would be "real", and that should then be a lot more sustainable, and fair, than our present system of valueing stuff?

(Office workers would earn rather little, I suspect)!

Andy Hunt · Post by **Andy Hunt** » 30 Sep 2008, 23:01

Mitch wrote:O.K. Jim, do I get this right? "currency" should be measured in energy, or "watts". If a person can deliver 100 watts an hour, and it takes him 16 hours to make a chair - then that's the value of the chair? The wood he used has no value, since he didn't "make" it, but it "cost" him, (or some-one else), energy to find it and transport it - so the "value" of the wood would be how much energy was used to get it to the chairmaker? If this was applied - and ALL energy was "valued" at the same price as human labour, then the true value of all goods would be "real", and that should then be a lot more sustainable, and fair, than our present system of valueing stuff?

(Office workers would earn rather little, I suspect)!

The genius Buckminster Fuller proposed the 'World Kilowatt Dollar', and you can actually get the things from the World Service Authority:-

http://www.worldgovernment.org/funding.html

They cost US$10 each.

Ludwig · Post by **Ludwig** » 01 Oct 2008, 00:58

SunnyJim wrote:
All this money that's disappearing shouldn't be there in the first place. That is the problem. It was conjured out of thin air as loans. It is not backed up by any physical collateral. It represents nothing but expectation of future growth.
Yeah I know. But a gold tied currency doesn't make any more sense either. Why should the 'real economy' be represented by how much gold has been found. Madness!

It makes a kind of sense because it acts as a restraint on growth. The point of gold is that we can't make more of it.

The problem in a capitalist system is that without growth, all the money ends up in the hands of a few people, unless everyone has something of exactly equivalent value to offer to everybody else. Obviously in a command economy, redistribution is forced by the Government. But then you have the problem of motivating people to work properly.

It should disapear, but if too much disappears and the real economy is under represented then people that want to work can't find jobs, and stuff sits in yards unused because no-one has the money to pay for it. Money must match work done in our economy.

The real economy is not going to be underrepresented any time soon. The current amount of money in the system outstrips by an order of magnitude the amount of work being done in the economy NOW, even before we've had a depression. Anyway, as I mentioned, this isn't real money at all anyway, it's all IOUs.

As for jobs: well this is an interesting question. Technology and fossil fuels have seen to it that we could in fact get by quite comfortably with most of the population sitting idle, or with us all working 2-day weeks. But socially this would be a disaster. Most people aren't satisfied without some sort of goal and sense of forward momentum, and I'm not convinced a permanent "steady state" economy is psychologically possible. That's arguably what the Soviet command economy tried to be.

How we handle the real economy shrinking is another discussion however. Banks cannot expect to make money from interest then.... Money must disappear, and money sat in investments must find its way back to the real economy. Too many people were doing nothing and making money from their capital, e.g. BTL landlords, bond holders, shareholders etc. The will have to work for a living again, and stop expecting their tennants, tax payers, employees etc to pay for their lifestyles.

I'm a bit tired and I'm not sure I totally follow what you're saying. The money sat in investments is precisely what's disappearing.

You talk of these people needing to work for a living again, but a big problem is what work now needs doing. In a very real sense, work is just there to keep people off the streets. Basic needs can be met by a fraction of the work actually done by the population; even the production of enough luxury goods for everyone could be achieved, I suspect, with most of the workforce unemployed. So to combat that socially potentially explosive scenario, we have built-in obsolescence and the endless pursuit of new markets to keep us all occupied.

Sorry, will need to come back to this - I'm knackered!

SunnyJim · Post by **SunnyJim** » 01 Oct 2008, 10:21

Mitch wrote:O.K. Jim, do I get this right? "currency" should be measured in energy, or "watts". If a person can deliver 100 watts an hour, and it takes him 16 hours to make a chair - then that's the value of the chair? The wood he used has no value, since he didn't "make" it, but it "cost" him, (or some-one else), energy to find it and transport it - so the "value" of the wood would be how much energy was used to get it to the chairmaker? If this was applied - and ALL energy was "valued" at the same price as human labour, then the true value of all goods would be "real", and that should then be a lot more sustainable, and fair, than our present system of valueing stuff?

(Office workers would earn rather little, I suspect)!

Sounds good to me Mitch. At least more sensible than linking currency to gold. Maybe a bit low level and hard to implement though? What if a person can deliver 400W per hr (Lance Armstrong). Does he get paid more? The boffins would hate it as intelligence is not rewarded only brawn.