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Thread: Accuracy Check -- Money as Debt

  1. #1 Accuracy Check -- Money as Debt 
    Forum Masters Degree Golkarian's Avatar
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    A friend, who is studying economics, sent me this to watch, I'm wondering how accurate it is:

    http://www.youtube.com/watch?v=vVkFb...x=0&playnext=1

    I was wondering because it sounds like something Darius would love.


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    Not sure about all the added story to it. But the main points are spot on.


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    Quote Originally Posted by spaceman1
    Not sure about all the added story to it. But the main points are spot on.
    Yes, some of it is, as admitted, allegorical, I was wondering about the factual aspect.
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    As I said, the main points are spot on. Banks create money out of thin air. All money is created in the banks, and ends up in the banks. So long as there is money in our society there will always be debt. That is how the system was made, thus giving control of society to the banks, governments and multi-national corporations. Everything we need to live in this world today comes essentially from those controlling bodies. And that is how they have intended it.
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    Yep, that's where money comes from. The bank's ability to create money from nothing means that the economy as a whole can function at a much higher capacity (the allegory alluded to this in the end about how and why it was legalized).

    This power isn't just with the banks. You yourself create money every time you use a credit card (not a debit card, though).
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  7. #6  
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    At first I was skeptical due to the poor artistry. As it went on, however, I realized this is the same message I've been "preaching" for some time now, and others before me. I believe this is a video everyone should watch to save people like me the wasted time retyping the same message. I also love the artful use of allegories.

    So yes, I do like it.
    Om mani padme hum

    "In dishonorable things we are not bound to obey any man." - The Book of the Courtier [1561], pg 99 (144 in pdf)
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    The film is great up till the last one, when it gets almost loony, in its radical-ness. At the same time, they make a good point: why should banking be the primary means by which inflation occurs?

    It seems banks are basically a complicated insurance industry. They take one person's promise to repay, and give the seller a stronger promise to repay, a promise that holds up for the seller, even if the buyer renigs.


    So, I don't agree with them on everything, like when they seem to say that "usury" is categorically bad, but I can see where the system has the potential to cause problems, and would be incredibly open to exploitation.
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  9. #8  
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    "usury" is inherently bad due to human nature. Any system devised must compensate for human greed, and this one makes the greediest individuals the most profitable.
    Om mani padme hum

    "In dishonorable things we are not bound to obey any man." - The Book of the Courtier [1561], pg 99 (144 in pdf)
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  10. #9  
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    Is there something wrong with greedy people getting rich?
    "A witty saying proves nothing." - Voltaire
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  11. #10  
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    Quote Originally Posted by Darius
    "usury" is inherently bad due to human nature. Any system devised must compensate for human greed, and this one makes the greediest individuals the most profitable.
    Depends on how you look at money lending. I look at it the way I look at the insurance industry. I pay someone a certain amount of money per month in exchange for the guarantee that they'll pay my hospital costs if I get really sick or injured.

    I don't see money lending as terribly different from that. The money lender is doing the same kind of statistical analysis to determine who ought to be lent to and who shouldn't as an insurance company does when deciding how much to charge for insurance. Their job is to make sure that money finds its way into the hands of people who can actually use it to do something productive, and keep it out of the hands of people who can't or won't.

    In other words: their job is to decide which business ideas ought to make it into reality, and which ones should just stay in the entrepreneur's imagination.
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    Quote Originally Posted by kojax
    Depends on how you look at money lending. I look at it the way I look at the insurance industry. I pay someone a certain amount of money per month in exchange for the guarantee that they'll pay my hospital costs if I get really sick or injured.
    That is in no way similar to usury.

    I don't see money lending as terribly different from that. The money lender is doing the same kind of statistical analysis to determine who ought to be lent to and who shouldn't as an insurance company does when deciding how much to charge for insurance. Their job is to make sure that money finds its way into the hands of people who can actually use it to do something productive, and keep it out of the hands of people who can't or won't.
    I have no idea how this relates to anything I said.

    In other words: their job is to decide which business ideas ought to make it into reality, and which ones should just stay in the entrepreneur's imagination.
    Do you enjoy making no sense? Do you even know what usury is? Why do I bother!
    Om mani padme hum

    "In dishonorable things we are not bound to obey any man." - The Book of the Courtier [1561], pg 99 (144 in pdf)
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    "Is there something wrong with greedy people getting rich?"

    No, I happen to like knowing who my enemies are.
    Dick, be Frank.

    Ambiguity Kills.
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  14. #13  
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    [quote="Darius"]
    Quote Originally Posted by kojax

    In other words: their job is to decide which business ideas ought to make it into reality, and which ones should just stay in the entrepreneur's imagination.
    Do you enjoy making no sense? Do you even know what usury is? Why do I bother!
    Usury = interest.



    Interest is the money that (theoretically) you use to refund your own losses when somebody defaults on a loan. So, if you've got like 100 people with loans (for simplicity let's assume all the loans were for the same amount of money), and you forecast that 5 of them (an average of 5%) will default, you'll want to charge about 5.26% interest so you break even.

    If there's inflation, you'll want to add inflation as well, to break even. So if inflation is 3%, then your total interest is 8.26% to break even.

    Then, you want to accommodate Murphy's law. Your prediction might be wrong. So add another 2% for good measure, so 10.26%

    It would be nice to profit as well, but most of your competitors will be charging the lowest prices they can in order to compete with you, so it's not such a simple matter. Most of your profitability will be from guessing so accurately that you don't end up needing that 2% margin of error. But... you should give yourself a margin of error just in case.



    ....Now..... that's pretty much identical to how an insurance company operates. Suppose out of 100 people, you estimate that 5 are going to have accidents this year. The cost per customer you charge per year will be the cost of those 5 accidents divided by 100. (Which is mathematically the same as charging each of your customers 5.26% in the above example)

    You might not need to account for inflation, unless they're paying at the beginning of the year. (In which case you would want to account for it). However: you would *certainly* want to give yourself a margin of error, and charge a little bit more than the cost of the accidents, just in case your predictions are wrong.

    Most insurance companies make their money by predicting so accurately that they don't end up needing as large a margin of error. It allows them to both charge a lower price, and keep some profit for themselves.
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  15. #14  
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    Quote Originally Posted by kojax
    Interest is the money that (theoretically) you use to refund your own losses when somebody defaults on a loan.
    Interest is what causes most defaults, due to the incredibly high payments required to fund the greedy little shits. Furthermore, even in TODAYS economy, the amount of defaulting is nowhere near alarming enough to warrant usury. In fact, usury was STARTED as a way to make more profit, and still exists in that same manner.

    Also, there is no such thing as "defaulting" on a loan in a sensible world. If you can't pay, you can't pay, but that doesn't mean you can NEVER pay. Chances are loans would be carried out by rich individuals with nothing better to do with their money, rather than banks, so payment periods would likely be more lax.

    In fact, HILARIOUSLY, the latter fact is what is forcing banks to stop foreclosing. They're forced to stop being AS greedy so they can be greedier later.
    Om mani padme hum

    "In dishonorable things we are not bound to obey any man." - The Book of the Courtier [1561], pg 99 (144 in pdf)
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  16. #15  
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    If you can't pay, you can't pay, but that doesn't mean you can NEVER pay.
    I agree.


    Here's 2 unrelated thoughts

    1- We all land on an island after a ship wreck no one has money. We start a new society from scratch. We decide to use a ledger for money. Someone says hey I'll take care of it, he writes down 1 million credits for himself and says now you can all borrow from me (at interet) to buy from other people what you need. Someone says hey wait a minute, how come you get a million and we get nothing, the guys says dont worry you can have money too, you just have to work and build me a house and I'll pay you or you can borrow it and pay me back at interest.

    2- Go back to Feudal europe, landlords are litteraly warlords that took hover land by force like mobsters, and since they ruled over the peasants and could make the rules they gave themselves fancy names like King. The king would grant land to his underbosses and gave them facy titles. The landlord could sell the land for money or ask the people who lived there to pay him a rent like a protection racket. So in effect most of the old aristocrats are basically mobsters that stole the land by force or by eliminating a rival mobster and exploited the inhabitants. The population is brainwashed to see royalty as fairy tale personalities to be admired (and back in the days religion played its part in justifying the established setup)
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    Quote Originally Posted by Darius
    Quote Originally Posted by kojax
    Interest is the money that (theoretically) you use to refund your own losses when somebody defaults on a loan.
    Interest is what causes most defaults, due to the incredibly high payments required to fund the greedy little shits. Furthermore, even in TODAYS economy, the amount of defaulting is nowhere near alarming enough to warrant usury. In fact, usury was STARTED as a way to make more profit, and still exists in that same manner.

    Also, there is no such thing as "defaulting" on a loan in a sensible world. If you can't pay, you can't pay, but that doesn't mean you can NEVER pay. Chances are loans would be carried out by rich individuals with nothing better to do with their money, rather than banks, so payment periods would likely be more lax.

    In fact, HILARIOUSLY, the latter fact is what is forcing banks to stop foreclosing. They're forced to stop being AS greedy so they can be greedier later.
    Well, in the USA there's bankruptcy, but that's simply an extension of the legal notion of "statutes of limitation". In the US most crimes have to be prosecuted within a set time frame, or the state has to just let it go. Theft is one of those crimes, so a debter is always free to simply wait out the statute of limitation.

    We could have a long discussion about why statutes of limitation benefit us.

    Quote Originally Posted by icewendigo

    Here's 2 unrelated thoughts

    1- We all land on an island after a ship wreck no one has money. We start a new society from scratch. We decide to use a ledger for money. Someone says hey I'll take care of it, he writes down 1 million credits for himself and says now you can all borrow from me (at interet) to buy from other people what you need. Someone says hey wait a minute, how come you get a million and we get nothing, the guys says dont worry you can have money too, you just have to work and build me a house and I'll pay you or you can borrow it and pay me back at interest.

    2- Go back to Feudal europe, landlords are litteraly warlords that took hover land by force like mobsters, and since they ruled over the peasants and could make the rules they gave themselves fancy names like King. The king would grant land to his underbosses and gave them facy titles. The landlord could sell the land for money or ask the people who lived there to pay him a rent like a protection racket. So in effect most of the old aristocrats are basically mobsters that stole the land by force or by eliminating a rival mobster and exploited the inhabitants. The population is brainwashed to see royalty as fairy tale personalities to be admired (and back in the days religion played its part in justifying the established setup)
    In a way they're quite related. We'd like the ledger to be in the hands of a common government (rather than private hands). If the banks were government owned, maybe that would make them more credible to us? Then whatever profits were generated would be to subsidize our taxes.

    The people in example #2 were basically functioning as a government, just not a democratic one. Sure they were thugs, but they were willing to protect you from other thugs, and their terms were usually just slightly more reasonable than those other thugs, so I'm sure a lot of peasants submitted voluntarily.
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  18. #17  
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    Quote Originally Posted by icewendigo
    1- We all land on an island after a ship wreck no one has money. We start a new society from scratch. We decide to use a ledger for money. Someone says hey I'll take care of it, he writes down 1 million credits for himself and says now you can all borrow from me (at interet) to buy from other people what you need. Someone says hey wait a minute, how come you get a million and we get nothing, the guys says dont worry you can have money too, you just have to work and build me a house and I'll pay you or you can borrow it and pay me back at interest.
    The difference between this scenario and how real-world banks operate is that real banks can't lend out more money than they have on deposit. They don't simply create money and give it to themselves. So a better analogy would be the guy with the ledger saying "Ok, all ten people the island now have $1000. And if you want to borrow more, I can just pencil in that you have more than that, but you'll need to pay me back with interest." And the guy with the ledger can't just lend out an infinite amount of money - there is a limit to how much he can magically create with loans.

    So then someone on the island figures out how to build an awesome car out of bamboo and coconuts, and starts selling them for $2000 - but no one actually has that much money. So when someone wants to buy an island car, he asks the guy keeping the ledger to lend him an extra $1000, and the guy marks in the ledger and says "Okay, now you have $2000 total, and you owe me $1000." So the guy who wants to buy the coconut and bamboo car pays the person who made it, and now has to pay back the extra $1000 that be borrowed plus interest by selling fish that he catches or something. There is now an extra $1000 circulating around in the island economy, the $1000 that the guy with the ledger "created" when he made the loan.

    So the guy who bought the car spends the next month busily catching and selling fish, until he makes $1100, which is enough to pay off his $1000 loan plus the $100 interest. So he goes to the guy with the ledger and says "Now I have the money I owe, I'm out of debt." The guy with the ledger says "Yep, you are." But here's the part that usually confuses people; when the guy who borrowed to buy a car finally pays off his debt, the guy with the ledger doesn't just keep the $1100 for himself. Instead, he only keeps the $100 in interest. The other $1000 that was paid back simply ceases to exist. It is destroyed in order to cancel out the new $1000 that was created when the guy with the ledger made the loan.

    The major problem with this analogy is that it represents the entire banking industry as one entity with a ledger, so it seems like the guy who keeps the ledger has no risk when he loans out the "new" $1000 that he creates, because one would imagine that if the guy who bought the car can't pay back the loan, the guy with the ledger could just shrug and scratch the $1000 debt off the ledger. In order for things to really make sense - and to explain why interest is necessary - you would need to imagine multiple people with ledgers who were all competing, and who can lose money if debts aren't paid back. The banking industry as a whole might have no risk, but individual banks certainly do have risk. The fact that any loss that one bank takes will be balanced out by the gain of another bank, keeping the industry as a whole neutral, will be of little comfort if you're the bank that's doing the losing.
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  19. #18  
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    Quote Originally Posted by Scifor Refugee
    Quote Originally Posted by icewendigo
    1- We all land on an island after a ship wreck no one has money. We start a new society from scratch. We decide to use a ledger for money. Someone says hey I'll take care of it, he writes down 1 million credits for himself and says now you can all borrow from me (at interet) to buy from other people what you need. Someone says hey wait a minute, how come you get a million and we get nothing, the guys says dont worry you can have money too, you just have to work and build me a house and I'll pay you or you can borrow it and pay me back at interest.
    The difference between this scenario and how real-world banks operate is that real banks can't lend out more money than they have on deposit. They don't simply create money and give it to themselves....
    Well, actually that's the issue. They kind of do.

    A bank is allowed to lend out several times the amount of money they have on deposit. It's not uncommon to have ratios legally allowed to be as high as 10 to 1, between the amount of money they lend out, and the amount of money they actually have on deposit.

    So, with a 10:1 ratio, if a bank had $10,000 on deposit, they can legally lend out $100,000. If I borrow $2,000 to buy something, and they guy I gave the money from that loan to decides to deposit with that same bank, then they'll have $12,000 on deposit, and they can lend $118,000 (They'll be able to lend $120,000 again after I repay the loan).


    One interesting question that I had, all through the film: What happens to the banks lending permissions if I don't repay my loan? Do they have to count the lost money as coming out of their deposits? Or do they only lose a fraction of the deposit? Or do they lose nothing?
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  20. #19  
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    They have to write it off, assuming they can't recoup some of the losses (sel the house/car/etc.). A bank's wealth isn't just how much they have in deposit. It's also accounts receivable. When a loan defaults, they lose that monthly income.

    The money on deposit isn't actually their money. The money they loan out is their money. The entire system works on people and businesses trusting the bank. The bank itself has accounts payable (deposits) and accounts receivable (loans). It pays interest to depositors based on its accounts receivable every month. Too many defaults and the bank can't offer a competitive interest rate and everyone moves their money to another bank.
    "A witty saying proves nothing." - Voltaire
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    Quote Originally Posted by kojax
    Well, actually that's the issue. They kind of do.

    A bank is allowed to lend out several times the amount of money they have on deposit. It's not uncommon to have ratios legally allowed to be as high as 10 to 1, between the amount of money they lend out, and the amount of money they actually have on deposit. http://www.thescienceforum.com/posti...quote&p=193318

    So, with a 10:1 ratio, if a bank had $10,000 on deposit, they can legally lend out $100,000. If I borrow $2,000 to buy something, and they guy I gave the money from that loan to decides to deposit with that same bank, then they'll have $12,000 on deposit, and they can lend $118,000 (They'll be able to lend $120,000 again after I repay the loan).
    You have to distinguish between an individual bank and the baking industry as a whole. A specific, individual bank absolutely cannot lend out more money than it has in deposits. If the reserve ratio is 10:1 and someone deposits $100k, then the bank can lend out up to $90k and must keep at least $10k sitting in their vault. It is true that because you are likely to deposit borrowed money in a bank the money will "multiply" throughout the system when your borrowed money shows up as a deposit in someone else's bank, but that's dealing with the banking industry as a whole. A specific bank can't lend out more than 90% of its deposits.
    One interesting question that I had, all through the film: What happens to the banks lending permissions if I don't repay my loan? Do they have to count the lost money as coming out of their deposits? Or do they only lose a fraction of the deposit? Or do they lose nothing?
    If the bank lends you $10k and you don't pay it back, the bank just lost $10k. They were lending you the money that other people deposited, and sooner or later those depositors will want to withdraw their money, so the bank has to replace it with their own funds (which means some of the profit from the people who did pay back their loans.
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    but that's dealing with the banking industry as a whole

    The process which in effect creates money out of thin air(because someone gets money that really belongs to someone else, but was borrowed) has a comparable macro effect;

    In effect the banking industry is inflating the money supply and getting interests for it.

    In theory the created money is canceled out by the loan repayment, but in practice, since most people borrow money for months and years, the time gap allows more money to be loaned out, that is the industry is lending money that was temporarily created by some bank in the system.

    After a while a lot of money in effect created from this process is out there in the economy while a lot of debt is accumulated. But when this situation is reached, the economy is used to/requires the debt to be kept up for the money supply to remain what it is.

    The more debt the more money exists, If debtors suddently and massively repay their loans(not likely), or if a lot of debtors default(possible), or if depositors draw their money out (possible) the money supply shrinks.

    If people could massively repay their loans, the money from the economy would be thrown back into a depsit box(until loaned out again), if debtors defaulted then the books would not balance and people who thought they had money in the bank would find there isnt much left(or none left if you dont get to the 10% reserve first), the same would happen if they all decided to cash in their savings.
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    Does anyone think they have a better alternative? Are you going to forbid banks from lending out deposits?
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    Does anyone think they have a better alternative? Are you going to forbid banks from lending out deposits?
    I'll be watching out for Ellen Brown(author of "web of debt") and Michael Hudson (economist) for ideas that could mitigate the present system's flaws



    For another perspective that proposes to a completely different utopian alternative
    "Zeitgeist Addendum"
    is quite interesing

    (I think its worth making a threat about that specific video)
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    [quote="Scifor Refugee"]
    Quote Originally Posted by icewendigo
    The major problem with this analogy is that it represents the entire banking industry as one entity with a ledger, so it seems like the guy who keeps the ledger has no risk when he loans out the "new" $1000 that he creates, because one would imagine that if the guy who bought the car can't pay back the loan, the guy with the ledger could just shrug and scratch the $1000 debt off the ledger. In order for things to really make sense - and to explain why interest is necessary - you would need to imagine multiple people with ledgers who were all competing, and who can lose money if debts aren't paid back. The banking industry as a whole might have no risk, but individual banks certainly do have risk. The fact that any loss that one bank takes will be balanced out by the gain of another bank, keeping the industry as a whole neutral, will be of little comfort if you're the bank that's doing the losing.
    Everyone is holding each other ransom for loans they can't pay. The guy with the ledger don't just shrug it off and scratch $1000 debt off the ledger, he will pursue the matter until the guy who borrowed is left only with his boxers. Now why did the smart ass guy who is left with only his boxers as property be so stupid to get a loan for something he doesn't even have the ability to pay? At the same time why didn't the guy with the ledger just let it go instead of pursuing the matter?
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    Quote Originally Posted by Scifor Refugee
    Does anyone think they have a better alternative? Are you going to forbid banks from lending out deposits?
    Probably better to focus on revising what we've got. I think inflation via banks wouldn't be such a bad thing so long as banks weren't the only institution allowed to create inflation. If interest is going to be paid on loans, but the currency doesn't exist for all the loans to be repaid, then we're going to hit periodic crises, when it comes time for people to pay the piper.

    Maybe the government should be allowed to inflate the currency in a way that's proportional to the expected interests? That might provide the rest of us with a little bit of tax relief.
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    Quote Originally Posted by kojax

    Well, actually that's the issue. They kind of do.

    A bank is allowed to lend out several times the amount of money they have on deposit. It's not uncommon to have ratios legally allowed to be as high as 10 to 1, between the amount of money they lend out, and the amount of money they actually have on deposit.

    So, with a 10:1 ratio, if a bank had $10,000 on deposit, they can legally lend out $100,000. If I borrow $2,000 to buy something, and they guy I gave the money from that loan to decides to deposit with that same bank, then they'll have $12,000 on deposit, and they can lend $118,000 (They'll be able to lend $120,000 again after I repay the loan).
    I think kojax is right here. After all, remember that from the point of view of the bank, the loans it gives out are assets, whereas the deposits we put in are debt. After all, when a bank loans someone 200K to buy a house, the bank expects to receive a flow of interest payments over many years in addition to the return of the original principle. So from the bank's perspective, giving out a loan is a lot like investing in a risky bond.

    On the flip side, when we deposit money into a bank, the bank pays us a stream of interest payments (at a lower rate). Moreover, the money we deposit doesn't belong to the bank--the bank has to return that money to us when we request it. So this is a form of debt for the bank.

    Someone I met in a finance class had what he thought was a great alternative for the TARP program. Why not take that money and give it to the public? They'll end up depositing that money in banks anyway, and that will make the banks solvent again.

    Now, given what I just said, this sounds like exactly the OPPOSITE thing you should do if saving banks is your concern. Because increasing the deposits in the bank just increases its debt. (I suppose you could argue that homeowners would use the money to repay their mortgages, but then you should give the money to homeowners, not to everyone. And anyway, this wasn't what he was proposing.)
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    Quote Originally Posted by Numsgil
    Quote Originally Posted by marcusclayman
    the average per capita income doesn't take into account the difference between economic classes

    what is "average" doesn't mean it is "common"

    eliminate the top 10% of the income, and that 8kish figure would probably drop in half if not more.
    Definitely. Most wealth is held by very few people. Distribution is always a problem with Capitalism.

    But over the long term, a rising tide really does lift all ships. The median American is far richer than their grandparents or great grandparents were. (I don't have data to back that up. But it should be fairly self evident.)
    The problem is that, once a large amount of wealth is concentrated in one place, your GDP starts to get measured only in terms of things those people value. What wealthy people value is mostly measured in labor intensive stuff, like consumer electronics, cars, boats, and back rubs. That's where all the demand is, and those are the needs we're doing a good job of satisfying for those who demand them.

    Poorer people mostly just want food and shelter, and maybe health insurance. They tend to do as much of their own work as they can, so they don't really value the service industry (except health insurance). Most of their needs are limited by static resources, like land.

    However: The word "demand" is deceptive, because it is defined only in terms of people who both want something, and can pay. If a person "demands" something, but can't pay, they are economically invisible.

    Our system is designed to create invisible people.
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    If a poor family can't afford a Ferrari, in a real economic sense they have 0 demand for it. Supply vs. Demand is an aggregate of the entire market's supply vs. demand. That's why as you lower the cost of something the demand increases. It has far less to do with people buying 5 iPhones and more to do with previously iPhone-less people buying in.

    So yes, the GDP is far from a perfect measurement of wealth. There are all sorts of nasty problems with GDP. The one you mention is fairly trivial, compared to problems like not taking into account ecological damage, or happiness of the population.

    There are some alternative measurements that haven't quite caught on yet: GPI, HPI, GNH, etc.

    But generally speaking GDP hasn't been replaced because for all its faults, it really does tend to capture the wealth of an economy. Especially if you do GDP per capita. When it goes up, other economic indices tend to go up, and when it goes down, they tend to go down.
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    Sadly this is true as what we are seeing with the collapse of the banking system that led to the current meltdown. And it can only happened because the system that we put in place to control it was simply ignored.
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    Quote Originally Posted by Numsgil
    If a poor family can't afford a Ferrari, in a real economic sense they have 0 demand for it. Supply vs. Demand is an aggregate of the entire market's supply vs. demand. That's why as you lower the cost of something the demand increases. It has far less to do with people buying 5 iPhones and more to do with previously iPhone-less people buying in.
    If that same family can't afford food, then they will also show up on all the indicators as having 0 demand for it.

    A capitalist economy always looks wonderful, because you're free to ignore the people who have "0 demand" for things as though they didn't exist.
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    No family can have 0 demand for food for very long

    Subsistence living means you do have enough food, after all. It's just a bit bland. So things like caviar are over represented since the rich can afford large prices. But there isn't enough caviar to go to everyone, so the price helps moderate and prevent shortages.

    If there wasn't enough food for everyone, people would start dying until there was. Pre industrial societies demonstrated this fairly well. (That Malthusian population dynamic again).
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    Quote Originally Posted by Numsgil
    No family can have 0 demand for food for very long
    That's very efficient in an inhuman-monster sort of way.

    Subsistence living means you do have enough food, after all. It's just a bit bland. So things like caviar are over represented since the rich can afford large prices. But there isn't enough caviar to go to everyone, so the price helps moderate and prevent shortages.

    What often happens is that they live for a very long time under the subsistence level, taking in a fraction of their real nutritional needs. However, they'll still show up on the indicators as eating full meals, because they only buy as much as they "demand".


    If there wasn't enough food for everyone, people would start dying until there was. Pre industrial societies demonstrated this fairly well. (That Malthusian population dynamic again).
    You don't see a problem with this?

    On the smaller scale, the penalties that go with breaking a society's laws mean little or nothing to a starving person. How, then, do you coerce somebody into accepting their fate? Rather than simply die, most people are going to put up a fight, one way or the other. Then your system fails because people won't adhere to it.

    In the bigger picture, you've got to be really really confident those people will never get hold of nukes, because the threat of mutually assured destruction means nothing to somebody who's already assured of destruction.
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    Quote Originally Posted by kojax
    Subsistence living means you do have enough food, after all. It's just a bit bland. So things like caviar are over represented since the rich can afford large prices. But there isn't enough caviar to go to everyone, so the price helps moderate and prevent shortages.

    What often happens is that they live for a very long time under the subsistence level, taking in a fraction of their real nutritional needs. However, they'll still show up on the indicators as eating full meals, because they only buy as much as they "demand".
    If they're consuming only a fraction of their actual needs, they'll die. What I'm saying is that that state can't exist for very long. Either the poor die, or they revolt, or the economy picks up to the point they can feed themselves (or the famine ends, etc. etc.)

    If there wasn't enough food for everyone, people would start dying until there was. Pre industrial societies demonstrated this fairly well. (That Malthusian population dynamic again).
    You don't see a problem with this?
    There's a difference between ought and is. Really it was the reality of the human condition for the last few hundred thousand years. What I'm saying is that you shouldn't lament not reaching the finish line when you've only dashed 70 yards. It's a slow process moving from Malthusian population dynamics to a post industrial society. We're still moving in that direction, which is good. But we're not there yet. And there really isn't an easy way to get there.

    There have always been poor people. The poor of today are not poorer than the poor of yesteryear. It's only been in the last 250 years or so that we've started decreasing the percentage of the human population at subsistence level. Wealth is increasing, and diffusing to greater and greater numbers of people.

    On the smaller scale, the penalties that go with breaking a society's laws mean little or nothing to a starving person. How, then, do you coerce somebody into accepting their fate? Rather than simply die, most people are going to put up a fight, one way or the other. Then your system fails because people won't adhere to it.

    In the bigger picture, you've got to be really really confident those people will never get hold of nukes, because the threat of mutually assured destruction means nothing to somebody who's already assured of destruction.
    There have been many "proletariat" insurrections. The October Revolution, for instance. Really any society which can't feed its people is doomed to failure. Further back there was the French Revolution ("let them eat cake"). Some fascist revolutions based on that same theme, too (see the Spanish Civil War).

    But there are few societies today like that. Some places in Africa and Asia, but the rest of the world is feed well enough not to revolt for food. Not to say there isn't revolts, just that they tend to be motivated differently (see Iran). Which is a sign of progress.
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    Quote Originally Posted by Numsgil
    Quote Originally Posted by kojax
    Subsistence living means you do have enough food, after all. It's just a bit bland. So things like caviar are over represented since the rich can afford large prices. But there isn't enough caviar to go to everyone, so the price helps moderate and prevent shortages.

    What often happens is that they live for a very long time under the subsistence level, taking in a fraction of their real nutritional needs. However, they'll still show up on the indicators as eating full meals, because they only buy as much as they "demand".
    If they're consuming only a fraction of their actual needs, they'll die. What I'm saying is that that state can't exist for very long. Either the poor die, or they revolt, or the economy picks up to the point they can feed themselves (or the famine ends, etc. etc.)
    What can happen is that the bottom 2% of a society can be starving, and people are just constantly being pushed into that 2% again and again. It sounds like that sort of thing is exactly what was happening pre-industrial.

    So, your current 2% starve, and then a new group of people take their place and starve, and etc... Since new kids are being born everyday, the cycle never really ends. You just thank your gods/stars/dice if you're one of the people who has food, and live in biting fear everyday of maybe getting fired.

    The trouble is that fear does things to peoples' minds.



    If there wasn't enough food for everyone, people would start dying until there was. Pre industrial societies demonstrated this fairly well. (That Malthusian population dynamic again).
    You don't see a problem with this?
    There's a difference between ought and is. Really it was the reality of the human condition for the last few hundred thousand years. What I'm saying is that you shouldn't lament not reaching the finish line when you've only dashed 70 yards. It's a slow process moving from Malthusian population dynamics to a post industrial society. We're still moving in that direction, which is good. But we're not there yet. And there really isn't an easy way to get there.

    There have always been poor people. The poor of today are not poorer than the poor of yesteryear. It's only been in the last 250 years or so that we've started decreasing the percentage of the human population at subsistence level. Wealth is increasing, and diffusing to greater and greater numbers of people.
    The problem is that those people have the option to become terrorists today, whereas in previous eras no such option existed. It has become technologically impossible for us to fully suppress our poor the way they suppressed theirs.

    There are just too many ways for a sufficiently large group of angry poor people to pool their efforts and do serious harm to the rest of us.

    On the smaller scale, the penalties that go with breaking a society's laws mean little or nothing to a starving person. How, then, do you coerce somebody into accepting their fate? Rather than simply die, most people are going to put up a fight, one way or the other. Then your system fails because people won't adhere to it.

    In the bigger picture, you've got to be really really confident those people will never get hold of nukes, because the threat of mutually assured destruction means nothing to somebody who's already assured of destruction.
    There have been many "proletariat" insurrections. The October Revolution, for instance. Really any society which can't feed its people is doomed to failure. Further back there was the French Revolution ("let them eat cake"). Some fascist revolutions based on that same theme, too (see the Spanish Civil War).
    Those tend to work out a lot better in countries who's government isn't willing to massacre its own people, or in eras prior to the invention of the fully automatic machine gun, or tanks and helicopters.

    The areas of the world that are experiencing the worst poverty are those where the government has a technological military advantage over its people, and a poor sense of "human rights". That's also where a lot of your terrorist groups draw on for their membership.


    But there are few societies today like that. Some places in Africa and Asia, but the rest of the world is feed well enough not to revolt for food. Not to say there isn't revolts, just that they tend to be motivated differently (see Iran). Which is a sign of progress.
    Revolts really aren't much of an issue. What concerns me is massive crime, that makes economic progress difficult or impossible, or terrorism. Terrorism is the main one, because sooner or later someone will inevitably get a nuclear weapon, and the cycle, if unbroken will just keep going.

    As long as there are people who have no hope, there will be terrorists. The only cure is to make it so that everyone has hope, so at least every large population group has hope, maybe not every individual.

    There is no other cure.
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    Quote Originally Posted by kojax
    There's a difference between ought and is. Really it was the reality of the human condition for the last few hundred thousand years. What I'm saying is that you shouldn't lament not reaching the finish line when you've only dashed 70 yards. It's a slow process moving from Malthusian population dynamics to a post industrial society. We're still moving in that direction, which is good. But we're not there yet. And there really isn't an easy way to get there.

    There have always been poor people. The poor of today are not poorer than the poor of yesteryear. It's only been in the last 250 years or so that we've started decreasing the percentage of the human population at subsistence level. Wealth is increasing, and diffusing to greater and greater numbers of people.
    The problem is that those people have the option to become terrorists today, whereas in previous eras no such option existed. It has become technologically impossible for us to fully suppress our poor the way they suppressed theirs.

    There are just too many ways for a sufficiently large group of angry poor people to pool their efforts and do serious harm to the rest of us.
    The world was less tame in years past then you seem to think. Think of Europe post Rome: the poor would raid each other over and over and over, fighting over basic subsistence level goods. Vikings are an excellent example of this. They weren't as interested in territory or empire as they were in just robbing the same places over and over.

    A more modern example is piracy. Piracy was a major concern in the Mediterranean at least as late as the early 1800s (Barbary pirates). Not to mention the rich tradition of Caribbean piracy. And of course the piracy in Somalia.

    Terrorism is less of a threat, I think, since it requires a dogmatic, selfless determination. Far easier to be resentful and greedy and just steal what you want. This works on less grandiose scales, too. Crime rates tend to be higher in poorer income areas.

    Revolts really aren't much of an issue. What concerns me is massive crime, that makes economic progress difficult or impossible, or terrorism. Terrorism is the main one, because sooner or later someone will inevitably get a nuclear weapon, and the cycle, if unbroken will just keep going.

    As long as there are people who have no hope, there will be terrorists. The only cure is to make it so that everyone has hope, so at least every large population group has hope, maybe not every individual.

    There is no other cure.
    Terrorism is less of an issue than you make it out to be. Terrorism just sticks out because it's, well, terrifying. That's really the point. But in terms of economic damage and loss of life it's really pretty minor compared to more mundane issues like car accidents, heart disease, natural disasters, etc.

    A nuke in New York or some likewise Hellish nightmare scenario isn't the end of the world. Terribly damaging economically and lots of loss of life, but recoverable. Take the San Francisco quake that leveled most of the city. Or the huge Chicago fire.

    If you take the damage and the chance it would actually happen (slim, nukes are expensive), and compare it to the more mundane (and thus far more common) threat of poverty like lawlessness, revolts, and theft, I think the real danger of poverty should be pretty clear. Consider most of Africa, where poverty means civil war, warlords, genocide, piracy, etc.
    "A witty saying proves nothing." - Voltaire
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    Quote Originally Posted by Numsgil
    Terrorism is less of a threat, I think, since it requires a dogmatic, selfless determination. Far easier to be resentful and greedy and just steal what you want. This works on less grandiose scales, too. Crime rates tend to be higher in poorer income areas.
    True, but I think terror grows as an indirect expression of a culture's feelings of hopelessness. I think terrorists mostly feel that they're serving something bigger than themselves, something that wouldn't have a voice without them.

    For example: advocating for the Palestinians, who largely suffer a very crushing kind of poverty. Maybe on the individual level, an average pali is still afraid of the law enough to obey it, but you know they're cheering on whoever wants to commit violent acts on their behalf. Those suicide bombers go to their death knowing their names will be remembered.



    Revolts really aren't much of an issue. What concerns me is massive crime, that makes economic progress difficult or impossible, or terrorism. Terrorism is the main one, because sooner or later someone will inevitably get a nuclear weapon, and the cycle, if unbroken will just keep going.

    As long as there are people who have no hope, there will be terrorists. The only cure is to make it so that everyone has hope, so at least every large population group has hope, maybe not every individual.

    There is no other cure.
    Terrorism is less of an issue than you make it out to be. Terrorism just sticks out because it's, well, terrifying. That's really the point. But in terms of economic damage and loss of life it's really pretty minor compared to more mundane issues like car accidents, heart disease, natural disasters, etc.
    It's also economically disruptive. People get scared, and then they get disenfranchised because they think it doesn't matter what they build. The terrorists are just going to blow it up anyway. They focus on protecting what they've got instead of producing more.


    A nuke in New York or some likewise Hellish nightmare scenario isn't the end of the world. Terribly damaging economically and lots of loss of life, but recoverable. Take the San Francisco quake that leveled most of the city. Or the huge Chicago fire.
    In terms of infrastructure. I agree that you're totally right. In terms of the political ability of people to handle it, pick themselves up and move forward, natural disasters and accidents are way easier to overcome than attacks.


    If you take the damage and the chance it would actually happen (slim, nukes are expensive), and compare it to the more mundane (and thus far more common) threat of poverty like lawlessness, revolts, and theft, I think the real danger of poverty should be pretty clear. Consider most of Africa, where poverty means civil war, warlords, genocide, piracy, etc.
    True, very true. Social liberties diminish when there's poverty because the middle class is less able to mobilize. They're too busy just surviving to be able to participate in clubs and march in protests .... etc... or afford a gun.
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