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Author Topic: A Resource Based Economy  (Read 288300 times)
kjj
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August 30, 2011, 07:42:00 PM
 #741

Reply to jtimon, not quoting for obvious reasons.

One thing that I don't like about that equation is that it is too simple.  If we ignore other currencies, the left side is fine.  But the right side is nonsense, it should really be:  (P1*Q1+P2*Q2+...+PN*QN)  You can create the quantity P*Q which has the same value, but you are making a huge mistake if you then think of P or Q as having independent meaning outside the product.

I don't use time-preference as defined in a textbook, I just mean "preference for one time over another".  If you are quoting a formal definition widely understood by economists, then the misunderstanding is my fault for not brushing up on the lingo.  Also, if that is the case, economists are even nuttier than I thought.

I gather now the cause of my misunderstanding on the island story.  You did say "money with demurrage", and I totally missed the "with demurrage" part.  The idea of money with rot built in isn't natural to me.  The history of money is a cycle where humanity tries to make money as nearly indestructible as possible, then politicians invent inflation which first rots money, then replaces it with junk, then rots the junk.  Then there is a great unhappiness, and the survivors start the cycle over.

In the baker example, I'm saying that a baker might be better off by letting the bread rot rather than lending it out, whether for interest or not.  Giving it away wasn't even a consideration.

That last two bits tie together very nicely.  I was going to say that a rational lender and a rational borrower would strike the exact same deal under demurrage as they do under inflation, or even deflation.  Then I went off and read the link that you posted again, and I got the same feeling that I had at the end of my previous post:  Once again, you are so close that you could reach out and touch it, but you still don't see it.

Inflation and deflation are neutral concepts.  Neither one has any meaning at all.  If someone added a zero to all physical currency, multiplied all bank accounts by 10, and multiplied all prices by 10, we would hardly notice.  The same would work if they divided everything by 10.  The same works if it happens every night, or every hour, or continuously.

The distortion in the world is clearly not inflation, it is with the specific way that inflation is implemented, first in one place and then flowing out to the rest of the world unevenly.

You clearly dislike inflation, but you are putting all of your efforts into replacing it with inflation-by-another-name (aka, demurrage) when you should instead be thinking about how to change the political structure that hands out favor in one place at the expense of the rest of the world.

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August 31, 2011, 03:21:04 AM
 #742

One thing that I don't like about that equation is that it is too simple.  If we ignore other currencies, the left side is fine.  But the right side is nonsense, it should really be:  (P1*Q1+P2*Q2+...+PN*QN)  You can create the quantity P*Q which has the same value, but you are making a huge mistake if you then think of P or Q as having independent meaning outside the product.
I'm no economist, but that's always bothered me, too.  Especially since then what sense does it make to take the time derivative of the product (and use the product rule)?  This whole business is the basis for the quantity theory of money.

And if you can't do this seemingly arbitrary and bogus aggregation, then you can't take time derivatives at all, since the sets of Pi and Qi are just discrete collections of numbers for given time intervals, and for the next time interval, the elements of the set are completely unrelated to those from the initial one.  Thus, there can be no theory derived from the equation of exchange that has any predictive power.

In my limited knowledge of it, it seems like while the quantity theory of money has some value in predicting long-term trends, it's dangerous when used for making short-term predictions.
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August 31, 2011, 10:41:32 AM
 #743

My argument shows that systematic bankruptcies aren't an inevitable result of compounding interest with a fixed base money supply, not that they aren't ever ensured, even in the most absurdly unrealistic cases.

That businesses which can't turn enough of a profit to finance their debts get new management or go bankrupt is a good thing, as the supply of credit is finite, and this process optimizes its allocation for economic efficiency.  But it's not as though there must exist indebted businesses in the economy that aren't profitable enough to finance their debts.

I mostly agree with you. I think that business that can't sustain themselves should go bankrupt or change their management. But they don't really need profits. If they can pay all their costs with their inputs, it's all fine, even if they don't produce profit.
The bold sentence is key for my claim. Even when the money supply is fixed, the supply of credit is not finite. Think of systems like LETS, for example, they're trading directly with credit instead of money. IOUs can be used for trade and debts are sold as if they were capital. Price inflation can appear with a fixed money supply, because the credit instruments are also biding for products.
I still haven't proved that credit must necessarily grow with time, but I proved that if a single lender with enough time wants to, he can make make the debts to him grow exponentially through interest.  
If the total credit in the system grows faster than the economy, price inflation appears. Price inflation also rises interest rates, ruining the plans of some investors.
If the total credit in the system grows slower than the economy, price deflation appears. Price deflation progressively devalues capital and discourages borrowing and investing.
Deflation stops growth, but interest needs growth or inflation. It actually requires growth, because inflation will be factored in the nominal interest, so it's like a temporal patch what capital-money really needs, which is growth.
And when the capital yields of certain type (say housing) equal the interest rates, further growth in that sector is not possible. The sector stops growing or becomes a bubble.
 
It's either real growth, unsustainable credit growth with inflation or money is slows its circulation and you have deflation. The destruction caused by deflation will enable later growth for another cycle.

I'm not sure if all this serves you. Feel free to ask or deny whatever you want so I can focus in that point.
 

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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August 31, 2011, 11:44:27 AM
 #744

The idea of money with rot built in isn't natural to me.

The history of money is a cycle where humanity tries to make money as nearly indestructible as possible, then politicians invent inflation...

The history of money is more complex than that. Not that I agree with all the opinions expressed in the following links, but just take a look:
http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%93-an-interview-with-economic-anthropologist-david-graeber.html
http://www.webisteme.com/blog/?p=384

In the baker example, I'm saying that a baker might be better off by letting the bread rot rather than lending it out, whether for interest or not.  Giving it away wasn't even a consideration.

Then we disagree here. If we assume there's no risk in the loan or the risk is properly factored in, the baker is better if he loan his bread instead of letting it perish.

That last two bits tie together very nicely.  I was going to say that a rational lender and a rational borrower would strike the exact same deal under demurrage as they do under inflation, or even deflation.  Then I went off and read the link that you posted again, and I got the same feeling that I had at the end of my previous post:  Once again, you are so close that you could reach out and touch it, but you still don't see it.

Then you haven't understood my example. Demurrage allows capital yields to drop below the basic interest that you can extract from the liquidity itself. On the other hand, inflation increases the opportunities of making money out of trade and speculation.

Inflation and deflation are neutral concepts.  Neither one has any meaning at all.  If someone added a zero to all physical currency, multiplied all bank accounts by 10, and multiplied all prices by 10, we would hardly notice.  The same would work if they divided everything by 10.  The same works if it happens every night, or every hour, or continuously.

I see this, but they act different when they are added at certain rate in time. They affect the financial market in that case.

The distortion in the world is clearly not inflation, it is with the specific way that inflation is implemented, first in one place and then flowing out to the rest of the world unevenly.

This is key. Unlike inflation, demurrage affects every money holder equally and instantly.

You clearly dislike inflation, but you are putting all of your efforts into replacing it with inflation-by-another-name (aka, demurrage) when you should instead be thinking about how to change the political structure that hands out favor in one place at the expense of the rest of the world.

My lack of faith in politics is what made me reject Gesell's freigeld for some time. While reading anarcho-capitalist literature, I realized that the money issuance must be taken away from the hands of the government.
I first focused in mutual credit systems like LETS as the only private way to make money without interest. The interest disappear here by removing its scarcity instead of its perfect durability.
Then I discovered bitcoin. And short after that, Ripple, the ultimate mutual credit tool. Unlike LETS, ripple is scalable.
With the block chain, the possibility of scarce money with demurrage out of the hands of the state becomes possible. That's why I advocate freicoin.
Although gold is better than the current system, Gesell convinced me that gold-money is flawed. This is the central point of our disagreement. 
I wrote a little story to show my point against capital-money.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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August 31, 2011, 11:53:01 AM
 #745

About the equation of exchange, yes, kjj formula is more accurate. And even if the original could be used for more than just theoretical reasoning, you can't have the exact measures of P, just estimates of dP. Within freicoin, I don't advocate for an elastic money supply to attain stable prices, but for a fixed monetary base (even more fixed than bitcoin's thanks to demurrage's destruction recycling of lost wallets).
Anyway, price inflation and deflation are still useful monetary concepts despite being abstract.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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August 31, 2011, 02:52:44 PM
 #746

The history of money is more complex than that. Not that I agree with all the opinions expressed in the following links, but just take a look:
http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%93-an-interview-with-economic-anthropologist-david-graeber.html
http://www.webisteme.com/blog/?p=384

The first article is quite good.  But money only had to be invented once, more or less.  That it started out as a way to standardize debt isn't really important, because eventually the gold -> paper -> bloodshed cycle took root.  The obvious examples are Rome, France (revolution era), and everyone on the planet today.

The second link less so.  I don't think that the author realizes that the system he is describing is almost identical to the system we have now.  The main differences that I see are that he proposes rolling back the whole specialization/division-of-labor thing that we've been working on for the last couple thousand years, at least in regards to creditworthiness assessment, and socializing the costs of bad lending decisions.  And shit, we've pretty much done the second part already.

In the baker example, I'm saying that a baker might be better off by letting the bread rot rather than lending it out, whether for interest or not.  Giving it away wasn't even a consideration.

Then we disagree here. If we assume there's no risk in the loan or the risk is properly factored in, the baker is better if he loan his bread instead of letting it perish.

Possibly.  I don't think that the situation could be fully analyzed in advance, it would really depend on a lot of details specific to the time and place.

That last two bits tie together very nicely.  I was going to say that a rational lender and a rational borrower would strike the exact same deal under demurrage as they do under inflation, or even deflation.  Then I went off and read the link that you posted again, and I got the same feeling that I had at the end of my previous post:  Once again, you are so close that you could reach out and touch it, but you still don't see it.

Then you haven't understood my example. Demurrage allows capital yields to drop below the basic interest that you can extract from the liquidity itself. On the other hand, inflation increases the opportunities of making money out of trade and speculation.

Except that inflation and demurrage are different words for the exact same thing.  They both mean "money is worth less tomorrow than today".  The mechanism isn't important, unless you are talking about specific implementations rather than general concepts.  And if you are talking about specific implementations, I will agree that the one we use today sucks, but the sucking is political, and merely changing the name won't prevent the exact same thing from happening after you change the name.

Also, the thing that you call the basic interest rate is the lowest interest rate that people are willing to pay to finance good productive ventures.  Capital yields can't fall below that level by definition.  Or more accurately, if it does, it is an economic loss compared to what it should have been.

And finally, trade and speculation aren't evil.  They help capital find the right places to be.  They only look evil right now because the men with guns (government) are letting their friends abuse the system to do things that sorta look like trade and speculation, but are actually robbery.

The distortion in the world is clearly not inflation, it is with the specific way that inflation is implemented, first in one place and then flowing out to the rest of the world unevenly.

This is key. Unlike inflation, demurrage affects every money holder equally and instantly.

I don't believe this for a second.  As long as the broken system is allowed to exist, it will seek (and find!) ways around obstacles.  The only way it could work is by taking power away from those that abuse it.  And if you've cured the disease (abuse), why replace one of the symptoms of abuse (inflation) with a synonym (demurrage)?

You clearly dislike inflation, but you are putting all of your efforts into replacing it with inflation-by-another-name (aka, demurrage) when you should instead be thinking about how to change the political structure that hands out favor in one place at the expense of the rest of the world.

My lack of faith in politics is what made me reject Gesell's freigeld for some time. While reading anarcho-capitalist literature, I realized that the money issuance must be taken away from the hands of the government.
I first focused in mutual credit systems like LETS as the only private way to make money without interest. The interest disappear here by removing its scarcity instead of its perfect durability.
Then I discovered bitcoin. And short after that, Ripple, the ultimate mutual credit tool. Unlike LETS, ripple is scalable.
With the block chain, the possibility of scarce money with demurrage out of the hands of the state becomes possible. That's why I advocate freicoin.
Although gold is better than the current system, Gesell convinced me that gold-money is flawed. This is the central point of our disagreement. 
I wrote a little story to show my point against capital-money.

Sure gold money is flawed.  It is just much less flawed than anything else I've ever seen proposed.  Humanity always returns to gold after a bloody revolution because it can't be abused, which is important when the revolution was against those that had been abused the previous paper issue.

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August 31, 2011, 06:20:02 PM
Last edit: August 31, 2011, 09:30:12 PM by jtimon
 #747

The history of money is more complex than that. Not that I agree with all the opinions expressed in the following links, but just take a look:
http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%93-an-interview-with-economic-anthropologist-david-graeber.html
http://www.webisteme.com/blog/?p=384

The first article is quite good.  But money only had to be invented once, more or less.  That it started out as a way to standardize debt isn't really important, because eventually the gold -> paper -> bloodshed cycle took root.  The obvious examples are Rome, France (revolution era), and everyone on the planet today.

The second link less so.  I don't think that the author realizes that the system he is describing is almost identical to the system we have now.  The main differences that I see are that he proposes rolling back the whole specialization/division-of-labor thing that we've been working on for the last couple thousand years, at least in regards to creditworthiness assessment, and socializing the costs of bad lending decisions.  And shit, we've pretty much done the second part already.

Mutual credit systems aren't barter.
There's no socializing of bad lending decisions in Ripple, every node takes full responsability of any IOU he issues or accepts. It's just more resilient because the financial network is not hierarchical like the one we have today.

Except that inflation and demurrage are different words for the exact same thing.  They both mean "money is worth less tomorrow than today".  The mechanism isn't important, unless you are talking about specific implementations rather than general concepts.  And if you are talking about specific implementations, I will agree that the one we use today sucks, but the sucking is political, and merely changing the name won't prevent the exact same thing from happening after you change the name.
So you agree that expocoin would be as bad as the current system, but you still think expocoin and freicoin would be the same thing.

Also, the thing that you call the basic interest rate is the lowest interest rate that people are willing to pay to finance good productive ventures.  Capital yields can't fall below that level by definition.  Or more accurately, if it does, it is an economic loss compared to what it should have been.

Why building a factory that doesn't yields like capital but covers all its costs over its lifetime shouuld be considered an economical loss?

And finally, trade and speculation aren't evil.  They help capital find the right places to be.  They only look evil right now because the men with guns (government) are letting their friends abuse the system to do things that sorta look like trade and speculation, but are actually robbery.

I didn't say it's evil.
But the fact that liquidity is a service that the money holder get for free from all the money users, enables a "liquidity yield", and interest rates and capital yields must compete with it.
This "liquidity yield" prevents further investments when capital yields drop below it.
Demurrage charges directly for liquidity, but the money holder can dodge inflation as he see it diluting from certain parts of the economy.
This is why demurrage pushes capital yields and basic interest down to zero and inflation doesn't.

As long as the broken system is allowed to exist, it will seek (and find!) ways around obstacles.  The only way it could work is by taking power away from those that abuse it.

The best way to change the current monetary system is relying on it as less as posible rather than going out to the squares in my opinion.

And if you've cured the disease (abuse), why replace one of the symptoms of abuse (inflation) with a synonym (demurrage)?

Because interest is another disease that enables abuse and prevents capital accumulation that can be cured through demurrage but not with inflation.
If you think that inflation and demurrage are equivalent, either you don't believe demurrage can lower (real) interest rates or you think inflation can do it too.
I assume you know inflation rises nominal interest rates.
Say 5% inflation expocoin produces 10% nominal interest rates (5% real interest rates).
Say bitcoin produces 5% nominal interest rates (5% real interest rates).
You say 5% demurrage freicoin would produce 5% nominal interest rates (5% real interest rates).
Am I right?
Remember freicoin has a fixed monetary base and if in this example bitcoin has "stable prices", freicoin too.

If this is your claim, why lenders can demand the same interest when their money rots (freicoin) that when it doesn't (bitcoin)?

Sure gold money is flawed.  It is just much less flawed than anything else I've ever seen proposed.  Humanity always returns to gold after a bloody revolution because it can't be abused, which is important when the revolution was against those that had been abused the previous paper issue.

Yes, I totally agree. Gold is the best cash-money people could have in the past if they wanted to avoid abuse.
But we have bitcoin now, and chain coins don't need to be everlasting like gold. When cash-money is everlasting, interest is unavoidable. We can have cash non-manipulable money that rots.
We don't have to rely completely on credit money like ripple (which can never be as liquid as cash) if we want to avoid interest.
We need a free financial market, but the optimal interest level is 0%, that means that we have built all the "capital" that we should to fully satisfy the demand for the products of that capital.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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August 31, 2011, 06:56:40 PM
 #748

My argument shows that systematic bankruptcies aren't an inevitable result of compounding interest with a fixed base money supply, not that they aren't ever ensured, even in the most absurdly unrealistic cases.

That businesses which can't turn enough of a profit to finance their debts get new management or go bankrupt is a good thing, as the supply of credit is finite, and this process optimizes its allocation for economic efficiency.  But it's not as though there must exist indebted businesses in the economy that aren't profitable enough to finance their debts.

I mostly agree with you. I think that business that can't sustain themselves should go bankrupt or change their management. But they don't really need profits. If they can pay all their costs with their inputs, it's all fine, even if they don't produce profit.
The bold sentence is key for my claim. Even when the money supply is fixed, the supply of credit is not finite.
Practically speaking, there are definitely limits that, ideally, kick in smoothly with rising interest rates.
Quote
Think of systems like LETS, for example, they're trading directly with credit instead of money. IOUs can be used for trade and debts are sold as if they were capital. Price inflation can appear with a fixed money supply, because the credit instruments are also biding for products.
I still haven't proved that credit must necessarily grow with time, but I proved that if a single lender with enough time wants to, he can make make the debts to him grow exponentially through interest.
And if he does this, it means he's not demanding any interest payments, and effectively continuing to lend to this person.  He can keep doing this forever and diminish the real value of the bond to zero*, sure.  But so what?  It's his problem for being a stupid lender.  It doesn't matter what the nominal value of the bond is.  I could write you a bond right now for 100 trillion USD.  Obviously worthless to you, and wouldn't cause the slightest problem for the economy.

* Edit: The "real value" of the bond is the portion that the borrower will end up paying back in a bankruptcy proceeding.  Not necessarily zero.
Quote

If the total credit in the system grows faster than the economy, price inflation appears. Price inflation also rises interest rates, ruining the plans of some investors.
If the total credit in the system grows slower than the economy, price deflation appears. Price deflation progressively devalues capital and discourages borrowing and investing.
I'll grant you that deflation discourages some borrowing, but I would argue only that for frivolous consumption and investments that can't keep up with the overall long-term growth rate of the economy (plus interest and various risk and volatility factors).  It does not discourage pure saving (hoarding), which benefits those competing for the goods in the economy whose prices borrowers would have been bidding up, had they been loaned the hoarded money.  So to me it's not clear from pure reasoning if deflation is a net bad, good, or neutral for the economy.  You need data.
Quote
Deflation stops growth,
Reality doesn't agree.  For the data, I'll drop this paper on you again: http://ideas.repec.org/p/fip/fedmsr/331.html.
Quote
but interest needs growth or inflation. It actually requires growth, because inflation will be factored in the nominal interest, so it's like a temporal patch what capital-money really needs, which is growth.
Requires growth for what?  To avoid bankruptcies?  I think you're thinking too much in terms of averages, and it's clouding what could be a clearer picture.  Ignoring consumer lending for now, as long as there are profit opportunities out there, and lenders smart enough to recognize them and avoid lending to losing businesses, then bankruptcies can in principle be avoided completely.  So since the total amount of issued credit can and should be expected to vary with the total amount of visible profit opportunities, I think we can conclude that the bankruptcy rate is solely a function of the foresight of lenders.

And besides, not all businesses are burdened by debt, so your averaged picture is wrong right away - these businesses could be operating at losses great enough to outweigh the gains made by a bankruptcy-free debt-burdened sector, resulting in an overal negative growth rate without any need for systematic bankruptcies.
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August 31, 2011, 11:20:07 PM
 #749

Even when the money supply is fixed, the supply of credit is not finite.
Practically speaking, there are definitely limits that, ideally, kick in smoothly with rising interest rates.

The only limit is what creditors think debtors can pay back. And creditors are not necessarily lenders, they can be suppliers not being paid when they deliver. Creditors can provide any good or service and ask for any good or service (including money) in return in the future.

Quote
If a single lender with enough time wants to, he can make make the debts to him grow exponentially through interest.
And if he does this, it means he's not demanding any interest payments, and effectively continuing to lend to this person.  He can keep doing this forever and diminish the real value of the bond to zero*, sure.  But so what?  It's his problem for being a stupid lender.  It doesn't matter what the nominal value of the bond is.  I could write you a bond right now for 100 trillion USD.  Obviously worthless to you, and wouldn't cause the slightest problem for the economy.

* Edit: The "real value" of the bond is the portion that the borrower will end up paying back in a bankruptcy proceeding.  Not necessarily zero.

I didn't say lending to the same borrower until the end of time, but keep always lending the capital and the gains, maybe to more and more borrowers with time.
The point is that the total debt owed to him is growing exponentially.

Quote

If the total credit in the system grows faster than the economy, price inflation appears. Price inflation also rises interest rates, ruining the plans of some investors.
If the total credit in the system grows slower than the economy, price deflation appears. Price deflation progressively devalues capital and discourages borrowing and investing.
I'll grant you that deflation discourages some borrowing, but I would argue only that for frivolous consumption and investments that can't keep up with the overall long-term growth rate of the economy (plus interest and various risk and volatility factors).  It does not discourage pure saving (hoarding), which benefits those competing for the goods in the economy whose prices borrowers would have been bidding up, had they been loaned the hoarded money.  So to me it's not clear from pure reasoning if deflation is a net bad, good, or neutral for the economy.  You need data.
Quote
Deflation stops growth,
Reality doesn't agree.  For the data, I'll drop this paper on you again: http://ideas.repec.org/p/fip/fedmsr/331.html.

Sorry, I thought you had agreed on that. My logic says deflation discourages real capital accumulation. Please point out the errors in my reasoning.
I'm not saying that deflation always lead to recession, just that it discourages investing and lending. Thanks for the link though.

Quote
but interest needs growth or inflation. It actually requires growth, because inflation will be factored in the nominal interest, so it's like a temporal patch what capital-money really needs, which is growth.
Requires growth for what?  To avoid bankruptcies?  I think you're thinking too much in terms of averages, and it's clouding what could be a clearer picture.  Ignoring consumer lending for now, as long as there are profit opportunities out there, and lenders smart enough to recognize them and avoid lending to losing businesses, then bankruptcies can in principle be avoided completely.  So since the total amount of issued credit can and should be expected to vary with the total amount of visible profit opportunities, I think we can conclude that the bankruptcy rate is solely a function of the foresight of lenders.

And besides, not all businesses are burdened by debt, so your averaged picture is wrong right away - these businesses could be operating at losses great enough to outweigh the gains made by a bankruptcy-free debt-burdened sector, resulting in an overal negative growth rate without any need for systematic bankruptcies.

For the financial market to keep functioning. The "profit opportunities out there" is the potential growth interest demands. But while the profits tend to zero by competition, capital yields tend to the interest rate which is always positive because money doesn't rot.
If a type of capital yields exactly the interest rate, financing a new capital of the same type will make all the capitals of the type yield less, which will be corrected by the financial market by not financing further investment of the same type.
Interest time protects the special type of profit called capital yield by blocking competition. At the same time it demands profits to fund new capital accumulation and to be used as a medium of exchange.
Being everlasting (maintaining your liquidity doesn't cost you nothing per unit of time, but you're gaining from the assurance it represents), money receives its share of the deal or doesn't move the wares. If it doesn't receive an equivalent share when funding investments, the investments are not made.
So every investment that requires funding becomes capital and is protected from competition by interest.
After paying interest as the cost it is, the profits of an investment are received in cash and distributed among the investors.
But when there's losses, all the costs have been paid with either cash or credit. As interest is the last cost to pay, it is paid with credit: the losses become a new debt that wasn't planned and that will grow exponentially if at least its interest is not paid.
If the next time everything is done right and all goes as planned, you still need a surplus to pay the debt, and fast if the debt has interest (which may not be the case if you owe to your suppliers instead of your lenders).
The losses make debt grow. And interest make debts grow by themselves without any further losses. Still you can say here that debt doesn't have to grow if is paid fast enough by a later profit, and you would be right. The point is that debt with interest grows exponentially when left alone. It's debt's tendency.
And debts are credit and its growth creates inflation.
Eventually the rises in interest rates produced by inflation and the amount of the debts themselves force a chain liquidation that can produce strong deflation, which would accelerate the liquidation process, but with side effects.
If the growth in debt wasn't exponential, the liquidations would be steady rather than cyclical. And we wouldn't have other deflation than the one produced by growth.

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September 01, 2011, 01:19:39 PM
 #750

In response to jtimon.

The science of well being

Help with translations and subtitles
http://www.universalsubtitles.org/en/videos/ywxINQQqJq2V (please fix timing before translating)
http://federicopistono.org/video

Sources cited
Democracy, technocracy, the free market or the scientific method for social concern? http://youtu.be/83LAk3BT7no
Does the world produce enough food to feed everyone? http://goo.gl/tGF64

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8 Ghost I - Nine Inch Nails
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September 04, 2011, 11:33:31 PM
 #751

Where, in all of the preceding circular, self referential economics discussion is human need addressed? Or human social relations? Or environmental dependence and sustainability? How does tracking money value sequences have anything to do with the human condition?

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September 05, 2011, 01:52:32 AM
 #752

Where, in all of the preceding circular, self referential economics discussion is human need addressed?
The whole reason people trade with each other is to meet their respective needs.

Quote
Or human social relations?
Trade relations are social relations.

Edit: I want to add that they can be, and often are, completely impersonal.  Money is only necessary for societies that scale well beyond the point where trade becomes largely impersonal.

Quote
Or environmental dependence and sustainability?
As resources become more scarce, their prices rise, incentivizing conservation and the discovery of alternatives.

Quote
How does tracking money value sequences have anything to do with the human condition?
Some monies are better than others.
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September 05, 2011, 09:50:06 AM
 #753

In response to jtimon.

The science of well being

Help with translations and subtitles
http://www.universalsubtitles.org/en/videos/ywxINQQqJq2V (please fix timing before translating)
http://federicopistono.org/video

Sources cited
Democracy, technocracy, the free market or the scientific method for social concern? http://youtu.be/83LAk3BT7no
Does the world produce enough food to feed everyone? http://goo.gl/tGF64

Music
2 Ghost I - Nine Inch Nails
8 Ghost I - Nine Inch Nails

Well, you have put it in video now, but you're still wrong.
The line you draw in your example is not objective. To make science from that, you should be able to order the whole humanity in this well being scale. But that scale is not objective. Common sense is not science !!
For example, I might think that prostitution would remove my dignity, but a 100€/hour prostitute may think that she's better positioned than me, coding for 6€/hour.
Can you order by "well being" all the people on earth as you can do by say height? No.
Then well being is not objective, period. With written arguments or videos.


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September 05, 2011, 10:49:00 AM
 #754

Well, you have put it in video now, but you're still wrong.
The line you draw in your example is not objective. To make science from that, you should be able to order the whole humanity in this well being scale. But that scale is not objective. Common sense is not science !!
For example, I might think that prostitution would remove my dignity, but a 100€/hour prostitute may think that she's better positioned than me, coding for 6€/hour.
Can you order by "well being" all the people on earth as you can do by say height? No.
Then well being is not objective, period. With written arguments or videos.

I'm really sorry you are still stuck in your reasoning, and you can't see past what you already think you know.

As I explained in the video, and everybody seems to get it beside you, even though some things might still be blurry and undecided, there are things that we know are objectively better than others.

Putting up a philosophical argument about moral relativism just degrades the discussion into nothing, because your line of reasoning is this: if you don't
know everything, then you can't talk about anything!


That's bullshit, and you know it. You just want to say you are right, even though you know you are not. I understand that, everybody has an ego problem. If you didn't see the argument as "against you", but you were just an external observer, you would recognise the fact the the reasoning is correct.

Notice that the fact that the concept of health is open, genuinely open for revision does not make it vacuous. The distinction between a healthy person and a dead one is about as clear and consequential as any we make in science. Another thing to notice is that there may be many peaks on the moral landscape: There may be equivalent ways to thrive; there may be equivalent ways to organize a human society so as to maximize human flourishing.

Now, why wouldn't this undermine an objective morality? Well think of how we talk about food: I would never be tempted to argue to you that there must be one right food to eat. There is clearly a range of materials that constitute healthy food. But there is nevertheless a clear distinction between food and poison. The fact that there are many right answers to the question, "What is food?" does not tempt us to say that there are no truths to be known about human nutrition. Many people worry that that a universal morality would require moral precepts that admit of no exceptions.

What you are saying is: "Everything is subjective, being dead or alive is the same! You can't say that being raped, beaten to death is worse and have a nice and nurturing upbringing, it's all subjective!"

Please, stop this nonsense.
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September 05, 2011, 11:48:59 AM
 #755

All I'm saying is that morals and well being is subjective, not everything.
Yes, you can distinguish food from poison, but if you can't order objectively the foods between them, if you haven't an objective measure of flavor, you can't know what foods need to be produced.
If you think morals are objective, that's clearly the source of our disagreement. I'm sorry if you don't like philosophy, but the "needs of humanity" is a philosophical problem and not a technical one as you pretend.
If you don't trust me when I tell you you haven't convinced me and think that I just keep on arguing knowing I'm wrong, then maybe you are the one with an ego problem. You can't understand why I disagree with you and your only explanation is that "I know I'm wrong". Well, that's pretty pretentious.

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September 05, 2011, 11:59:52 AM
 #756

All I'm saying is that morals and well being is subjective, not everything.

OK, simple question then.

Is it morally acceptable to rape and torture somebody until they die? Can't you tell if that objectively increases or decreases well being?
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September 05, 2011, 12:03:16 PM
 #757

if you can't order objectively the foods between them, if you haven't an objective measure of flavor, you can't know what foods need to be produced.

You seem to confuse objective with universal and immutable. Something can be objective, yet very different with different conditions. You also seem to have a very simplistic and narrow vision of science.

For example, is a particular substance toxic? It depends. On some patients you might require less, more, not at all if that causes an allergic reaction... yet, we know how to differentiate and treat this scenario objectively.
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September 05, 2011, 12:08:51 PM
 #758

There are no moral facts, only moral opinions, and opinions aren't the kinds of things that are true or false.
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September 05, 2011, 12:11:58 PM
 #759

There are no moral facts, only moral opinions, and opinions aren't the kinds of things that are true or false.

So, your answers to my questions would be:

Is it morally acceptable to rape and torture somebody until they die?
It depends.

Can't you tell if that objectively increases or decreases well being?
No, you can't.

Am I interpreting you correctly?
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September 05, 2011, 12:18:30 PM
 #760

Is it morally acceptable to rape and torture somebody until they die?
It depends on the moral framework.
Is it bad to eat people? Not for cannibals.

Can't you tell if that objectively increases or decreases well being?
No, not objectively.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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