Home » xyzzy » Dungeon » Modern Monetary Theory (or, how I stopped worrying about the natl debt.)
Re: Modern Monetary Theory [message #96867 is a reply to message #96859] Wed, 26 July 2023 10:08 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Illuminati (2nd Degree)
Take some time out in your life and listen here to this very simple to understand dialog and reason why our means of living has become so compromised and contentious these days. In our western culture this same dynamic has gone on cyclically since ancient Rome and Greece. Where landlords and eventually bankers have used their influence on government to gain leverage and setup their free lunch from working society.

The cycle continues today leading to what we constantly read and hear from news outlets as a cold war with China. China, now a socialist country that learned to do what our country did in the late 19th and early 20th century. Develop a mixed industrial & service economy without the rent free class of finance banking loading down society with debt. Their banking is a public utility, a natural monopoly without the profit motive of private banking. Socialism was the trajectory of industrialism in the west that never got implemented due to financial capitalists relationships with government.

China's success now is perceived as a threat to the financial class that has enveloped our economy. Thus the cold war status constantly amplified by news. All during a time in our civilizations history that our development and use of technology has come to heads with the climatic nature of our very planet. We squabble over nations bettering their prospects for their citizens as it may interfere eventually with the financial class elite's means to extract their free lunch. Human nature. But, selfish, petty human nature.

Michael Hudson.... https://www.youtube.com/watch?v=uQrNTgfPvQ8&t=1s
Re: Modern Monetary Theory [message #96891 is a reply to message #96867] Sat, 05 August 2023 11:20 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Banking not only has it's compound interest to amplify money, thanks to legislation of both political parties. It enjoys the thrill of investing in the casino of Wall St too. And when it looses just asks for a bail out from the Federal Reserve.

Our Ponzi scheme economy: The Breeding of Money.

On The Breeding Of Money - by Gordog
bý Gordog

Some continue to delude themselves about the so-called US economy, which is nothing but a house of cards---and this meaningless, completely fabricated 'metric' of GDP. In real terms, China's economy is already bigger by half then the US. And that is being charitable.

Let us review some basic facts about how NUMBERS actually work. This is known as MATHEMATICS.

Take for instance the Ponzi Scheme. This is an ingenious bilking scam where a group of investors is promised a guaranteed rate of return. Since there is no PRODUCTIVE business of any kind that can generate any return, the only way to pay those initial investors is to draw in more investors over the next term, usually a year. The incoming investors are likewise paid their return by the next crop of investors, etc. Now it is obvious just from this description that the amount of new investors has to INCREASE each year, in order for this to stay afloat.

The mathematical underpinning of this scheme is exponential growth. This is a mathematical function where the growth of something is a function of the EXPONENT of TIME.

In simple terms: if you start with a single cell that splits in two...then those two each split in two and so on, it is obvious that the number of cells doubles at a given rate of time. In a Petri dish, such organisms will rapidly multiply in number until they have exhausted all the nutrients available...and everybody DIES!

Now let's consider a bank that is lending money at interest. Here we have a group of BORROWERS rather than investors.

If in the first year, the bank has a given number of borrowers, it will receive back not just the amount of money it has lent, but an additional amount of money in interest. This accumulation of interest will continue building in perpetuity, according to the exponential math exactly like the Ponzi Scheme or Petri dish.

This is the fundamental mathematics of both. Only they are mirror images of each other. One is drawing in lenders [investors], while the other is drawing in borrowers. From the wiki entry on exponential growth:

Finance:
Compound interest at a constant interest rate provides exponential growth of the capital. See also rule of 72.
Pyramid schemes or Ponzi schemes also show this type of growth resulting in high profits for a few initial investors and losses among great numbers of investors.
For instance if you borrow money at a rate of 9 percent interest per year, the amount you owe is DOUBLE after just 8 years [provided you are required to just pay it all back in one lump sum and not payments].

Now let's take into account that the ONLY way for brand new money to come into existence is if it is created as a BANK LOAN. That is actually how our system works. The borrower can be a consumer, a corporation or a government. It doesn't matter. But somebody has to step up to the bank counter and say 'I want a loan' before any new money can come into existence.

So here is the catch 22: Because the borrowers in any given year are also paying back interest, that means that more and more brand new money has to come into being each year, simply to account for that extra interest money that wasn't there before!

So you need an ever greater amount of borrowers stepping up and asking for loans.

Where do they come from? Can you just keep going like this forever?

Obviously the Petri dish and the Ponzi Scheme both tell us that this is a house built on foundations of sand. It cannot possibly continue in perpetuity. It all has to come crashing down.

Consider that 100 years ago, very few ordinary people needed to borrow money. Oftentimes people would buy a house or a car with money they had saved. By the time of the postwar years of the 1940s, you already had a new kind of borrowing culture emerging, where people would often seek credit to buy their own home more quickly.

[Recall the scene in Frank Capra's It's a Wonderful Life, where George Bailey [Jimmy Stewart] who runs a family savings and loan that lends to aspiring homeowners, confronts the badguy Henry Potter who is a slumlord and wants to ruin the small family S&L.]

For good or bad, this depiction of getting ordinary folks to borrow money so they can more quickly own their own home, as something positive and progressive, took root. Of course getting people to borrow for buying a house and car was just the beginning. Soon, you needed a whole new crop of borrowers, so we started women entering the workforce and becoming part of the debt slave pool.

[Remember, just like the Ponzi Scheme, the interest lending scheme needs EVER GREATER numbers of borrowers each year.]

Then when that dried up, you had to start importing brand new PEOPLE, ie immigrants! Today that is an increasingly fraught subject as the wheels continue to come off this Ponzi machine and there is less to go around for everybody. So people start resenting the newcomers. Yet, the powers that be insist on bringing in ever more people! They are needed. Each one is going to go to the bank and borrow to buy a car, a house, etc. Just like that Ponzi Scheme somehow has to find new investors to avert going tits up. Then you had credit cards, and then a very big one: EDUCATION. Now you have not only mom and pop debt slaving away, but even junior has to be pressed into the chain gang, before having even gotten an education or a vocation in life.

Is there any possible stone that has been left unturned in the search for new debt slaves? And this is all supposed to be so 'glorious'?

Some have foreseen all of those problems, such as Michael Hudson. He told us long ago that ancient civilizations had all come up against the same problem with EXPONENTIAL MATH: When you attach interest to loans, the amount of debt reaches unmanageable levels and has to simply be wiped clean. We see this from the graph of exponential math:
https://www.moonofalabama.org/11i/expgrowth-s.jpg
A real productive economy can be expected to grow only linearly, as in the red line. And even then, at some point it cannot grow any more!

But the amount of accumulated debt starts overtaking the amount produced by the real economy until it is double, triple or even many more times that of the real, productive economy. Obviously, the only thing you are doing is producing money itself, not actual and real things! That is why we have had ZIRP for more than a decade now. Zero interest rate policy. Not wanting to actually write off unpayable debt, at least cutting the money creation rate to zero is supposed to accomplish the same thing.
On the matter of wealth and gaining it, The Great Thinker had much to say:

There are two sorts of wealth-getting, as I have said; one is a part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another.
The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest.

And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth this is the most unnatural.

Aristotle, Politics Book One, Part X

As I have come to learn from reading, listening and interpreting for myself a few years now. The U.S. government does not HAVE to borrow to pay it's bills. It is a sovereign country with it's own currency. It does so to keep our Ponzi going. And deficit growing. The IMF and World Bank are an investment vehicle that's led to impoverishing counties to make them debt slaves and sell off their assets in their country. The US trade debt is from cycling back dollars from foreign trade in the form of IOU's, (bonds). Without producing any goods in exchange. This free lunch as it's known is what partly accounts for countries grouping together to circumvent our advantage and their disadvantage. The BRICS initiative. As well as our use of sanctions to try and control countries that are not in compliance with our National Security interests. Which are world wide and contentious in scope by means of regime change, clandestine operations and nearly continuous hot spot wars since the end of WWII.
If we do not come to terms with the way our economy and society have played out. It seems to me that a good part of the world will shun our business in time. And we have the wild card of our environmental reckoning to deal with. Now is a crucial time it seems to start cooperating rather than agitating.
Re: Modern Monetary Theory [message #96909 is a reply to message #96891] Sat, 12 August 2023 18:12 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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This is the phony crap that makes up some of our financial economy. Instead of making practical things for society. This circus is rolled out as a swell opportunity for the investment set. That's the business model for Wall Street. Hucksterism. Our economy now is so overloaded with debt servicing by real WORKING people. That buying goods and services is diminished augmented by inflation to keep a few living as they're accustomed to.
We Work is an oxymoron.

https://wallstreetonparade.com/2023/08/weworks-stock-imploded-to-13-cents-yesterday-its-cult-master-adam-neumann-cashed-out-years-ago-and-is-a-billionaire/
Re: Modern Monetary Theory [message #96917 is a reply to message #96909] Sun, 13 August 2023 08:49 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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This is a wonderful synthesis of a book I've read and re-read called, Destiny of Civilization, by Michael Hudson. He has been advising Chinese economic academia for some time now on how to avoid the pitfall of finance capitalism. Keeping the rentier class from influencing elected government and eventually taking the reins of economic planning in a country. Their income is a non productive form of free lunch that imposes rent extraction, and debt service from the working class. Driving up cost of living for the real economy the working class lives in. Hudson explains in this four part videos that are Chinese in origin. They include some clever graphics to accentuate Hudson's dialogue. Making us laypeople better to understand the concepts he presents.

It's one of the best I've perused being a long time advocate of his amazing historical and thorough debunking of our neoliberal economic doctrine. I don't know what or how our population can come to realize that the economic conditions we all are going through now is anything more than what Mr. Hudson explains so eloquently. Always with a Cheshire cat's grin on his face for the sheer irony to what the enablers to our system of democracy tout as in the best interest to our citizenry.

Four parts of gettin real here y'all.

https://michael-hudson.com/2023/08/the-destiny-of-china/
Re: Modern Monetary Theory [message #96987 is a reply to message #96867] Tue, 12 September 2023 06:37 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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100 years of the rise of corporate concentration. Monopolization. Asset shares going to the top 1%. Each graph showing a steady climb upwards.
This is where our economy has shared it's wealth to. Does that seem fair?

https://businessconcentration.com/

Re: Modern Monetary Theory [message #97009 is a reply to message #96987] Tue, 19 September 2023 12:25 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Punishing working people for our national debt is the scapegoat of neoliberalism and libertarianism. Like the greater public has caused this great public debt situation. It falls mainly on our financial system and our military industrial complex. Do we need 7 to 800 military bases throughout the world? Exact figures not known and maybe the Pentagon doesn't even know. Our big banking system is totally corrupt as pointed out in the article by the watchdog organization Wall Street on Parade.

https://wallstreetonparade.com/2023/09/professors-point-to-jpmorgan-chase-as-poster-boy-of-a-financial-system-dependent-on-corruption-to-sustain-itself/

Our world financial dominance and military diplomacy is being rejected by the greater populated world with the BRICS alliance. Our country represents 4% of the worlds population but has acted as if it's the lone designated representative of righteous ethical attainment. All the while our cost of living skyrockets, our crime rate soars, our populations longevity shrinks, private debt highest ever and poverty increases.
Like the blues number, Before you accuse me, take a look at yourself.
Re: Modern Monetary Theory [message #97030 is a reply to message #97009] Wed, 27 September 2023 14:35 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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The new world order emerging from the BRICS coalition and China's Belt & Road initiative is a sign of America's and Europe's waning influence. The BRICS alliance has added 6 more members to it's charter and the list is growing. China's Belt & Road alliance is building infrastructure there and more in underdeveloped countries in it's need for raw materials and trade opportunities. It's doing so by not indebting these countries like US controlled World Bank & IMF fund has. It is the strategic purpose for China that our country and certainly now Europe can't match. As Europe now because of Ukraine's war are paying way more for LNG and oil from the US and other countries besides Russia now. Hurting their economies. Though Europe's trick is to buy some from India who is supplied by Russia.

However, Europe's economy and especially Germany is tanking as a result of this. Their currency's are the Euro, which means no currency sovereignty for any of the Euro Zone members. They can't do MMT like the US can. We can do it, but we cripple ourselves instead by holding the government hostage for our foolish and petty political brinkmanship. Such is neoliberalism.

This coalition and initiative going on is in principally Asia, Africa and South America is a direct result of the US led G7 countries decades of indebting and colonizing countries for their natural resources and cheap labor. And from the US sanctioning and trade dollarization that these countries want to get out from under. It's coming back to bite us in the posterior. Our country is doing everything it can to try and thwart this from happening. It's likely we will fail. And I have no sympathy for us. We have not acted in good faith or with virtue with the poor countries. And even with our allies, as Germany is finding out. Henry Kissinger once said, "To be an enemy of the US is dangerous. To be a friend is fatal".

Re: Modern Monetary Theory [message #97037 is a reply to message #97030] Sat, 30 September 2023 11:01 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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This is something to ponder with a clear mind not closed by pessimism. It's from the Ministry of Foreign Affairs of the People's Republic of China. A dialogue of proposals for the world. And particularly this country. The USA.

I think its inspirational.

https://www.fmprc.gov.cn/eng/zxxx_662805/202309/t20230926_11150122.html
Re: Modern Monetary Theory [message #97067 is a reply to message #97037] Sun, 15 October 2023 09:15 Go to previous messageGo to next message
Rusty is currently offline  Rusty
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Geopolitical poker. That's the game played by the IMF and World Bank. The US arm of the Pentagon. A gauntlet is being thrown down in geopolitical statecraft with China and the BRICS association in the IMF/World Bank quota percentage. The US holds veto power over every other nation to block resolutions not favoring the IMF/World Bank conditions for making loans to countries. With the advent of the BRICS alliance making inroads with financing nations obtaining loans for their needs to create infrastructure and trade opportunity.

Here is a breakdown from Michael Hudson of what this "offer" from the US amounts to. In effect, a poker throw down from the house to the players to abide to the houses loaded deck. Hudson ends with a proposition the Chinese might just take. To further up the ante the US offers.

BRICS and the Belt Road Initiative is a thorn in the US side of making the rules, and breaking them when it suits our needs.

https://michael-hudson.com/2023/10/twice-as-important/
Re: Modern Monetary Theory [message #97082 is a reply to message #97067] Mon, 23 October 2023 09:04 Go to previous messageGo to previous message
Rusty is currently offline  Rusty
Messages: 1015
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I (finally) found this video I saw on youtube in terms of Chinese and Russia's economic and geopolitical agenda's. Here's a formal Chinese state media interview with old Vladimir. The Putinator. By the Chinese media group. It's a discussion question and answer highlighting the relationship between Putin and Xi of China over the years. For me, the pragmatism of what is shaping the Belt & Road initiative and the BRICS alliance between Russia and China is what constitutes a mutually beneficial relationship of two countries employing cooperation and concession for each party. Something Putin highlights over their long history in the video. Something our world needs more of to overcome the looming obstacles of climate change and general peaceful platitudes.

There is also, towards the latter part of the interview, Putin's take on our country's geo-political stance and actions from diplomacy over the years. The points he makes are very similar to what the few in our own country speak of that run contrary to the official narrative. For the record, Putin has stated that Russia's interests lay with Asia and the Southern tier of BRICS aligning countries. Europe is not part of this shift. The narrative of Russia wanting to expand the old Soviet vassal states bordering it is a fallacy that conveniently ties into the current hostilities in Ukraine.

This video of course can be dismissed as propaganda coming from Chinese state media. Its totally cast as mutual admiration. Then again, so is much of western media and official government media in this country. It all comes down to action speaks louder than words. And the agenda underlying a country's interests. You haven't witnessed China involved in the art of war over the last too many decades as has the US.
China, Russia and the other BRICS countries are forming a brand new alliance that runs counter to what our country has come to expect of the whole wide world over the years since the end of WWII. It's a tectonic shift away from our unipolarity and dollar-Pentagon diplomacy. Really a fascinating ongoing piece of work.

https://www.youtube.com/watch?v=fHDWgUuyyQw
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