[p2p-research] excellent contribution on flow money by Martien van Steenbergen

[Martien van Steenbergen]

On 21 May 2009, at 17:07 , Ryan Lanham wrote:

> Therefore, raw materials, labor and skill are in a constant price  
> tension.  One cannot "fix" them because to do so is to establish the  
> price of bread without understanding the factors that change the  
> price of bread which include not only supply (inputs) but also demand.

There is no need to ‘fix’ them. Just let the market decide. Everyone  
will their own valuation of labor, skills, raw materials, etc.


> So far as the world has determined to date, or at least so far as I  
> am aware, there are only two possible processes for determining how  
> much of any good or service to produce:  1) One produces what can be  
> sold profitably or,

Seems to me this is only true in our current monetary system. You are  
required, compelled even, to make a profit since you must not only be  
able to pay for the materials and labour, but also for the interest! A  
lot of this interest is ‘hidden’ in the inputs for your production  
process, since the suppliers of those input also include the interest  
they pay into their products and services. This ‘hidden’ interest  
often ranges in the 20% to 40%.

When you ask for a mortgage for your house of €100k, you will actually  
pay €200k for that house in a period of 30 years against 3% interest.  
The bank does not check your creditworthiness. Instead, the bank  
checks your capability to ‘steal’ this extra €100k from others in  
those 20 years.

Also note that your house does not increase in value, but that your  
money decreases in value.

Since compound positive interest follows an exponential curve, it will  
eventually inflate everything to unimaginable levels, as we are  
experiencing right now. Pumping more money into the system only makes  
it worse. Due to the long delays in the myriad of feedback loops, we  
only notice this when it is too late.

> 2) One produces what one is commanded to produce from a central point.

The Internet facilitates a global marketplace for matching supply and  
demand (Ebay being a good example). Production still can be  
decentralized.

> If one tries to produce a good without profit, then one is  
> attempting to complete a perpetual motion machine...building  
> something that runs with an inherent energy imbalance...where the  
> output is continued even though the energy in is greater than the  
> value/demand out.  A perpetual motion machine violates conservation  
> of energy much the same way running an unprofitable business does.   
> Money is the energy of an economic function.  If you cost more than  
> the world values your good or service, you cannot run forever just  
> because your inputs + a profit = some number.

So true. But be sure to take the whole system into account.

It is exactly this fact that causes labour to flee to low wage  
countries: the wages do not take the whole system into account,  
tipping the system into unbalance, beyond its limits.

Succes en plezier,

Martien.