[p2p-research] DEBT IS THE constructed PROBLEM AND DEFLATION IS THE reactionary SOLUTION
Ryan Lanham
rlanham1963 at gmail.com
Tue Jul 13 00:52:44 CEST 2010
Hi Michel,
On Mon, Jul 12, 2010 at 9:05 AM, Michel Bauwens <michelsub2004 at gmail.com>wrote:
> Hi Ryan,
>
> you write: One must appreciate the way money is created...typically through
> debt...either public or private.
>
> this is actually what I meant, most money is now created through debt, by
> banks, not by governments 'producing' money (see web of debt, ellen woods)
>
>
Overwhelmingly, since at least 1800, this is the way most money has been
created. Actual script...cash is a tiny fraction of "money." See M1 versus
M3 on wikipedia.
> Kevin Carson would probably tell you that free market capitalism is a
> contradiction in terms, since capitalism is based on monopolies in nearly
> every sector of the economy, highly regulated, etc ...
>
>
Everything is relative. Free is relative. I am shocked what the British
call their rights. As an American they seem paltry. But the British are a
free people and one I greatly admire. So it is natural that "free market"
and capitalism itself are relative. I equate capitalism with the standard
use of debt to finance enterprises aimed at overcoming risk. Markets are a
given. Anyone against markets, to me, is like someone against liberty,
democracy, fairness, apple pie, etc. As a matter of fact, I don't eat or
care for apple pie...but the others I do care for...
> Nevertheless, I would tend to agree, but can we prove this, that the
> relative autonomy, individualism, and productive explosion that has
> accompanied capitalist development in many countries, produce more happiness
> than before ... though I would add a note that countries with strong welfare
> provisions exhibit higher rates of happiness ... and as martin pedersen will
> undoubtedly add, we whould not be oblivious that 'our' happiness may be
> predicated on an increased unhappiness elswhere ..
>
It seems straightforward to me. If it were debatable, I'd debate it.
Capitalism as in free markets has run amok far too often and led to
horrendous injustices and externalities...one of which is gushing into the
Gulf about 1000 miles from where I am sitting.
>
> Then there is point five,
>
> obviously, technology changes the context for labour and learning, and this
> is bound to have strong effects,
>
> but how do you see this directly to the debt explosion?
>
>
It is relatively straightforward, Michel. Here's how. Risk could not be
expanded by industry because profit was in doubt in the face of rapid
information movement, free systems, automation, etc. People thought wealth
was expanding because productivity was expanding. It was in a way...but not
broadly. You see productivity in the form of information systems is
relatively low in labor demand. That is, it is efficient in human capital
terms. Nevertheless, people in information intensive socieities consumed
hugely with the expectation not only of current income, but expanding
incomes. So they invested in risk...the way most people do...through
housing. It is still going on....Canada is a mess. The US is probably 20%
overvalued. Canada is more like 50% overvalued. When that comes home to
roost, prices fall, deflation occurs, debts can't be repaid, etc.
> I'm not denying the link, but what is its nature?
>
>
The nature is perception of risk and reward. When people think risk is low
and returns are great, they act. Usually this leads to cataclysm. Risk is
always present. If it is underestimated, capital will be lost.
Easy money (money for nothin' and you're chicks for free) is a very rare
circumstance. When it occurs (in economic terms it is called pure
arbitrage) capitalists move in to suck up the possibilities very quickly.
In a sense, all profit has become an arbitrage. People move in quickly to
suck off the opportunity. Hence the import of intellectual property. It
offers a form of protection from risk. Risk is the demon of the world...and
the God. He who profits with low risk and does it long-term...that person
is a guru above all others.
> I find the alternative explanation, as that of david harvey, linking the
> debt crisis to neoliberalism, convincing by itself (i.e. the debt crisis is
> the natural result of replacing income for labour with credit)
>
>
Don't know what that means, but it sounds like bunk. Neoliberalism is a
non-word. Talk to me in terms of actions. How does a neo-liberal act?
Does she take risk? If so, then risk must be overcome by expertise,
innovation, and advancement of markets by creating things people value
whether that is cognac or iPads. Europe is good at elite markets and
blocking risk by arguing they make the best arugula or chocolate puffs or
whatever. America overcomes risk by shear innovation...inventing the next
cool game, song or craze from hooola hoops to bible thumpers. Asia
overcomes risk by copying others very cheaply. Japan is now
quasi-American. Korea is quasi-Japanese...quality plus cool at a crazy low
price. Germany goes up market. They produce insanely great stuff that is
hideously expensive. England fills in niches. France sells lifestyle and
aesthetic...on and on it goes.
> So, following occam's razor, we do not really need the
> technology/labour/learning explanation
>
I disagree. The problem is that risk cannot become overcome because the
Japanese learn very quickly how to make good scotch. In a nutshell,
innovation is of minimal advantage. That is true for individuals and for
nations and firms. Firms that consistently innovate (e.g. 3M or General
Electric) are declining in value even though they can still do it. That's
because China and India can copy very efficiently.
>
> I would happily be convinced though, the more so that I do sense there is a
> connection, which I have myself put forward under the 'crisis of value'
> theory, i.e. the increasing inability of translating use value, which is now
> exponentially rising, into exchange value,
>
Again, these are big words where they are not needed. The problem is
simple...value is easier to produce. Therefore it is valued less. Keep
going and you end up with free.
>
> however, this is a general trend, and I would be careful to claim this is
> the reason for the 2008 breakdown
>
>
Maybe. What really happened in 2008 was that people stole a bunch of money
and then tried to pass the buck to government. Governments were stupid
enough to take the buck. It was either that or the death of household names
and institutions...which doesn't help when you are trying to run for office.
> most likely, the 2008 crisis is the result of a confluence of trends, as
> explained by Carlota Perez in Technological Revolutions and Financial
> Capital, i.e. the different integrated elements which made for a successfull
> kondratieff cycle, get exhausted, leading ultimately to a Sudden System
> Shock
>
>
Sounds complicated. Here's my simple explanation. The private sector made
bad debts and transferred them to the state. You can only do that once in a
generation. Now the question is...now what? How does real value get
created at a level that keeps the go-go economy go-going.
> On Sun, Jul 11, 2010 at 10:08 PM, Ryan Lanham <rlanham1963 at gmail.com>wrote:
>
>> Michel,
>>
>> 1971, Bretton Woods, wasn't the privatization of money. Banks in the US
>> and Britain, etc. used to regularly print their own notes for 10s and
>> hundreds of years. 1971 represents the trading of money as a requirement
>> for good standing of non-commodity currencies.
>>
>> The rules of contracts are formal. Money moves via contracts such as
>> futures, options, debt, etc. The rules in these areas are highly
>> formalized, and those govern the way money moves. One must appreciate the
>> way money is created...typically through debt...either public or private.
>> Banks are, and always have been, quasi-governmental. They are a regulatory
>> function in some respects...like stock exchanges.
>>
>> If states tried to provide all banking services, economies would shrink
>> dramatically. If one considers that a good, it would be wise. I am perhaps
>> old-fashioned enough to hope for continued growth and a growth-based
>> economy.
>>
>> My views are relatively straightforward on these topics:
>>
>> 1. I believe free market capitalism has largely proved the happiest time
>> for humans by far.
>> 2. I believe in governments regulating markets.
>> 3. I believe these things require careful balances.
>> 4. I believe that technology is all important in changing the rules.
>> 5. Technology has made labour and learning problematic.
>> 6. Because of 5, the credit/debt economy of the world is now broken.
>> 7. There may be ways to fix 6, but I don't see how.
>> 8. If there is no way to fix 6, there will be great disruption and
>> trauma.
>> 9. Something else will ensue.
>> 10. P2P may be part of 9. I think "free" economies are a logical
>> technical outcome.
>> 11. Understanding free economies is therefore important.
>> 12. There is no future in the past.
>> 13. State socialism and communism are the past.
>> 14. It is possible that debt-based capitalism is becoming the past.
>> 15. If 14 is true, there is an urgency to uncover some means of solving
>> what will replace it.
>>
>> Ryan
>>
>>
>> On Sun, Jul 11, 2010 at 1:00 AM, Michel Bauwens <michelsub2004 at gmail.com>wrote:
>>
>>> Ryan,
>>>
>>> you say, as a response to Patrick: The rules of money are complex and
>>> very formal. They are typically best left to the province of states.
>>>
>>> BUT then the question is, since states have long ago lost their
>>> sovereignty over money supply, which is created by private banks (fractional
>>> reserve) and circulates through the shadow banking system outside state
>>> control, how would you re-assert that sovereignty?
>>>
>>> If your wish is to be followed, the situation pre-1971 should be
>>> restored, how do you intend to achieve the de-privatisation of money?
>>>
>>> Michel
>>>
>>> On Sun, Jul 11, 2010 at 6:01 AM, Ryan Lanham <rlanham1963 at gmail.com>wrote:
>>>
>>>> Sovereignty is an agreement. That is why it is problematic. If you
>>>> agree to being an American, a Japanese, a Frenchman, etc. you are
>>>> participating in a common framework that empowers governments with
>>>> sovereignty. In the British system, the monarch literally embodies
>>>> sovereignty. In the US system, it is "the People." The People have rights
>>>> and responsibilities. A person cannot simply choose to no longer
>>>> participate in a sovereign framework because it leaves huge questions
>>>> unanswered (e.g. who says you are an acceptable traveler?) Who says you
>>>> will agree to live under certain laws?
>>>>
>>>> Nations are in fact a commons. And their currencies are also commons
>>>> that have even broader sway.
>>>>
>>>> Every imaginable scheme for money has been tried and tried again. There
>>>> is little likelihood someone will happen upon a scheme that is simple and
>>>> fresh. Innovation takes intense study in very complex frameworks (typically
>>>> like science). That said, I think small currencies and small means of
>>>> establishing local value can be beautiful, fun and very fruitful. I do not
>>>> think of them as "money." Money is a currency, but not all currency is
>>>> money.
>>>>
>>>> The rules of money are complex and very formal. They are typically best
>>>> left to the province of states. Currencies, on the other hand, can be made
>>>> and used by anyone from the S&H Green stamp store to the local homeless
>>>> shelter.
>>>>
>>>> Ryan
>>>>
>>>>
>>>> On Sat, Jul 10, 2010 at 2:17 PM, Patrick Anderson <agnucius at gmail.com>wrote:
>>>>
>>>>> Can anyone in the universe tell me *why* a nation would choose to go
>>>>> into massive debt to foreign powers when we (as much as any national
>>>>> is "the we") could far more easily take the responsibility of issuance
>>>>> upon ourselves?
>>>>>
>>>>> If 12 of us were abandoned on a deserted island, would would it be
>>>>> better for us to issue some sort of currency so we could trade skills,
>>>>> or would it be better to rent that money from someone on another
>>>>> island?
>>>>>
>>>>> If peers are going to use alternate currencies, should they issue it
>>>>> for themselves, or should the RENT it from someone else?
>>>>>
>>>>> If We, the Peers choose to RENT our money from someone else, then
>>>>> *who* are those other issuers, and how did they become so superior to
>>>>> us that they have the right to invent money out of thin air and then
>>>>> demand payment for the use of it?
>>>>>
>>>>> By what authority do international bankers issue currency used by most
>>>>> every nation on earth?
>>>>>
>>>>> I live in the USA. We have a massive National Debt *ONLY* because we
>>>>> have been taken over by foreign powers and so will not issue our own
>>>>> currency.
>>>>>
>>>>> What good does that do?
>>>>>
>>>>> Those who *do* issue the currency are using those fiat notes to buy
>>>>> bonds backed largely by federal lands and other national treasures.
>>>>>
>>>>> When we finally default on those massive loans, we will have lost
>>>>> title to our country to clever thieves that have never done anything
>>>>> of value except to trick us out of our sovereignty.
>>>>>
>>>>> WHY, WHY, WHY!?
>>>>>
>>>>> _______________________________________________
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>>>>>
>>>>
>>>>
>>>>
>>>> --
>>>> Ryan Lanham
>>>> rlanham1963 at gmail.com
>>>> Facebook: Ryan_Lanham
>>>> P.O. Box 633
>>>> Grand Cayman, KY1-1303
>>>> Cayman Islands
>>>> (345) 916-1712
>>>>
>>>>
>>>>
>>>>
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>>>
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>>
>>
>> --
>> Ryan Lanham
>> rlanham1963 at gmail.com
>> Facebook: Ryan_Lanham
>> P.O. Box 633
>> Grand Cayman, KY1-1303
>> Cayman Islands
>> (345) 916-1712
>>
>>
>>
>>
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>
>
> --
> P2P Foundation: http://p2pfoundation.net - http://blog.p2pfoundation.net
>
> Connect: http://p2pfoundation.ning.com; Discuss:
> http://listcultures.org/mailman/listinfo/p2presearch_listcultures.org
>
> Updates: http://del.icio.us/mbauwens; http://friendfeed.com/mbauwens;
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>
> Think tank: http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>
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--
Ryan Lanham
rlanham1963 at gmail.com
Facebook: Ryan_Lanham
P.O. Box 633
Grand Cayman, KY1-1303
Cayman Islands
(345) 916-1712
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