[p2p-research] DEBT IS THE constructed PROBLEM AND DEFLATION IS THE reactionary SOLUTION
Michel Bauwens
michelsub2004 at gmail.com
Tue Jul 13 10:38:54 CEST 2010
Ryan,
thanks for the various explanations ...
info on the non-word: http://en.wikipedia.org/wiki/Neoliberalism
On Tue, Jul 13, 2010 at 5:52 AM, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> 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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>>>>
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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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>>
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>>
>>
>>
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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
>
>
>
>
> _______________________________________________
> p2presearch mailing list
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>
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