And based on the comment by Migeru in this morning's Salon In the long run, we're all dead. John Maynard Keynes
Pity that once a very small chunk of the population did get to live about its means,
Doesn't this actually contradict your (spot on) diagnosis of the "Anglo Disease"?
There has been a concentration of financial "wealth" in fewer and fewer hands, but these people were the ones who were already loaded.
I don't think the Uber-Rich have been living beyond their means. What property they have will probably be free of mortgage, and the transient bubble price to such "rentiers" is irrelevant: they ain't selling, but rather renting out to "little people".
These few been profiting - via the Debt machine and the Bubble - at the expense of the many who have been borrowing against the inflated assets created by the Bubble, and consuming high off the hog.
ie it's not a "very small chunk" of the population, but a very large chunk who - because their real income has been declining (hoovered off by the few via financial Capital)- continued to live beyond their ever reducing means and put the US into global hock.
That, as I understand it, is the Anglo Disease.
- Jake Ceterum censeo Chicago esse delendam
Any thoughts?
Because it would mean that an awful lot of other fuckers would also be in Guantanamo with him. It's not that easy to transfer an entire city like day-time DC 2107 km south.
Mind you, bad old Stalin managed to do just that with an entire country. But Uncle Joe had his own ways, many of them quite uncivilized, deplorable and, on a more practical note, broadly inapplicable to the present circumstances. Facts, selfish little bastards. They don't even care about your feelings.
...already $1.5067... *Traitor*, n. A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
``This record is purely a play on the weakness of the dollar, as investors use both crude and gold as a hedge against inflation,'' said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland. ``If the dollar keeps getting weaker, and we don't have inventory builds today, it could drive prices towards $105.'' Crude oil for April delivery rose as much as $1.20, or 1.2 percent, to $102.08 a barrel in electronic trading on the New York Mercantile Exchange.
``This record is purely a play on the weakness of the dollar, as investors use both crude and gold as a hedge against inflation,'' said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland. ``If the dollar keeps getting weaker, and we don't have inventory builds today, it could drive prices towards $105.''
Crude oil for April delivery rose as much as $1.20, or 1.2 percent, to $102.08 a barrel in electronic trading on the New York Mercantile Exchange.
there was a tiem when a dolalr was wordth 100 pesetas.. which would be roughly 1.65$ fo a euro.. and I think that is the palce where the dolalr is going to stay during tis long long US half-recession (which I have been advocatign for years to rebalance the world economy and oil consumption).
A pleasure I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude
most of the money was not real, but it was as real as existing money
Money is an information token backed by the institutions that allow it to function as a means of payment, store of value, standard of deferred payment, and unit of account.
And the large majority of money in our economies ... I say "our" because every member of the EU is a monetary production economy in the same sense that the United States is ... is produced as a side-effect of bank lending.
Now, sure, we can talk as if "money" consists of gold duckets (in old wooden chests) or copper cash (threaded on string through their hole in the center and tied up in bundles) ...
... but in the US and France and the UK, "money" is either a bearer note from the appropriate Reserve Bank or an entry in the credit side of some commercial bank somewhere.
In consideration of what money really is, and of the fact that all sorts of mischief along the lines of "natural rates" of this and that is likely to be done by pandering to the confusion that money really is "valuable stuff", rather than "information tokens of value so long as our financial system keeps working" ...
... then perhaps we need to find ways to express things that do not pander to common misconceptions about money.
And most especially on pieces on the Daily Kos, where there are ever so many people who are self- or other-described experts on the basis of being able to convincingly repeat neoclassical fairy tales about money and finance. Utsukushikereba sore de ii
perhaps we need to find ways to express things that do not pander to common misconceptions about money.
So in this case, instead of
In effect, he created a lot of money,
... and instead of
"However, most of the money was not backed by real wealth, but by financial fantasy." Utsukushikereba sore de ii
So I try to skirt around it. Does it weaken the overall point? In the long run, we're all dead. John Maynard Keynes
But I think the point can be made in language that directly reflects actual monetary institutions, even if it is not belaboring the point about what those institutions are.
That is, no, a diary cannot be written that is simultaneously about both this topic and the actual rules that govern modern monetary institutions ... because a diary can only coherently be about so much at one time ... but it can be written in the simple shorthands of the chartalist Banker's school rather than the simple shorthands of the quantity theory Treasury school. Utsukushikereba sore de ii
I have to disagree. You share a common misconception that Money is an object when it is in reality a relationship.
This Monetary Rationale by E C Riegel is IMHO definitive.
In particular this abbreviated summary
Breviate The purpose of money is to facilitate barter by splitting the transaction into two parts, the acceptor of money reserving the power to requisition value from any trader at any time. . The method of money is to employ a concept of value in terms of a value unit dissociated from any object. The monetary unit is any adopted value, which value is the basis relative to which other values may be expressed. The monetary system is a cooperative agreement among traders to regulate the issuance of monetary instruments, to express and exchange values in terms of the monetary unit, and to keep account of such exchanges. Monetary instruments may be any evidences of monetary transactions that serve the convenience of trade and the purpose of accountancy.
Breviate
The purpose of money is to facilitate barter by splitting the transaction into two parts, the acceptor of money reserving the power to requisition value from any trader at any time. .
The method of money is to employ a concept of value in terms of a value unit dissociated from any object.
The monetary unit is any adopted value, which value is the basis relative to which other values may be expressed.
The monetary system is a cooperative agreement among traders to regulate the issuance of monetary instruments, to express and exchange values in terms of the monetary unit, and to keep account of such exchanges.
Monetary instruments may be any evidences of monetary transactions that serve the convenience of trade and the purpose of accountancy.
Wherever a barter system - such as the Swiss WIR or proprietary systems like Bartercard - incorporates "time to pay" or credit, then the result is a monetary system requiring a "Value Unit".
So, while Credit may be Money (as it is when Money is bank-created Debt), it is normally only a necessary part of a monetary system.
Likewise, an abstract "Value Unit" is not Money any more than Credit is, but merely another necessary element of a monetary system.
Money is implicit in the system, and the agreement/documented relationship between the system participants.
In particular Money is not a "store of value": "Money's Worth" such as gold, may be a store of value, and in that role constitutes "Wealth" or "Capital".
Riegel speculated elsewhere - and I agree with him - that Money exists only in the instant of exchange ie it is "Dynamic Value". Everything else is "Capital" or "Potential Money" consisting either of obligations (accounts payable and receivable) or rights of ownership and use(Property). ie Capital may be characterised as "Static Value".
I believe that the analogy between Energy and Value is exact, and I regard Economics as the "Physics of Value".
And, indeed, this is surely not correct:
The purpose of money is to facilitate barter by splitting the transaction into two parts, the acceptor of money reserving the power to requisition value from any trader at any time
Money is first and foremost an institution, and as soon as we start talking about "the purpose" of an institution as a first principle, we are not talking about the empirical institution itself, but entering into the institution as participants and trading folkviews regarding the institution.
And when a work is so deeply entrenched in the monetarist fairy tale approach to the historiography of money as to say:
Civilization began with exchange, and exchange began with whole barter. Whole barter means the exchange of things for things, with each transaction complete in itself.
Civilization began with Cities, and Cities began with Big Men (priests, kings, whatever) redistributing taxes collected in kind. The first money were receipts that stood as proof of payment for those taxes.
And, yes, literally tokens, and yes, of course, obviously, with no value independent of the system of relationships where the information content of the token had meaning.
Barter is a fine thing to get luxuries and other status goods ... because, after all, if you fail to get the luxury or status good, it just means that the Joneses get ahead of you, when you would rather keep up with the Joneses.
However, for staples, reliance on barter would be insane. For staples, the problem of the dual coincidence of wants is not a minor annoyance that can be worked around for a century or decade while waiting for one of the items being bartered to emerge as the medium of exchange ... its a problem of, if nobody who has cereal grains wants what you have to offer, you starve then die.
Even worse is the following form of argument:
The total of 176 answers to the 22 questions showed such contradictions, inconsistencies and disagreements that we feel it a patriotic duty to state that there appears no understanding of the subject of money among the contributing authorities or among others whose writings we have studied.
Now, if you take several chartalist theories, of whatever quality, and several quantity theories, of whatever quality, and throw them into a mass, it is certain that that will be a mass of confusion and contradiction, because there are fundamental premises upon which the two groups of theory will disagree, and both groups cannot be simultaneously right.
But that can not be used to disprove the validity of each and every theory in the mass. Utsukushikereba sore de ii
ie a time delay between two "legs" of a barter exchange.
1/ I accept your IOU against value now.
That is the first "leg" of a split barter transaction.
2/ I then exchange your IOU for something of value from Migeru.
That is the second leg of the "split barter" transaction.
This all takes place within a "monetary system" which requires a "Value Unit" and a legal framework, and of course also some means of guaranteeing performance in respect of IOU's...
We currently achieve money/split barter by accepting Bank issued IOU's as "Value" (when in fact they are claims over Value or "anti-Value"), and in fact banks' economic function is as "guarantee providers".
These implicit Bank guarantees are not backed 100% by Value = "money's worth" (as yours and mine are - ours are ultimately backed by our earning power, or by something we "own"). They are actually backed by maybe 8% of "Value"= Capital which is an "in-house", or proprietary "default fund", the extent and nature of which is set by banking regulators - the BIS in Basel.
I don't think Banks as credit intermediaries are either necessary (the internet allows us to bypass them) or sustainable (compound interest on money created as debt is mathematically unsustainable).
If we can back a mutual guarantee with a provision into a mutually owned (held by a "custodian") "default fund" the result is Banking without the Bank as credit intermediary.
But that will actually be great for the Bank because, in this model, a bank operates without putting its capital at risk. It is now a pure service provider managing the creation of credit by setting "guarantee limits", rather than "credit limits", and also handling the necessary accounting system and "default fund" held by the Custodian.
And now Greenspan tells them - "gotcha, suckers - all these IOUs you got from us, you'd better dump them because they're not good for much." Which could of course cause a self-fulfilling prophecy as dollar holders see the value of their reserves drom, are tempted to sell, and these sales cause further drops. So far the sang froid of all these countries has been quite remarkable, and the fall of the dollar very orderly,
Presumably they're not selling in large volumes because they don't want the dollar to fall even more. But wouldn't they be mad to continue buying Dollars with their exports?
Most of the exporting countries are still extremely cash rich and have to put their continuing surpluses somewhere - and I very much doubt its the Dollar if they can possibly avoid it. Ergo the Euro will become the international reserve currency almost by default.
This will not be without its problems for the EU as EU exports will be priced out of many markets by the rising currency. The only thing that will save the EU is that it has a very large internal market as well.
Presumably the EU financial industry will also be a long term beneficiary - with London and New York losing out. But we still have a very long way to go before this plays out, and the US will discover that once you lose the trust of your trading partners, its very hard to win it back. "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
The resource-rich can back out of the dollar if the neo-mercantalists do not, because the active defense of dollar pegs or dollar-dominated pegs requires neo-mercantalists to issue domestic currency and use it to acquire dollar denominated assets and hold them.
However, the resource-rich can only do so if they do it slowly and cautiously, because something that looks like a run on the US$ may spur the neo-mercantalists to shift their peg ... which would lead to a meltdown in the US$, and a meltdown of the US$ will meltdown much of their accumulated financial holdings directly, and because major crises in any specific main money center is bad for business in all money centers, will also hurt their € and £ and ¥ holdings. Utsukushikereba sore de ii
So, yes, a country that has experienced a collapse of its currency has few routes to a strong currency other than a strong economy ... but even then, the choice to have a stronger currency rather than stronger demands in labor markets is a policy choice made in the context of a strong economy.
However, a country that has had a strong economy, and in particular a country that has had the strongest economy in the world, can have additional routes to a strong currency ... just as one abstract example, a tacit collaboration with nations pursuing neo-mercentalist policies of a steeply discounted peg against "such a currency" (cough US$) would be able to maintain a higher indirect exchange rates for "such a currency" than otherwise.
That's not a permanently sustainable policy, but its sustainable over the medium term ... for example, over the long term the other parties to the game may not find themselves either able to sustain the neo-mercentalist policy against political demands to deliver standard of living gains, or willing to hold the accumulation of foreign exchange reserves denominated in an artificially inflated currency.
So, US$0.05 (€0.04 soon to be €0.02) version: a strong economy permits a country to sustain a "strong currency" policy, in service to its wealthy or in service to foreign adventurism (or both) ... but a "strong currency" policy without the backing of a strong economy is a foolish policy, and the policy that the US has been pursuing as if having a "strong currency" magically creates the strong economy that is required to make a "strong currency" policy sustainable. Utsukushikereba sore de ii
a "strong currency" policy without the backing of a strong economy is a foolish policy, and the policy that the US has been pursuing as if having a "strong currency" magically creates the strong economy that is required to make a "strong currency" policy sustainable.
Of course, whether it will or not, that is always an open question, but I reckon it can be done. Utsukushikereba sore de ii
Please>
So try us! In the long run, we're all dead. John Maynard Keynes
(anciens.)
?
Yeah, I know, if the option comes into the money, they may have to top up their reserve against the option (I know it works that way with futures contracts) ... but that only helps me up to the point they go belly up. That's exactly when the call option is going to be giving the biggest windfall gain. Utsukushikereba sore de ii
Wasn't aware they were still calling the US currency "dollars" anymore in order to avoid confusion with actual hard currency like AUD or CDN or HKD btw.
In my finance circles it's refered to as the NAP, or New American Peso.
Probably take awhile before this filters down to the folks at FT.
The A$ was, of course, created at 10 shillings to the dollar, so older folks call a A$0.10 coin a shilling. And a penny was original 1.2 pence ... but I never heard anyone call a penny anything, since they phased pennies out before I arrived.
And the US$ is still a harder currency than the Jam$, Bajan$ or EC$, so there, too. Utsukushikereba sore de ii
