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Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

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Helsworth
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Post: #11
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

@Boudifle
Your above post contains so many inaccuracies and establishment spewed lies, that it's frightening.
I'll try to be brief.

1-The models you are blaming are NOT Keynesian models, they are neoliberal models. It's a big difference between the two.

2-There has been no decline in productivity. You are gravely mistaken.


3-Currently, no government in the developed world is printing money in response to the crisis. The US is practicing QE, which is useless in triggering a revival of crediting, and it is NOT money printing. Japan practiced QE for 10 years and still had deflation. Also, 81% of all QE is in a vault and stagnant. http://forum.ars-regendi.com/wow-81-all-...23609.html

4-Money is and always has been a "creature of the state". Money is a government issued liability, a public IOU. Fiat money is backed by taxation. Taxation ensures a constant demand for the government's money; and because of this, a government with monetary sovereignty is NOT a household. It is not revenue constrained. Public spending finances taxation, not the other way around. Unemployment is a policy choice. So long as you have unused resources, spare production capacity, and unemployment (people willing and able to work) - the government is either taxing too much, spending too little, or both.

5-Present establishment models don't take into account the government and private debt. The financial crisis is a crisis on paper. Private debt is the problem, not government debt. Aggregate demand is income plus the change in private debt. Private banks can fuel short term economic growth, but it is not sustainable in the mid to long term. When private debt levels get too high, households start reducing their consumption in order to be able to make bank payments. That hurts the rest of the economy. Lower consumption means lower sales, lower sales means lower production, lower production means laying off workers (rising unemployment).
The austerity imposed by idiotic neoliberal governments, see the EU - only made the crisis worse. That's because during a downward economic cycle, the government deficit is supposed to grow not shrink. The private sector cannot deleverage if the government is working to reduce its budget deficit or transform it into a surplus. Historically speaking, government deficits are way too low compared to the private sector debt levels.

6-Throw away all a priori assumptions, and take a look at double-entry bookkeeping. (S-I)+(G-T)+(X-M)=0 There are 3 sectors to the modern economy, government sector, private sector, and foreign sector. All 3 cannot be in a position of surplus at the same time, someone needs to run the deficit so the others can run the surplus, and the only one able to do this without going bankrupt is the government (the currency sovereign).
The government deficit equals the net savings or net surplus of the nongovernment sector in a given fiscal year. All transactions (horizontal) within the private sector net to 0. Someone's spending is another's income. One man's liability is another's asset. Every debit has a corresponding credit. The only way that that net in the private sector can be positive or negative, is via vertical transactions. Meaning? Government spending more than it taxes, or taxing more than it spends. The former fuels the private sector with net savings. The later erodes accrued savings over time.

7-The notion of apolitical money is a lie or scam (depending on context).

8-Countries in the developed world don't grow as fast as developing countries; because they're already at a certain level of development. And the establishments are content to simply import the real wealth from third world countries. The US for instance is a net exporter of aggregate demand - the whole world wants to sell its physical products to it in exchange for paper dollars. That being said, geopolitics is one thing, economic reality and potential reality is another. Developed countries are in NO danger to lose their ability to produce.

9-The fundamental problem of the 21st century capitalist economies is the financial system. It's predatory, and it doesn't work like Adam Smith and others hoped that it would. The parasitical banksters don't issue credit for real production. They simply gamble on the prices of existing assets, in order to bankrupt firms and seize existing assets. What is bankruptcy (caused by predatory lending) if not a transfer of ownership at bellow real market value?
The great bulk of private investment comes from accrued earnings over time, not from bank loans.

10-The Eurozone is another problem in and of itself. The euro is a foreign currency to all member states. Member state government are constrained by the 3% arbitrary rule of Maastricht. Despite having a common currency, there are no common banks. The ECB doesn't guarantee euro deposits (like the FDIC does in the US). Member states do. But they can't in reality. How can they, when they are currency users, not currency issuers? That would be like Andora guaranteeing dollar deposits, or Argentina guaranteeing ruble deposits. And sine Europe chose the path of austerity, here's how real domestic aggregate demand looks.


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This post was last modified: 08.01.2014 19:13 by Helsworth.

08.01.2014 19:05
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Rising Phoenix
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Post: #12
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

Helsworth Wrote:
2-There has been no decline in productivity. You are gravely mistaken.

No, but there has been a decline in real wages (which is what I think most people are talking about when they mean 'productivity' in countries like the U.S.A.).

Helsworth Wrote:
8-Countries in the developed world don't grow as fast as developing countries; because they're already at a certain level of development. And the establishments are content to simply import the real wealth from third world countries. The US for instance is a net exporter of aggregate demand - the whole world wants to sell its physical products to it in exchange for paper dollars. That being said, geopolitics is one thing, economic reality and potential reality is another. Developed countries are in NO danger to lose their ability to produce.

No, but they are constraining their ability to increase production. More technology in many cases would exacerbate their existing social issues, which would lead to people questining the status quo even more, which is ultimately bad for those in the top...

Helsworth Wrote:
9-The fundamental problem of the 21st century capitalist economies is the financial system. It's predatory, and it doesn't work like Adam Smith and others hoped that it would. The parasitical banksters don't issue credit for real production. They simply gamble on the prices of existing assets, in order to bankrupt firms and seize existing assets. What is bankruptcy (caused by predatory lending) if not a transfer of ownership at bellow real market value?
The great bulk of private investment comes from accrued earnings over time, not from bank loans.

No objections there, except that an important thing to note is that generally speaking the banks that behave like that are the more successful ones market-wise (and are also the most prone to receive bailouts when the need for it arises).

08.01.2014 21:37
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Helsworth
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Post: #13
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

Indeed. While the productivity of capital has increased, wages have trailed well bellow that treshhold.


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08.01.2014 22:40
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Boudifle
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Post: #14
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

Hels... did you think i was liberal?
I m not liberal, not keynesian etc...
A correct and effective keynesian state can work only if there is quiet no corruption... it seems difficult. I recognise the importance of sovereinty of a state on its Money, but as i said, the bit coin is a symptom. A symptom only exist thanks to a precise disharmony.
In the real economy, some theoretical models can be wrong, even if they look like very logic on the paper:
-It s possible for a state not to be in deficit and create growth
-It s possible to be developped and have commecial exedent in the long term
-It s impossible to create growth after a certain level of legislative unsecurity, whatever the money you try to put in your economy
-If you take the wrong economical choices, you will have high unemployment even if you have a perfect monetary policy... on the paper.
-OK, bankers are thieves, who will desagree exept bankers?

By the way, the problem of European Union is not ONLY because of the lake of a central Bank...

31.01.2014 19:44
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Helsworth
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Post: #15
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

Boudifle Wrote:
Hels... did you think i was liberal?
I m not liberal, not keynesian etc...
A correct and effective keynesian state can work only if there is quiet no corruption... it seems difficult. I recognise the importance of sovereinty of a state on its Money, but as i said, the bit coin is a symptom. A symptom only exist thanks to a precise disharmony.
In the real economy, some theoretical models can be wrong, even if they look like very logic on the paper:
-It s possible for a state not to be in deficit and create growth
-It s possible to be developped and have commecial exedent in the long term
-It s impossible to create growth after a certain level of legislative unsecurity, whatever the money you try to put in your economy
-If you take the wrong economical choices, you will have high unemployment even if you have a perfect monetary policy... on the paper.
-OK, bankers are thieves, who will desagree exept bankers?

By the way, the problem of European Union is not ONLY because of the lake of a central Bank...

Where to begin, I wonder?

1- I barely seen you post. I don't know on which side of the political spectrum you see yourself.

2- The Eurozone does have a central bank. It's financial architecture problems are many, and they're all political. Lack of a surplus recycling system inside the eurozone member states. Lack of european banks; the ECB does not guarantee euro deposits, state governments do (which they can't). Arbitrary cap on fiscal deficits. These are the macro-problems.

3- It's possible to have short term growth by not running fiscal deficits, provided the foreign sector is running the deficit. This always leads to bubbles, and it will inevitably blow up. The only creator and destroyer of net assets is the currency sovereign. The currency sovereign creates net assets by spending more than it taxes - adding more numbers into the accounts in the banking system, than it takes out via taxation. The currency sovereign destroys net assets by taxing more than it spends.
Once again, basic double entry bookkeeping. Private sector + government sector + foreign sector =0

4-Bitcoin is a virtual (capped) commodity set to deflate as demand for it rises. It's not recognized by law as legal tender. As such, it is not money.

5-Yes, bankers are thieves, because the system is designed to give them power to speculate on everything with virtually no threat of being convicted. They gamble to bring existing assets into bankruptcy, in order to acquire them at bellow real market value. The banking system of our days isn't behaving like Adam Smith envisioned. The great bulk of private investment comes from accrued earnings over time, not from bank loans.

6-You're confusing monetary policy and fiscal policy. They are two vastly different things. The former is virtually a blunt instrument, unable to deal with recessions, unable to create net financial assets within the economy. Monetary stimulus means increased spending from existing (fixed) income. It means leverage spending. While fiscal stimulus means increased spending from increased income. The former is not sustainable mid to long term. The latter is.

7-There's no system out there that is spared from corruption. Corruption is a human trait. And as long as humans are in charge of public and private institutions, you will have corruption.

If you'll allow me, and if you have the time... please read this article on fiscal sustainability 101. http://modernmoney.wordpress.com/2010/12...t%C2%A03d/


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This post was last modified: 31.01.2014 20:11 by Helsworth.

31.01.2014 20:07
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Rising Phoenix
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Post: #16
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

Helsworth Wrote:
7-There's no system out there that is spared from corruption. Corruption is a human trait. And as long as humans are in charge of public and private institutions, you will have corruption.

Not so much a human trait as a system trait. We live in a society that emphatizes profit making as the means to "reach the top" (also an imaginary construct). Thus as a result everyone has an interest in pulling their own way instead of pulling everyone's way.

Many people see stealing as a viable means of increasing their income - and what is corruption if not a form of theft?

31.01.2014 22:44
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Crossover
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Post: #17
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

Boudifle Wrote:
..
A correct and effective keynesian state can work only if there is quiet no corruption... it seems difficult.

And isn't this a prerequisite for a free-market economy?Otherwise how are you going to achieve perfectly informed participants which is a pre-requisite for a free market economy?
Which system's effectiveness is NOT affected by corruption or its lack thereof as a matter of fact ?

Quote:
In the real economy, some theoretical models can be wrong, even if they look like very logic on the paper:

Except for when we are not talking about models but about identities

Quote:
-It s possible for a state not to be in deficit and create growth

Only if it has a twin trade surplus that is larger than the gvt surplus.
Othewrise you will have private debt fueled growth which is guaranteed to not last forever.And this can be proved by identities, not by models.

Quote:
-It s impossible to create growth after a certain level of legislative unsecurity, whatever the money you try to put in your economy

It is also impossible to create growth if you only make shockingly large reforms and do not provide much needed money in the economy to stimulate demand.Eurozone anyone?

Quote:
-If you take the wrong economical choices, you will have high unemployment even if you have a perfect monetary policy... on the paper.

Communism USSR style is a wrong economical choice but it can have low unemployment.

Quote:
By the way, the problem of European Union is not ONLY because of the lake of a central Bank...

No the problem is the lack of a central fiscal authority.


-In sharp contrast, economic phenomena are not just hard to predict. Their prediction is impossible. Why? Because human economies (quite unlike those populated by automata) are subject to something worse than the worst non-linearities: infinite regress.
31.01.2014 23:09
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Crossover
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Post: #18
RE: Yanis Varoufakis, Bitcoin and the dangerous fantasy of apolitical money

TriniSary7 Wrote:

Crossover Wrote:
Which system's effectiveness is NOT affected by corruption or its lack thereof as a matter of fact ?

http://en.wikipedia.org/wiki/Qin_%28stat...tes_Period



-In sharp contrast, economic phenomena are not just hard to predict. Their prediction is impossible. Why? Because human economies (quite unlike those populated by automata) are subject to something worse than the worst non-linearities: infinite regress.
01.02.2014 02:08
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