Of course, zero mention of Limits to Growth here………
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Tags: 2008, capitalism, crash, economics, economy, education, europe, federal reserve, gap, indebtedness, inequality, japan, jobs, market, pollution, poor, profits, reagan, recession, recovery, richard wolff, stock, unemployment, work
Categories : economy
Unlike the vast majority of journalists, George Monbiot does his own research rather than repeat parrot fashion what others in his trade throw at the sheeples as ‘news’. It’s a pity he hasn’t included resource depletion in the pot as a problem for growth and therefore debt servicing, but there are enough new concepts in this to make it a most worthwhile read. Lifted from the Guardian.
A maverick currency scheme from the 1930s could save the Greek economy
Compare the terms demanded of the Greek government to those offered to the banks. Eurozone ministers now insist upon unconditional surrender: a national abasement that makes a mockery of democracy. But when the banks were bailed out, governments magicked up the necessary money almost unconditionally. They shyly requested a few token reforms, then looked away when the bankers disregarded them.
The German government, now crushing the life out of southern Europe, merely tickled its own banks. As the New York Times reported, though the corrupt German banking system “required a bailout bigger than the one American banks received”, “there is little appetite for change in Germany because the banking system is so deeply intertwined with its politics, serving as a rich source of patronage and financing for local projects”.
When the Greeks complain that they have been reduced to colonial subjects, they are right, but the colonial masters are not the northern members of the eurozone. They are the private banks. The governments that seem determined to destroy a sovereign state for its impudence are merely the intermediaries of power.
None of this is to deny the corruption and fiscal promiscuity of previous Greek administrations. But while the banks have got away with far worse, the bullies of the eurozone insist on extracting every last drop of blood from people who had no role in their governments’ deceptions.
Greece is stuffed: or so almost everyone asserts. Perhaps. Or perhaps there are possibilities we have scarcely begun to examine. I should warn you that no one in their right mind would take financial advice from me. (Or, for that matter, from most financial advisers) I seek only to suggest that there may be some possibilities of hope among the ruins.
One of these radical ideas was proposed a few months ago by Martin Wolf in the Financial Times. He suggests stripping private banks of their remarkable power to create money out of thin air. Simply by issuing credit, they spawn between 95% and 97% of the money supply. If the state were to assert a monopoly on money creation, governments could increase their supply without increasing debt. Seigniorage (the difference between the cost of producing money and its value) would accrue to the state, adding billions of pounds to national coffers. The banks would be reduced to the servants, not the masters, of the economy.
An entirely different approach is proposed by Ann Pettifor, in Just Money. She argues that governments have failed to understand what money is. It should not be seen as a commodity, she says, but as a social relationship based on trust. Unusually for a radical critic of finance, she sees the creation of money by private banks as “a great civilisational advance”, freeing nations from the usurers who once monopolised and restricted wealth.
The supply of money is, in effect, unlimited: as long as there is sufficient productive activity to absorb it there is no obvious restraint on the amount of money that can be issued. So when governments and central bankers tell you that the money has run out, Pettifor argues, they are either deceiving us or deceiving themselves. What holds back economic activity is an unnecessary and artificial restriction of the medium of exchange.
Banking’s great civilisational advance has been all but destroyed through deregulation, whose result is a new system of usury, speculation and exploitation. Private banks borrow cheap and lend dear, forcing us to work ever longer hours and to inflict ever more damage on the natural world to service our debts. Pettifor suggests that governments should reassert control over interest rates at every level of lending.
But perhaps the biggest transformation could happen at the local level. Greece already has set up some local currencies that have kept money circulating in several towns and cities as it cannot be siphoned away. (There are similar systems in Britain, such as the Bristol Pound). But strangely they do not make use of the thrilling, transformative system that almost saved Europe from fascism; the currency developed by the economist Silvio Gesell called stamp scrip. It is explained in Bernard Lietaer’s magnificent book The Future of Money.
In its original form, stamp scrip was a piece of paper on which a number of boxes were printed. The note would lose its validity unless a stamp costing 1% of its value was stuck in one of the boxes every month. In other words, the currency lost value over time, so there was no incentive to hoard it. Stamp scrip projects took off across Germany and Austria after national currencies collapsed in the early 1930s. In 1932, for example, the Austrian town of Wörgl was almost broke, unable to finance public works or to support its destitute population, until the mayor heard of Gesell’s proposal.
This little pot of money kept circulating, enabling Wörgl to repave the streets, rebuild the water system
He put up the town’s tiny remaining fund as collateral against the same value of stamp scrip, and used it to pay for a building project. The workers then passed on the currency as quickly as they could. Like the magic pudding, this little pot of money kept circulating, enabling Wörgl to repave the streets, rebuild the water system, construct houses, a bridge and even a ski jump. In the 13 months of the experiment, the 5,500 scrip schillings in circulation were spent 416 times, creating between 12 and 14 times as much employment as the standard currency would have done. Unemployment vanished, and the stamp fees paid for a soup kitchen feeding 220 families.
The governments of Germany and Austria, profoundly threatened by the success of these projects, shut them down and employment collapsed once more. When the US economist Irving Fisher examined these experiments he concluded that “the correct application of stamp scrip would solve the depression crisis in the US in three weeks!”. Roosevelt’s government, aware that such currencies could invoke a massive loss of federal power, promptly banned it.
Could these ideas be useful to Greece? Could they be of relevance in other parts of Europe? Even perhaps in Scotland, where the currency issue was unimaginatively fudged before the referendum? I don’t know. But if Greece leaves the eurozone, it could open up a world of possibility to which other nations have closed their minds.
Twitter: @georgemonbiot. A fully referenced version of this article can be found at Monbiot.com
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Tags: "george Monbiot", Ann Pettifor, credit, currency, eurozone, greece, interest, issue, Martin Wolf, money, Silvio Gesell, stamp scrip, supply, unemployment, Wörgl
Categories : economy
Some of you might remember that if ever there was a book that changed my life, it was Ted Trainer’s “Abandon Affluence”. These days, I have a tendency to call it “Abandon Effluence”, as the planet chokes on waste of all kinds produced by our effluent civilisation, be it CO2 in the air or plastic in the ocean….
Today, an article in the Sydney Morning Herald prompted me to comment further on this. Titled “Miserly Newstart keeps unemployed further away from jobs”, I could not help thinking “thank god for the unemployed”. For two fundamentally and totally contradictory reasons. Poor people can’t consume the planet to death, and poor people keep the economy afloat… You won’t read that in mainstream media…
The morons in charge of our country right now seem to take great pleasure in denigrating the unemployed (and the disabled, and the sick, and anyone else who may have fallen on hard times) for not doing any of the “heavy lifting”. The media loves to tell us that these dole bludgers live off our taxes (all monopoly money created out of thin air let us not forget) and we should therefore look down upon them as inferior people. From the SMH:
Australia’s Newstart was comparable to benefits provided in the Southern European nations of Greece, Spain and Portugal, which have all been rocked by the global financial crisis and sovereign debt problems. So we’ve got southern European generosity even though Australia is richer than those nations and escaped the financial crisis relatively unscathed.
What the morons keep forgetting is that whilst these unemployed people may not be paying income tax, they do pay GST on almost everything they buy with their $500 a fortnight (including food, as most of these people probably buy processed food rather than fresh), and rent to their landlords who profit handsomely. When you earn such paltry amounts of money, everything you get gets ploughed back into the economy and is counted as GDP. I believe that the main reason the unemployed are so derided is because they don’t actually participate in growth, they simply don’t get enough to consume like those who work! And they cannot get in debt, except with high interest rate credit cards…. and no doubts the banks love cashing in on that one, even if there are a few defaulters among them.
Unfortunately for the unemployed, nearly all of them do not realise what an opportunity unemployment really is. They have been so brainwashed into thinking the Matrix is the only modus operandi that they find it impossible to think outside that box. To be fair, none of the employed do either!
Imagine this…: next month, all the unemployed wake up to themselves and decide to abandon the Matrix. They each find one of the 800,000 houses that are empty at any one time in Australia, and squat there. After all, Australia has a tradition of squatting, that’s how this nation began…! Using their last dole payment (or two or three), they buy chickens and seeds, a few gardening implements, and start growing their own food. They won’t need electricity because they won’t be watching TV or charging their smart phones. They would surely have enough clothing already to keep warm if it’s cold, and most of them would quite likely own essentials like bedding etc….
Now I realise this is pure fantasy, but just bear with me a little longer….. what would happen to the economy?
According to the ABS, there are 777,700 unemployed people at the moment in Australia, representing 6.2% of the 12,500,000 who make up ‘the work force’. The underemployed number 14.8%, or another 1.8 million people, for a total 2.6 million people who presumably earn their $500 a fortnight’s worth of pound of flesh. I make that out to be a total of (in round numbers) 33.8 billion dollars a year. What, exactly, would happen to the economy if that much spending/consumption was removed from the economy? Or the 3.4 billion in GST for that matter? What of all those landlords who suddenly lose their tenants, causing a crash in the housing bubble? What of the power companies that suddenly find themselves having to shut down 10% of their power stations? Were the government to exile the unemployed, it would cause an instant depression…….
The reason of course there is any unemployment at all, is due to the very market forces the morons in charge constantly push on us. If there were no unemployment, it would be an employee’s market instead of the current employers’. In a labour shortage situation, any potential employee applying to fill a vacant position would be able to name his price (wages) and desperate employers would have little choice but to accept. And we can’t have that now, can we….. the labour market will not pay any more than is absolutely necessary. So the morons in charge continue denigrating the very socio-economic sector they and their precious Capitalism created, even ensuring they mostly cannot get a job even……. according to the SMH:
Morris and Wilson argue Australia’s current approach is counterproductive. Their study into the implications of life on Newstart found many recipients were so deprived they were ill-equipped to get work. Newstart’s very low rate was “scarring” the unemployed and making it more difficult for them to find a job.
If there were jobs to be had of course. Furthermore, my imaginary scenario above will one day come to fruition; it’s only a matter of when really. So many pundits are proclaiming that it will all start next year, like Paul Craig Roberts…
We need a reboot, no doubt about it, but first, we have to rid ourselves of the morons in charge. Before it’s too late. If it isn’t already of course, they all have their heads in the sand.
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Tags: "abandon affluence", abandon, affluence, bludgers, dole, effluence, gst, labour, market, newstart, squatting, taxes, unemployment
Categories : economy
Are we running out of time? I sure as hell feel like I am…. The illusion of economic stability we are bombarded with from the media and governments of all flavours has convinced most people that the great economic crisis of 2008 was just a blip and that things are just fine again…. Well, it’s not like that at all… The truth is that the crash of 2008 was just the first wave of our economic tsunamis. We have not even come close to recovering from that wave, and the second wave of the economic collapse is fast approaching. Think of the exponential curve…. and we are on the vertical bit. The number of crises is growing exponentially. Capitalism is like a gigantic global sand castle built on a foundation of debt and toilet paper currency. As each wave of the crisis hits us, the solutions that our dear leaders will present us will will involve even more debt and even more toilet paper printing. And every time we wipe our collective arses, everything gets worse. Right now, events are unfolding in Europe and in the US that are pushing us toward the next crisis….
The following is a list of 12 things that were published on Zero Hedge that only too clearly show the next wave of the economic tsunami is almost here…
#1 According to TrimTab’s CEO Charles Biderman, corporate insider purchases of stock have hit an all-time low, and the ratio of corporate insider selling to corporate insider buying has now reached an astounding 50 to 1….
#2 On Friday we learned that personal income in the United States experienced its largest one month decline in 20 years… Personal income decreased by $505.5 billion in January, or 3.6%, compared to December (on a seasonally adjusted and annualized basis). That’s the most dramatic decline since January 1993, according to the Commerce Department.
#3 In a stunning move, Michigan Governor Rick Snyder says that he will appoint an emergency financial manager to take care of Detroit’s financial affairs… If this does not work, Detroit will almost certainly have to declare bankruptcy. If that happens, it will be the largest municipal bankruptcy in U.S. history.
#4 On Friday it was announced that the unemployment rate in Italy had risen to 11.7 percent. That was a huge jump from 11.3 percent the previous month, and Italy now has the highest unemployment rate that it has experienced in 21 years.
#5 The youth unemployment rate in Italy has risen to a new all-time record high of 38.7 percent.
#6 On Friday it was announced that the unemployment rate in the eurozone as a whole had just hit a brand new record high of 11.9 percent.
#8 The youth unemployment rate in Greece is now an almost unbelievable 59.4 percent.
#9 On Saturday, hundreds of thousands of protesters filled the streets of Lisbon and other Portuguese cities to protest the austerity measures that are being imposed upon them. It was reportedly the largest protest in the history of Portugal.
#10 According to Goldman Sachs, bank deposits declined all over Europe during the month of January.
#11 Over the weekend, the deputy governor of China’s central bank declared that China is prepared for a “currency war“…
#12 Italy is an economic basket case at this point, and the political gridlock in Italy is certainly not helping matters. Former comedian Beppe Grillo’s party could potentially tip the balance of power one way or the other in Italy, and over the weekend he made some comments that are really shaking things up over in Europe. For one thing, he is suggesting that Italy should hold a referendum on the euro… In addition, Grillo is also suggesting that Italy’s debt has gotten so large that renegotiation is the only option… He’s my man, renegotiation means CANCELLATION!!
The so called “sequester cuts” in the US ($95 billion) have now gone into effect, and they will definitely affect on the U.S. economy. And of course we all know the U.S. economy has already been showing plenty of signs of tanking lately. If you doubt this, read “Consumer Spending Drought: 16 Signs That The Middle Class Is Running Out Of Money“.
So what comes next? Keep your fingers and toes crossed…… trust me, there are no solutions to this mess. Except for Grillo’s and mine!
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Tags: "economic depression", "money printing", bankruptcy, collapse, detroit, europe, greece, grillo, italy, unemployment
Categories : collapse, economy