tag:blogger.com,1999:blog-1513588060557517621.post7273032248244676639..comments2023-03-22T12:40:49.113+01:00Comments on Notes on the Next Bust: Rising inequality explained (not using r-g)Ari Andricopouloshttp://www.blogger.com/profile/00181838814176635218noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-1513588060557517621.post-1629547438799744502016-03-16T09:52:52.128+01:002016-03-16T09:52:52.128+01:00Great post today. An interesting read for any pers...Great post today. An interesting read for any person who would agree with your views. Long may these posts continue. <a href="http://www.topratedpersonalloans.com/" rel="nofollow">http://www.topratedpersonalloans.com/</a>calvinewershttps://www.blogger.com/profile/08577240595558024291noreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-8495756632596824182015-12-13T19:29:35.334+01:002015-12-13T19:29:35.334+01:00* I meant credit guidance not capital controls.* I meant credit guidance not capital controls.jakenoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-74013813399059641292015-12-02T00:45:06.275+01:002015-12-02T00:45:06.275+01:00
that is an interesting criticism of the mpe model...<br />that is an interesting criticism of the mpe model.My intial response would be to advocate a land value tax, to prevent prevent property price inflation and land speculation.Although that georgist approach is not part of the mpe program.<br /><br />I believe the mpe proponents would argue that true cause of inflation is the increasing costs of debt servicing incurred by interest charges,forcing everybody to push up prices to meet those costs.They also have this interesting ratio rule,I have just come across a more succinct explanation here https://holland4mpe.wordpress.com/2013/02/07/introduction-to-mathematically-perfected-economy/ .The group’s critique of how interest servicing takes up more and more of circulation flows is exactly the same as yours.<br /><br />But more generally,It strikes me that the optimum system would have no “unearned income” or “rents” in it. Even Keynes sought to eliminate these rents,in his piece euthanasia of the rentier:<br />“Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.”<br />Would you consider interest unearnt rent ?<br /><br />I agree with overt monetary(Central bank) financing of government deficits. But It strikes me that no public debt issuance would be better than higher interest rates. High interest rates are just a public subsidy to financial institutions, by providing them with a safe income yielding asset to park their funds.Why not simply prevent asset price inflation (affordable house prices) through a land value tax,and completely do away with speculative investments.By steering credit towards socially useful and productive investments to the real economy through,high capital gains taxes on financial assets and securitiesand/or capital controls.We need to direct credit to tangible capital formation which increases economic output.<br /><br />thanks<br />Jakenoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-55659671855628834462015-08-18T18:23:00.581+02:002015-08-18T18:23:00.581+02:00Hi Jake,
I have great misgivings about this idea...Hi Jake, <br /><br />I have great misgivings about this idea - which I may not have fully understood. I am not even sure where to begin.<br /><br />Although I agree that interest is a large cost to society, there is only one thing worse than having too much interest and that is having no interest at all.<br /><br />One problem is that a zero interest rate encourages speculation. It also means that there is no limit to the amount of money that can be created for free. I don't see how this can be avoided. This means that we will get a huge inflationary spiral of asset prices and huge increase in money supply leading to hyper inflation in goods. When giving out money effectively for free this can not be avoided. The presence of interest prevents this. <br /><br />People who borrowed early would get huge windfall gains as everyone started following suit and paying more and more for their property as it would be so cheap.<br /><br />Interest rates are required to prevent a build up of credit. But also, we need to find another way of putting money into the economy to replace credit. The MPE credit is one way of doing this but it is uncontrolled and will lead to misallocation of resources.<br /><br />Unless I have completely misunderstood it it appears to be a completely impractical solution. Much better to get the economy back to one where debt is a much smaller share of GDP, bankers and rent seekers get a smaller share of the pie and house prices etc are more affordable. To do this we need considerably larger government deficits and actually higher interest rates. And in my opinion, these government deficits should be partially monetised to increase the amount of sovereign money vs debt money.Ari Andricopouloshttps://www.blogger.com/profile/00181838814176635218noreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-43703042935683122402015-08-16T20:19:09.921+02:002015-08-16T20:19:09.921+02:00Thanks for having a look
try using this,it hashes...Thanks for having a look<br /><br />try using this,it hashes it out.: https://australia4mpe.wordpress.com/category/mpe-for-dummies/<br /><br />or.. <br /><br />But the crux of their idea is this:Their Fundamental ideas is to provide the public with a "Common Monetary Infrastructure" which allows people<br />to monetise their promissory notes (normally written up for bank mortgages) into fungible exchangeable currency.<br />This public entity will allow people to issue their own credit interest free. All self issued currency(principal) would be paid back or retired from circulation back to the CMI, at an agreed upon rate(the rate of consumption and depreciation of the property). The "CMI" would publish the funds so that the "obligor" could pay someone for his property. But Then the "obligor" would retire down the principal so that they would be extinguished. The rate of payment would be the same as the rate of consumption, so typically a $100,000 property would be consumed over 100 years, and the obligor would only have to pay $83.33 a month.<br /><br />The 'borrower' is obligated to retire the principle on a scheduled basis at a agreed upon rate,the rate of consumption/depreciation.So they would have to repay the principle over a period of time in monthly segments<br /><br />The only debt that will be written off is the interest part of the debt, whereas the 'borrower' is still liable to repay the principle. However many over indebted people having already repaid the principle many times over,so some people's mortages could end up being written off.<br /><br />'It addresses the issue of demand deficiency created through interest claims.Which you point out here are cumulative "But now, more borrowing is needed in order to replace the demand lost by the extra debt servicing costs. After this year the gap between liabilities and RSFL has risen"<br /><br />In regards to you point about savers; in the sense that banks generate deposits in exchange for people's promissory notes and then charge interest on it,no real savers miss out.(correct me if I am wrong)<br /><br />so these ideas would directly address demand deficiency created by interest claims and hoarding, by removing interest costs from the credit creation process .As opposed to just compensating by using CB created money and government spending to fill the demand gap.<br /><br />maybe the maths aspect would be of interest https://australia4mpe.wordpress.com/the-mathematics/<br /><br />thanksJakenoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-48650217515939961972015-08-13T14:32:48.920+02:002015-08-13T14:32:48.920+02:00Thanks Jake,
I've been to the facebook page, ...Thanks Jake,<br /><br />I've been to the facebook page, and it is difficult for me to find the actual idea that you are discussing. Reading posts by Adriano Lorenzo, I do find the language quite inflammatory, as well as his attack on Steve Keen completely unjustified. He may well be unrepresentative. But overall I am not sure he understands the mechanism by which money is created.<br /><br />In any case, I do not wish to criticise others - I only do so in reference to his attack on Steve Keen, who, in my opinion, perfectly understands these matters. <br /><br />In terms of the idea, it is effectively a writing off of all debt. If no interest is payable ever then there is no need to ever repay the principal. I would need to be convinced here that this transfer of wealth from savers to borrowers is justified. It appears to be pretty extreme to me.<br /><br />Anyway, I haven't read the full idea so maybe should not be commenting on it. The principle of reducing debt money relative to base money (in a way that does not involve more saving) is one that definitely needs to be included in the solution to this problem.<br /><br />Ari Andricopouloshttps://www.blogger.com/profile/00181838814176635218noreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-40595051032553959892015-08-12T01:14:59.394+02:002015-08-12T01:14:59.394+02:00this is excellent.
I agree we need productive defi...this is excellent.<br />I agree we need productive deficit spending financed interest free by the CB.<br />BUt having read this article and <br />http://www.notesonthenextbust.com/2015/04/a-comparison-of-long-term-effects-of.html<br />I wonder what other policy proposals would you look at to address demand leakages created by interest claims on the productive economy.<br /><br />I´ve come across a group called ,mathematical perfected economy founded by mike montagne.<br />They advocate a system which would introduce a public agency to monetize people´s promissory notes interest free. Consequently there would be no interest claims on the productive economy, This would lower the cost of everything,as people would only have to pay back principal.It would also address the demand leakages you have cited, as income could be spent on consumption,not interest payments.They also explain that this would eliminate both inflation and deflation.<br />I would be interested to hear if you corroborate their math, and what your view on their proposals and views and positions on inflation and deflation.And whether you think it has any limitations or is more sustainable than the status quo<br />they have a fb group,and some websites https://www.facebook.com/groups/pfmpe2012/<br />https://australia4mpe.wordpress.com/ (check out the mathematics page)<br /><br /> <br />thanks.<br />jakenoreply@blogger.com