Tuesday, December 18, 2012

Why Not Just Wean Ourselves Off Fixed-Income Expectations?

commentary by Roger Erickson

Why not abandon the concept of Fiat Fixed-Income drained from relatively static assets. And replace it with the concept of upward-floating REAL capabilities growth from high-tempo exploration of high-margin REAL options?

After all, the glory really does go to those who find a better way, not those conservatives who try to sit on the old ways - and hoard digits.

Those focused on interest income see reduced bond-income as a bad thing? Maybe for a few mercantilists, but not for the nation as a whole.

It's not like there aren't other REAL options. Rebuild? Build? Go back to the moon? Invent? Have fun?

These people seem to only see static value, not the dynamic value of coordinated public initiative.


5 comments:

paul said...
This comment has been removed by the author.
Bob said...

pension funds REAL PENSION FUNDS FOR REAL WORKERS THE PRODUCE,non government workers, REAL PENSIONS are fixed to the bonds. The whole system of retirement was built on this model. What do you think the sheeple will do if Geithner shows up with his one trillion dollar coin and says poof! the deficeit is gone! Any sane working person will come to the sad realization that as malcolm x movie excerpt said " We,ve been hood winked, we've been bamboozled, we've been lied to,etc etc". In other words the vale of confusion about the ponzi scheme will be pulled away. 401 k's suck, social security was built as an iron clad agreement with labor and the Gubbamant IRS black hand. Now the scum Libor rigging bankers have looted to the point of self destruction Geithner will show up with his magic coin. Viva la revolution when the sheeple burn the USD like the draft cards of viet nam. I don't want to see it, but changing the rules like saying bonds don't count anymore is ludricrous unless you want a revolution. Just sayn, without the sheeple trusting the system IE " I work and I get mine later" if this breaks down stick a fork in the congress, etc. etc.

Roger Erickson said...

Bob,
Guaranteeing food/housing/support for the elderly without the charade of pensions is no more revolutionary than introducing Social Security & various Automatic Stabilizers back in the 1930s.

There's no other way to scale up our economy further, without changing methods.

Did builders panic & give up when Cathedrals started collapsing in the middle ages? No, they just initiated novel indirections. We'll do the same, after much sturm & drang.

Tom Hickey said...

Bob said...
pension funds REAL PENSION FUNDS FOR REAL WORKERS THE PRODUCE,non government workers, REAL PENSIONS are fixed to the bonds. The whole system of retirement was built on this model. What do you think the sheeple will do if Geithner shows up with his one trillion dollar coin and says poof! the deficeit is gone! Any sane working person will come to the sad realization that as malcolm x movie excerpt said " We,ve been hood winked, we've been bamboozled, we've been lied to,etc etc". In other words the vale of confusion about the ponzi scheme will be pulled away. 401 k's suck, social security was built as an iron clad agreement with labor and the Gubbamant IRS black hand. Now the scum Libor rigging bankers have looted to the point of self destruction Geithner will show up with his magic coin. Viva la revolution when the sheeple burn the USD like the draft cards of viet nam. I don't want to see it, but changing the rules like saying bonds don't count anymore is ludricrous unless you want a revolution. Just sayn, without the sheeple trusting the system IE " I work and I get mine later" if this breaks down stick a fork in the congress, etc. etc.


Right, the bonds issue is very complicated because just about everyone has a vested interest in it.

The system of issuing currency by issuing debt lies at the bottom of the whole rotten system which makes it saving-based and entails exponential growth in savings. On the other hand, growth without accommodating saving desire will result in unsustainable private debt and the financial cycle of crashes.

What this entails is either curtailing policy space and letting recessions-depressions occur regularly by limiting the ability of govt to accomodate saving desire, or else completely revising the system to go to a system that is not saving-based, where govt provides the capital.

The way forward is to revise the system, but that is most probably not going to happen without a revolution resulting from a total system failure. There are too many vested interests involved.In short, complexity is running ahead of human ability to handle it.

Tom Hickey said...

Roger Erickson said...
Bob,
Guaranteeing food/housing/support for the elderly without the charade of pensions is no more revolutionary than introducing Social Security & various Automatic Stabilizers back in the 1930s.

There's no other way to scale up our economy further, without changing methods.

Did builders panic & give up when Cathedrals started collapsing in the middle ages? No, they just initiated novel indirections. We'll do the same, after much sturm & drang.


Roger, I am thinking that this is probably just too big a jump to make through evolution of the system. It will probably take a revolution.

Schumpeter had the outlines correct, I suspect. He did not see a revolution occurring due to class struggle as Marx did. His conclusion translated to contemporary times was that rent-seeking would undermine investment and curtail innovation, resulting in extreme inequality and economic difficulties that would end in socialism due to the widespread perception that capitalism had failed.

I think that not just the US but the global economy may be on this track.