tag:blogger.com,1999:blog-2761684730989137546.post2176206361145402364..comments2024-03-28T04:13:36.779-04:00Comments on Mike Norman Economics: Andrea Terzi — Helicopter money: Too confused to be helpfulmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger59125tag:blogger.com,1999:blog-2761684730989137546.post-58938240418037931012016-06-05T23:30:12.072-04:002016-06-05T23:30:12.072-04:00And thanks for your feedback, btw, Ignacio, since:...And thanks for your feedback, btw, Ignacio, since:<br /><br /><i>Iron sharpens iron, So one man sharpens another.</i> Proverbs 27:17Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-76913007386817567272016-06-05T23:23:16.152-04:002016-06-05T23:23:16.152-04:00If Eurozone citizens, businesses, governments, etc...If Eurozone citizens, businesses, governments, etc. had been allowed accounts at the ECB then the deposits in Eurozone banks would have been, by definition, only at-risk, not necessarily liquid investments and not the funds necessary for the economy to function till insolvent banks could be foreclosed on.<br /><br />In other words the Eurozone would have had two payment systems within the ECB, one that worked through the banks and one that worked independently of the banks via peer-to-peer transactions between individuals, businesses, government, etc. Thus the failure of French, German and other banks with exposure to Greek government debt might have been painful but not necessarily catastrophic.<br /><br />Still, new fiat might have been needed and that's where equal fiat distributions to all Eurozone citizens would come in to provide it without cheating anyone.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72943741086238478302016-06-05T16:33:33.819-04:002016-06-05T16:33:33.819-04:00Removing deposit insurance is necessary but by no ...Removing deposit insurance is necessary but by no means sufficient. We also need to allow central bank accounts for all and remove the power of the central bank to create fiat except for the monetary sovereign.<br /><br />And a partial fix such as removing deposit insurance without a massive (and equal, of course) distribution of new fiat to finance the massive bank run that would result would, of course, be a disaster.<br /><br />The Eurozone may not have deposit insurance but Eurozone citizens are not allowed accounts at the ECB either. Thus the choice is either lend to a bank (a deposit is legally a loan) or unsafe, inconvenient physical fiat and the mattress or safety deposit box.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-21839901146534753322016-06-05T13:38:38.309-04:002016-06-05T13:38:38.309-04:00There is nothing special on removing deposit insur...There is nothing special on removing deposit insurance, is what I'm telling all the time... it doesn't change the credit relationships, expansion etc. But, whatever, if you think that that will fix anything, I would like to see it happen, not that I lack examples why it doesn't change anything (you can take Greece and Cyprus as recent examples).Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-12039682500628671612016-06-04T15:40:11.441-04:002016-06-04T15:40:11.441-04:00this would happen even if you forbid it by law. Ig...<i> this would happen even if you forbid it by law.</i> Ignacio <br /><br />Forbid? Forbid what? Let people, banks, etc extend as much credit as they dare, I say. Where's the forbidding in that?<br /><br />Communist? No, I'm an anti-fascist which is to say I'm against welfare proportional to wealth and not need.<br /><br />No one has refuted what I'm proposing, not even on purely practical grounds. Apparently you're not hearing what I'm saying to suggest I want to forbid anything except special privileges for the banks.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-4813564777326042692016-06-04T12:54:59.428-04:002016-06-04T12:54:59.428-04:00It's not pragmatists, it's what commercial...It's not pragmatists, it's what commercial relationships do all the time. Unless you forced somehow everyone to clear transactions immediately through liquid assets (and provided enough liquidity) this would happen even if you forbid it by law.<br /><br />I'm sorry but is how humans operate, 'credit' is built-in in human relations. As I said the shadow banking and unfunded liabilities do not necessarily revolve about the official system, it can be inter-family lending which leverages the system (as in China). You apparently can't wrap your head around that.<br /><br />Even if you managed to enforce it, somehow, you would have no way to know which is the endogenous demand for liquidity on aggregate and be able to provide it to the private sector. I don't see how this would work in practice in anything but a communist system, because the problem with endogenous supply of credit and leverage is that is created on-demand by the private sector until it doesn't (and the other way to stop bubbles is 'disciplining' the asset side by law and effective regulatory and judicial apparatus (again, not the liability side because as we have seen repeatedly over history this absolutely fails).<br /><br />You can call it theft all you want but I don't see how what you want to do actually works in practice with a radical change on how both production and transactions, and behaviour, take place in the system.Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-27929871003448140922016-06-03T22:55:55.882-04:002016-06-03T22:55:55.882-04:00Aka lending. Bank assets. Random
I thinking of an...<i>Aka lending. Bank assets.</i> Random<br /><br />I thinking of an asset pledged as collateral.<br /><br />But more broadly, how in the heck does the probable ability of a borrower to repay legally stolen (from the non so-called creditworthy who nevertheless must keep their fiat in a bank or else be forced to use inconvenient, unsafe physical fiat) purchasing power (plus interest, of course) justify the theft in the first place? It doesn't.<br /><br />Allow everyone to have accounts at the central bank and abolish other privileges for the banks and the moral problem is eliminated except for the problem of the unjust debt the population was driven into, cheated non-debtors and perhaps other needed restitution as well.<br /><br />It's quite a mess pragmatists have made. We'd best get to cleaning it up and preventing it from happening again.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72337359904874884892016-06-03T20:38:35.857-04:002016-06-03T20:38:35.857-04:00"Asset side you say?"
Aka lending. Bank..."Asset side you say?"<br /><br />Aka lending. Bank assets.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-81906648870390522912016-06-02T17:22:40.695-04:002016-06-02T17:22:40.695-04:00And that's what happens when the shadow bankin...<i>And that's what happens when the shadow banking systems runs amok sometimes, and is not just "big bad evil banks", but corporations and even physical persons (ie. China huge shadow bank bubble does not have official institutions of credit involved). </i> Ignacio <br /><br />Much of the allure of shadow banking is that deposits there earn higher interest rates than the artificially suppressed rates the banks pay.<br /><br />You want to reign in shadow banking? Then eliminate all privileges for the banks and then they'll have to pay decent interest rates for deposits. And if those interest rates are deemed too high then distribute new fiat equally to all citizens to drive them down.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-5168267650442485112016-06-02T17:19:54.484-04:002016-06-02T17:19:54.484-04:00This comment has been removed by the author.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-29299465088578436472016-06-02T15:25:56.019-04:002016-06-02T15:25:56.019-04:00As I said above: there are already trillions in un...<i>As I said above: there are already trillions in unfunded liabilities around!</i> Ignacio<br /><br />So what? I don't want my government subsidizing any of that. And the proper abolition of government provided deposit insurance should require billions if not trillions of new fiat to be distributed equally to all citizens. Shouldn't you rejoice at the reversal of so much unjust wealth inequality and the unwinding of so much leverage?<br /><br />Asset side you say? Why in God's Name should owning an asset qualify one for what is in essence the PUBLIC'S credit? Do you not realize that's a formula for the rich to loot the poor? As they have done so?<br /><br />Government provided deposit insurance is completely undefensible - especially now given inexpensive fiat and today's computers and communications.<br /><br />So what the heck are you defending if not injustice?Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-52250777474911819212016-06-02T14:02:03.185-04:002016-06-02T14:02:03.185-04:00Andrew, what you are missing is that this is alrea...Andrew, what you are missing is that this is already how it works.<br /><br />As I said above: there are already trillions in unfunded liabilities around! You are focusing on the 'nomination' of the liabilities instead of focussing on the asset side which is what matters.<br /><br />Is always about the asset side, is never about the liability side. Messing with the liability side is what the current morons in power do and it achieves nothing because the 'system' (all the actors involved) will always leverage and create their own liabilities endogenously.<br /><br />If you want to experience this first hand all you have to do is go live in a nation where the monetary and payment system and the institutions are in collapse mode. But this happens ALL the time also in normally functioning nations.<br /><br />Corporations create liabilities all the time, and all of them may as well be completely faux and bollocks in the future if things go south. And that's what happens when the shadow banking systems runs amok sometimes, and is not just "big bad evil banks", but corporations and even physical persons (ie. China huge shadow bank bubble does not have official institutions of credit involved).<br /><br />Many forms of securities are used as 'money' and that is nominated in USD or CNY doesn't matter a single iota, because that's just the nomination. What matters is that you are using a security to acquire other security or an asset.<br /><br />Stop obsessing over the liability side of the balance sheet, it doesn't work like you think it does, funding it to a 100%, requiring 100% reserves, having separate 'nomisma' units for the public or private credit, etc. does not change any of the above, ever.Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-2790219300253170902016-06-02T13:39:17.451-04:002016-06-02T13:39:17.451-04:00A third alternative is print and spend publicly an...<i>A third alternative is print and spend publicly and then use private borrowing from loanable funds created by spending (outside money) for private investment. All inside money is outside money. The monetary system is exogenous rather than endogenous, and government decides on the amount to inject by spending (including transfer) and the amount to withdraw by taxation in order to control growth, employment and price stability, rather than allowing markets to do so, since markets have a history of price instability, chronic unemployment, and boom-bust cycles.</i> Tom Hickey<br /><br />Yes, except I would allow banks to create as many liabilities as they dare in the name of endogenous money creation.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-89572700687213346802016-06-02T13:29:43.694-04:002016-06-02T13:29:43.694-04:00Ignacio,
they think their "morals" are ...Ignacio,<br /><br />they think their "morals" are the most important part in this and this is just wrong...<br /><br />Morals dont get you anything... you have to be technically competent when you are dealing with material production/distribution systems which is what the whole problems are about these days..<br /><br />To people like us this wouldnt even be hard to set up....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-68978290629411433932016-06-02T13:27:39.491-04:002016-06-02T13:27:39.491-04:00Current accounting is 'honest', as long as...<i>Current accounting is 'honest', as long as the market prices hold up</i> Ignacio<br /><br />No it isn't. How can one have honest accounting when the liabilities the banking cartel creates are almost entirely a sham wrt the general population? Market prices when we have a government enabled boom-bust cycle?<br /><br />Besides, at worst, what I'm proposing is morally obvious, should do no harm, and the abolition of government provided deposit insurance alone should require a huge amount of new fiat to be created and distributed equally to all citizens. What's not to like?<br /><br />As for dislike of appeals to morality all I'm asking for is simple honesty and equal protection under the law. Is that too much to ask? How much lower a standard do you think safe wrt survival of our society?Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-64264899029625280362016-06-02T13:27:39.048-04:002016-06-02T13:27:39.048-04:00This comment has been removed by the author.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-34641372200759428492016-06-02T13:08:55.866-04:002016-06-02T13:08:55.866-04:00I'm not saying is not possible, or that it sho...I'm not saying is not possible, or that it shouldn't be done, but you are disingenuous if you think it's something simple or easy to implement.<br /><br />I'm all for it as I believe a public alternative should exist, but I'm also telling you that there are already solutions around that are similar in nature or there are in other places and that won't change the real material relationships because fringe monetarist and banking reform does not fix things (in fact more often than not it ends up being destructive), because they don't change ultimate social behaviour and relationships.<br /><br />Current accounting is 'honest', as long as the market prices hold up, and in accordance to the laws. If you don't like them you have to change them, I'm not saying I like them, but I'm not twisting language to advance an agenda either.<br /><br /><br />As for the rest, I have enough with a set of idiots driven by "morality" ruining the eurozone with their policy, and seen enough what "moral" does when applied to economics (the moral of whom?). I would rather focus myself on what does better the lives of the population and what doesn't, instead of spiralling down into a debate about morals that won't get me anywhere and more often than not ends up with destructive policy. Things have to stand on their own without appealing to higher metaphysical , outcome driven policy, not ideologically driven agenda. Ideologically driven agenda is what is killing society, more than dishonest banking system.<br /><br />P.S: History is by now long enough to have a good insight on many monetary and banking experiments, is worth learning about them as the results are often completely different of what you could expect of them a priori.Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-90259763494174565862016-06-02T13:05:43.332-04:002016-06-02T13:05:43.332-04:00"Print and spend" is socialism. "Bo..."Print and spend" is socialism. "Borrow and spend" is capitalism. The difference is risk assumption with the opportunity for extraordinary reward for individuals wiling to take on risk by borrowing to invest. In printing to spend there is no risk and the distribution is more even.<br /><br />What is the rationale for borrowing to spend and creating risk? To create individual incentive to invest in order to drive capital formation.<br /><br />This is the basis of capitalism that began with the Venice bankers in the late Renaissance that would develop into capitalism during modernity.<br /><br />See Peter Dorman's "Modernity and Capitalism" that I just put up here.<br /><br />A third alternative is print and spend publicly and then use private borrowing from loanable funds created by spending (outside money) for private investment. All inside money is outside money. The monetary system is exogenous rather than endogenous, and government decides on the amount to inject by spending (including transfer) and the amount to withdraw by taxation in order to control growth, employment and price stability, rather than allowing markets to do so, since markets have a history of price instability, chronic unemployment, and boom-bust cycles. Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-73279847393627953692016-06-02T12:54:58.980-04:002016-06-02T12:54:58.980-04:00because the "private sector" will always...<i> because the "private sector" will always find ways around that because is what happens when trade is involved.</i> Ignacio<br /><br />That's no excuse for government subsidies for such behavior but rather an argument for why they should be eliminated.<br /><br />Besides, I'm not arguing for elimination of the "social safety net" since investment is good and investment requires taking risks. We should not be too frightened of failure since that is self-defeating.<br /><br /><i>Instead of seeking magic fixes via fringe monetary and banking engineering we shall start looking for more endurable changes, otherwise we are just iterating over the same system of the last centuries regarding credit relationships.</i> Ignacio<br /><br />Bank have ALWAYS, at least since the abolition of the Tally Stick, been at least implicitly privileged by government since it is the apparent moral duty of a monetary sovereign to provide a risk-free transaction and storage service for its fiat and not leave that to the private sector. So what I'm suggesting has NOT been tried to any significant extent.<br /><br />I'm calling for justice including honest accounting, not magic, though the results (God's blessing) may well seem magical to some.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-71115627490619297272016-06-02T12:36:45.414-04:002016-06-02T12:36:45.414-04:00What you want in practice is what defenders of 100...<i>What you want in practice is what defenders of 100% reserve (non-fractional) banking always want</i> Ignacio<br /><br />No. What I want is honest accounting and that means liabilities that are real and not a sham. Let banks create as many liabilities as they dare, I say. But let them be actual liabilities wrt the general public.<br /><br />As for infrastructure, you are surely mistaken. What I propose should easily be accomplished with the Internet and ATM's at local post offices. Are you being deliberately obtuse? <br /><br />Besides, government subsidies for private credit creation are a looting mechanism whereby workers and the poor have been/are cheated. That alone more than justifies the very modest real cost of doing away with them.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-11811216299846591832016-06-02T12:15:38.210-04:002016-06-02T12:15:38.210-04:00"Such lending would be new fiat creation. But..."Such lending would be new fiat creation. But the central bank should only create fiat for the monetary sovereign."<br /><br />Print and spend, instead of "borrow" and spend. I don't think many people around here are against that, preaching to the choir. This has nothing to do with all the other banking stuff.<br /><br />"Risk-free storage" solutions already exist (broadly speaking, treasury securities), it changes nothing. The management of a payment system for the wide public (transactions) actually requires a good deal of infrastructure and personnel, the public, and in general everybody, is oblivious to whether you are using 'fiat' or 'credit' (as both are materially undistinguishable) and it changes ZERO about the actual transaction and credit relationships amongst different actors. You can't just wrap your head around that fact: there are already trillions in unfunded liabilities (not insured) and the private sector will always find ways to create and leverage credit because it's an endogenous function of the system and how it works.<br /><br />What you want in practice is what defenders of 100% reserve (non-fractional) banking always want, pivoting to that model doesn't change jackshit in practice because the "private sector" will always find ways around that because is what happens when trade is involved. What's the difference? None, that when the pyramid of liabilities collapses due to market prices the authorities have to steep in and save the system off the records (ie. 2008).<br /><br />It won't magically change behaviour of people, it wouldn't do anything, because the material relationships and behaviour is basically the same. Instead of seeking magic fixes via fringe monetary and banking engineering we shall start looking for more endurable changes, otherwise we are just iterating over the same system of the last centuries regarding credit relationships.<br /><br />It has been like that sicne th first freaking civilization were commerce existed, wrap your head around that, making 'everything fiat' won't change a damn thing <br /><br />p.s: ofc = of courseIgnaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-37899515684170115312016-06-02T12:05:38.308-04:002016-06-02T12:05:38.308-04:00ofc = "of course"ofc = "of course"Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78743994642528298812016-06-02T11:33:12.175-04:002016-06-02T11:33:12.175-04:00One of the primary functions of banking, now more ...<i>One of the primary functions of banking, now more than ever, is operating the payment system and ofc, lending. For both of those functions you need infrastructure and institutions built around those services, ....</i> Ignacio<br /><br />Who the hell (literally, it seems) says the central bank should lend? It shouldn't. Such lending would be new fiat creation. But the central bank should only create fiat for the monetary sovereign. Otherwise it is allowing the so-called credit-worthy to loot the poor and other non so-called creditworthy. <br /><br />Risk-free storage of and transactions with fiat for all citizens and not just depository institutions require very little in the way of personnel or infrastructure. Yet those services, along with the abolition of government-provided deposit insurance and other privileges for the banks would profoundly reform our money system for the better.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44327019985406497912016-06-02T11:24:34.666-04:002016-06-02T11:24:34.666-04:00This comment has been removed by the author.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24196922123500729292016-06-02T11:13:05.851-04:002016-06-02T11:13:05.851-04:00What does ofc mean?What does ofc mean?MRWhttps://www.blogger.com/profile/13878920695841363553noreply@blogger.com