The last five years after the financial crisis have made clear that the workings of money, credit, and debt have profound consequences for the functioning of our economic system. But for many, the fundamental principles that make money work remain opaque.
Is it possible to create an economic system that does not produce bubbles and crises? And is it possible to solve our current debt crisis?
In this four-part series of short videos, Institute for New Economic Thinking grantee Dirk Bezemer tackles these important questions and offers a straightforward explanation of how money works.
He describes money as a means by which members of a society can settle their debts to one another. He then uses this understanding of money to explain the mechanics of the housing market and how bubbles grow and lead to economic crises. And he explains what can be done after the 2008 crisis to build a more effective and stable financial system that can once again serve the real economy.INET
Dirk Bezemer - Debt: The Good, the Bad, and the Ugly
Dirk Bezemer | Associate Professor, University of Groningen
7 comments:
There is no NECESSARY debt with the use of common stock as a private money form.
As for government money, if the monetary sovereign never borrows, never runs a budget surplus and sometimes runs budget deficits then for all practical purposes debt-free fiat would accumulate* in the economy equal to the sum of those budget deficits.
* I ignore the machinations of the central bank since it should not even exist in a just society.
* picks up the nearest handgun and shoots himself in the face.
Gee wiz, one would think debt-free money is good news; not grounds for a potentially failed and disfiguring suicide attempt!
The irony is that I used to have a problem with sharing! But it sure beats stealing!
F,
Here is a Greek scripture for you:
"12 And Jesus entered into the sanctuary and cast out all those selling and buying in the sanctuary, and the tables of the brokers He overturns, and the seats of those selling doves.
13 And He is saying to them, "It is written, 'My house a house of prayer shall be called,' yet you are making it a burglars' cave."
Mat 21:12-13
Normally the translation is "den of theives" but if you look at the orignal Greek, it is "burglars' cave" (spElaion lEstOn) or "cave of robbers"...
http://scripture4all.org/OnlineInterlinear/NTpdf/mat21.pdf
These caves imo were places that thieves/robbers secreted their ill gotten items... rather than a "den" which implies habitation...
So you are probably on to something as far as "theft", but I have a hard time with "theft of purchasing power" this I just dont get, seems too abstract... and the relation to "debt" you seem to be on to...
It seems to me that something was going on in the exchange conducted by these 'brokers' (kollubistOn) or 'loppists' or 'clippists' who did the forex between the Roman/Herodian currencies and the silver sheckels used at the temple... so it at some levels has something to do with monetary systems, but I dont see any mention of "debt" either implied or direct...
There are achaeological records of clipped coins,
Here is one claimed to be Assyrian from 300BC:
http://images.davidlawrence.com/productimages/351xxx/351750_r.jpg
You can see the chunks taken off.. so I wonder if they were just clpping a small piece of silver off of the sheckels and taking it as a "commission" for doing the exchange... I guess that would reduce their purchasing power as they would have as much silver as otherwise, and you could perhaps claim the brokers were "stealing their purchasing power"... but again I dont see how "debt" comes into it... this just looks like they were ripping them off on commissions by nipping off some of the silver to do the deal...
Anyways fyi, perhaps think about it...
rsp.
F,
Here is perhaps a better example of a clipped coin but I believe this is Islamic not Israelite:
http://www.coinsweekly.com/en/Review-auction/10?&id=395
But you can see how they used to clip some of the metal off of the coins...
rsp,
Hey Franko,
Don't confuse me with Bob Roddis, please. Coin clipping is not what I'm talking about.
The theft I'm referring to is the unethical creation of new purchasing power.
OK F,
Lets say a young person gets a job and commutes to work via public xportation for 3 years and saves up enough "money" to buy a car and goes down to a dealer and pays "cash"...
OK, that same day, another young person gets a job and his employer is not on the public xportation route so he has to drive to his place of employment on day 1, so he goes into the dealership and signs up for a $199/mo lease for 36 months... as he doesnt have the "cash" because he is just starting the job...
Then the first guy sees this second guy over at the closing table and runs over there screaming: "Stop thief! You just stole my purchasing power!"
How does this make sense?!?
Why cant the second kid just sign up to pay it back over time as he needs the car TODAY, not 3 years from now?
Now we could argue about what is a just/appropriate APR on the lease, but what is wrong with the govt allowing one of its fiscal agents to advance balances of the state currency on the second kids behalf to the auto company so the auto company can get paid for the manufacture of the car and the kid can start driving to work?
How is anything wrong with this scenario? Who is getting hurt? What is being "stolen"? What is 'unethical'? ... again lets try to leave the APR out of the discussion because I agree the APR can be 'unethical'...
As long as the second kid remains employed there should be no problem.... If the second kid stops paying, the lender can always send out the tow truck and take the car back and wholesale it to get the missing balances...
As long as the govt is staffed by non-morons running a non-chaos economic policy this system can work well imo...
rsp,
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