But capitalism has failed around the world in various experiments since 14th century Italy. Is it not time to try something different?
But that is exactly what I have been trying to tell people the last 10 years: try something different that has not been tried (and failed at) before!
I can't be quite as cold blooded as you, alien.
Tommy, I think you contradict what you said in a previous post:
I had thought that the meltdown we saw, what has it been two years already?-- would have resulted in a realignment, where control of the economy and the money started flowing back to those who create something of value, and away from the agents who-- even though this violates my non de-humanizing language policy-- perform a function in the economy that can only be described as parasitic.
I have underestimated the resiliance of our parasitic infestation in the economy.
Things, apparently, have to become much worse.
And they will.
The highlighted quote above is exactly what I said.
This nostalgia for a better, more wonderful capitalist era is purely nonsensical and lacks any understanding of history.
Frustrated Mess, you completely misunderstood the first paragraph of Dave's essay, which says the exact opposite of what you think it says.
I suspect you never read a word beyond what you quoted.
I suggest you go back and read on and then tell Dave that you had made a mistake.
Something i should have addressed sooner: How we got here, where we went wrong.
The single biggest mistake we made was allowing the F[orces]O[f]E[vil] (TM) to equate enterprise with capital, and call the whole system Capitalism, thus making the worst part of unregulated enterprise the sacred centre of our political system, philosophy and world-view.
Enterprise is, very simply, trade. Goods and services for goods and services, with or without an intervening medium of exchange. Trade may be facilitated by money, but can easily be understood, and carried out, in the absence of money. An ebony log for a bushel of wheat; your fortune told for a silver coin; a silver coin for patching a tent; a song for your supper, two goats for a cow; a jug of milk for a candle; a candle for a blessing; seven years' farm labour for a bride. Every participant in the transactions has to invest effort and/or resources. If there is profit (i.e. one participant gets a better deal than the other) it's a small advantage, balanced out in the community's economy.
Capital, on the other hand, is money, and can't be anything else. Money attracting money from another source. The capitalist invests no labour and no resources - and usually not even his own money - to accumulate other people's money. Compound interest is money accruing money that doesn't even exist - projected, or imaginary or electronic money.
Eterprise is a fairly basic human activity; it goes on through wars and natural disasters; it will continue long past the collapse of capitalism. Capital was a convenience of highly complex economies, which has been misused to such an extreme that it no longer serves any purpose for society.
The single biggest mistake we made was allowing the F[orces]O[f]E[vil] (TM) to equate enterprise with capital
Not to worry. If we had managed not to let them so equate, they would have got the same results with another holy word.
Words have power, but not as much as the left tells itself.
And then, another fundamental question:
What bills? Why do we think we owe the bankers anything for the goods and services we exchange among ourselves? Would anything be lost if we simply left them out of every transaction? Why do we act as if the value they assign to our wages and the price they put on our produce is the true price and value - even though they keep changing the numbers?
Money, like any other deity, has the power its worshippers give it. When the people lose faith, the god loses power.
Actually, 'paying the bills' has a more free floating meaning than that.
When it was tossed out that boomers have never paid their bills... at the level of cognitive reality, its a point about inter-generational division of resources.
Actually, 'paying the bills' has a more free floating meaning than that.
When it was tossed out that boomers have never paid their bills... at the level of cognitive reality, its a point about inter-generational division of resources.
I'm very suspicious of 'free-floating' meanings - indeed, of any word that can't be nailed down - and so should we all be, imo: the FOE have made out exactly like bandits from the corruption of language.
Yes, i know about the other meaning. Two, actually.
That we took more than our share, as regards generations. Which i've already answered: We also put more in. And that we took more than our share of the planet. That part is true and fair. The only way to pay those bills is to revolt before we die.
absentia, 'how to get to a money-free society' is part of a trail. all steps are part of trails i guess.
currently in rural context loss of land immediately and directly is at critical point.because of Money.
many out here don't know how it's formed.leaving people in ignorance leaves them open to manipulation.
so, needed is;- clarity on how money is created,
- alternatives, including existing or new barter systems between sectors. many already do small-scale barter. maybe a better term than barter is 'gift exchange'
I'm not sure it's necessary to go to a money-free society. Barter can be awkward. Some medium of exchange (salt, shells, rocks, gold, eggs...) is convenient for keeping track of transactions; once the population reaches 100 or so, it becomes almost necessary. However, we need to be aware that the more abstract money is , the more arbitrary its value, the easier it becomes for the unscrupulous to cheat the unwary.
From time to time in huiman history, a currency has become debased to the point of inutility and had to be scrapped. This means, whoever is holding a lot of cash (savings and IOU's) is plum out of luck. The transition is easiest on landowners. The money-lenders who have already siezed entailed property get a head start on the next phase, but they then have to sell those properties at the new going rate, so buyers may fare better in acquiring the same property they lost.
The most important thing in such transitions is a clear understanding of what we're doing and why it needs done. A government with a strong enough mandate and stomach to carry it through and enforce proper regulation, is also useful. Usually, the dire situation throws up the tough leaders - though we may repent of them later on.
I wonder how China will handle it. Too bad i won't be here to see what China becomes, afterward.
I think I'm more than satisfied I wont see how the Chinese deal with turmoil.
I'm very suspicious of 'free-floating' meanings - indeed, of any word that can't be nailed down...
You can be as suspicious as you want. Should be. And thats operative in actual discussions you and I have with people.
But how much of it is about actual discussions, and how much is about 'free floating meanings' that we cannot directly effect, but have to address nonethless?
That doesnt mean you give up on having discussions. But its folly to act as if a billion discussions is what is going to turn things around, when we cant have them. Nor is it necessary to depend on that.
True enough. What i usually do is confront the word i have trouble with, and the person who used it; try my best to nail that sucker (the word, the word! Not the person!) down. Makes me a PITA sometimes.
(yes, that may be a flat bread)
absentia, 'how to get to a money-free society' is part of a trail.
all steps are part of trails i guess.
currently in rural context loss of land immediately and directly is at critical point.
because of Money.
many out here don't know how it's formed.
leaving people in ignorance leaves them open to manipulation.
so, needed is;
- clarity on how money is created,
- alternatives, including existing or new barter systems between sectors. many already do small-scale barter. maybe a better term than barter is 'gift exchange'
[edited from this morning to add:
forget it,
too many employees are just promoting the employers' interests.
i don't think city workers would ever be able to do equal exchanges, before a vast sea change in attitude.
i try to imagine bank workers rallying for 100 percent reserves- loans only from cash on hand...
or insurance workers calling for their industry to stop premium rate increases...
-
i'll probably regret writing here at all.]
Alien,
The difference in my mind is that I regretfully see at as inevitable. I interpreted your take on the same idea more as a tactic we should adopt, that we should stand back and let things degrade as quickly as possible. Re-reading what you said, that probably wasn't a fair interpretation of your words.
In the final analysis, no I don't think we are dissagreeing.
In the final analysis, no I don't think we are disagreeing.
That's the way I see it too, Tommy.
I don't see it as a possible tactic either, but I agree that it is, very sadly, unavoidable. That is why I said that truth (not me) is cold blooded.
earlier reading or comments may be unfair.
city workers generally are in the same boat of ignorance regarding money as rural, probably even bank workers to some degree.
i'm still in a lot of ignorance - had to think twice today about whether a one percent interest charge constitutes 'money creation'. if the loan is made from 100 percent cash reserves- actual depositor's money on hand, and if the one receiving a loan gets the money to pay the interest from other's (e.g. clients) cash, then the interest isn't 'money creation'. Money creation is the process of loaning non-existent or limited reserves.
ideally of course i wouldn't have to insure my house because neighbours would help rebuild it in exchange for cooking or other help.
residents of the province ought to figure out a different system for car insurance. like public transit.
and i wouldn't need a bank if ...have to think about that more..
actually, unless one needs a loan for a project, banks aren't needed. the overabundance of bank and financial 'industry' workers can enjoy just transition strategies to useful work.
quote: "and i wouldn't need a bank if ...have to think about that more.."
...if your modern Serta Perfect mattress allowed you to stash it there. :)
...we had more credit unions, that are only interested in maintaining the lending services to members and they were supported by government guarantees, like pensions.
I think the problems that exist now stem not so much from money as debt and compound interest, usury etc, but not due to normal interest or simple interest charges on money and credit. I agree with Alien when (insert other worldly gender) says that anyone can overthrow any system and cause it not to work properly. The right says that over-spending is the root cause of all evil in the world today, when in fact the problem is underspending due to slow economic growth and debts growing exponentially by compound interest. Economic growth rates in the western world are lower than the rates charged by money lenders. And since our governments have handed the bulk of money creation powers to private banks, banks and financial capitalists have effectively be handed what used to be federal powers of resource allocation. The banks and money speculators are in control not elected governments. And our elected stooges feign powerlessness. The coup happened some time ago.
quote: "The coup happened some time ago."
Fidel. I've been hoping that someone would give a date to such events and an explanation as to why and how they came about. Want to take a crack at it?
quote: "The coup happened some time ago."
Fidel. I've been hoping that someone would give a date to such events and an explanation as to why and how they came about. Want to take a crack at it?
In Canada it was as early as 1975. Milton Friedman rubber stamped a speech given by our then Bank of Canada governor Gerald Bouey. Friedman said he couldn't have given a better speech himself about monetarist monetarism. And our national debt began to grow and grow and ...
The coup was completed by 1991 when Brian Mulroney's conservative government rammed a bill through Parliament without any debate. I think there may have been an all-party finance committee on the matter, but it was token. The NDP objected we can be sure, but the mechanics of the phony majority made it a dictatorial maneuver. Lurking somewhere in the background all the while was that shadowy central bankers clique, the Bank of International Settlements who none of us mere mortals ever votes for by the democratic method. Unelected and accountable to no one but money. Money is said to have no country, and I believe it's true. Money owes allegiance to a kind of international code of pirates everywhere. And they have power to live parasitically by the sweat, blood and tears of whole nations, and possess the power to destroy whole nations without firing so much as a cannon ball. Non-compliance to the monetarist agenda sometimes requires military muscle. Marauding international capital works on the basis of piracy in that it takes what it can and gives nothing back. No prisoners.
But you said "The banks and money speculators are in control not elected governments." How was this made possible?
But you said "The banks and money speculators are in control not elected governments." How was this made possible?
I believe they wield power by idle threats for capital flight and with full compliance by our elected stooges. Michael Wilson, for instance, was a bond salesman for Bay Street before becoming finance minister under Mulroney. That's when the idle threats began WRT money speculators and foreign creditors foreclosing on Canada because Canada was alleged to be approaching a debt wall or some such. They worked to take the legs out from under the productive labour economy with tight money policies in favour of creditors, and then they told us there was nothing government could do to challenge international capital. We would just have to knuckle under and tighten our belts while the rich got richer. The new liberal financial regime pulled off a similar bloodless coup in late 1970s Britain. It was an idle bluff according to some insiders and commentators from that era.
And, of course, lavish spending on social programs was causing inflation and justification for therr creditor-friendly tight money policies. It wasn't the case according to today's economists, but that's besides the point and water under the bridge now. The Liberals fell in-line by 1993 and expanded Mulroney]s corporate America-friendly FTA with NAFTA by 1994. More threats and power handed to US corporations who have since scooped up controlling interest in more than 30 key sectors of Canada's economy including energy and manufacturing. Canada has become a land of absentee corporate landlords and with national energy policy dictated to us from corporate board rooms in America as Canadians themselves are transformed into renters in their own land.
Imagine a dandelion that keeps growing, summer and winter, year after year, taking the nutrients, water, oxygen and space from every other living thing. No cycle: all one way. Can't be sustained.
Just see eco -nomy like any other eco -system; like a garden. Then you can see exactly what needs to be done to make it work.
Imagine a dandelion that keeps growing, summer and winter, year after year, taking the nutrients, water, oxygen and space from every other living thing. No cycle: all one way. Can't be sustained.
Just see eco -nomy like any other eco -system; like a garden. Then you can see exactly what needs to be done to make it work.
Exactly! What a good metaphor that is for the economy and society. Jim Stanford and even Jeffery Sachs, a one-time advocate for economic shock treatment, say that there IS a valid alternative to neoliberalism and its "flexible labour markets." Those alternatives to the "new" liberal capitalism are there in the Nordic countries, competitive economies and spending lavishly on social programs and enhancing economic competitiveness. These Marxian ideas were previously denounced by Ricardo and von Hayek and Friedman to be counter-productive to free markets and prosperity. The results are in, and there really is a valid alternative to Thatcher and Friedman's neoliberal ideology. TRIAA, or, there really is an alternative
"The banks and money speculators are in control not elected governments."
And that was allowed to happen because suddenly you didn't need grandma as collateral to take out a loan. In lieu of wage raises, you could produce a plastic card to buy most anything. Finance capital had a new market and the biorrower became hooked (Canadians owe #1.4 trillion today)
And, that was allowed to happen because everyone was made an investor in their future, dependent on economic and market growth and their pension funds, with added incentives from tax-free RRSPs (if you had anything left over).
We were sucked into relenquishing political control in that fashion.
Yeah, that, and the scare-tactics. Inflation will wipe us out! Economic stagnation will wipe us out! Grow or die! Remember?
It wasn't too hard to convince us, because we'd already had the red scare, the yellow peril, the OPEC scare: all those awful people, just waiting for us to falter, to weaken... And having been raised puritan (more or less; Catholics probably even more susceptible to guilt) it wasn't too hard to convince us that we didn't deserve fewer work-hours or higher pay. Had it too good too long. Time to pay the piper - all that. So the bankers were the piper and we just believed that was okay for them to own all our stuff.
Excellent points, George and Absentia. Yes, plastic and credit to finance big homes that people won't be able to afford to heat and electrify before very long. And sports-wagons in every kid's parents' driveway while they flip burgers and put off higher learning for tomorrow, or whenever they opt to put that on tick, too.
George I thought I read that Canada as a whole is suffering indebtedness to the tune of more than $2 trillion dollars, from personal debts to federal debt and everything in between?
Fidel: (your post #25)
I think you have been caught up in all the bullshit to long and have been made to argue your point so much that it has become twisted and you have forgotten what it is..
Every one working for the governemt is a big problem. Why should anyone have to work for any one else? Work is the problem. work means that someone is being exploited.
The real issue is how to distribute the resource of the world evenly and properly to everyone.
I think it would be better if you argue for eveyone to pitch in and help out.
First we all decide what needs should be filled and then figure out how we all make it happen.
First we all decide what needs should be filled and then figure out how we all make it happen.
In order for that to happen, you need every person equaling one vote. See the last sentence in my poorly written post #25. I admit to not posting zingers every time. Maybe not even most of the time. But I still give'r everything I've got 110 percent, coach.
Yeah, that, and the scare-tactics. Inflation will wipe us out! Economic stagnation will wipe us out! Grow or die! Remember?
It wasn't too hard to convince us, because we'd already had the red scare, the yellow peril, the OPEC scare: all those awful people, just waiting for us to falter, to weaken... And having been raised puritan (more or less; Catholics probably even more susceptible to guilt) it wasn't too hard to convince us that we didn't deserve fewer work-hours or higher pay. Had it too good too long. Time to pay the piper - all that. So the bankers were the piper and we just believed that was okay for them to own all our stuff.
- I might note a minor quibble with all the 'us' and 'we' stuff floating around - some of us were smelling rats way back in the 80s, and not buying all the 'stupid greedy Canadians' crap even back then .... not to speak for everyone, of course ....
That'd be people like me, siamdave. I didn't know any of the important stuff in those days. Some babblers tell me I still don't.
George I thought I read that Canada as a whole is suffering indebtedness to the tune of more than $2 trillion dollars, from personal debts to federal debt and everything in between?
Keeping eye on ball: This makes it sound as if we borrowed so much money. In fact, most of the "debt" is compound interest - that is, interest on interest on interest, etc. It's monopoly money - doesn't exist, and the GNP to base it on doesn't exist. It keeps growing in the computer, on the page, in the mouths of pundits, but it does not exist! We've already payed back way more than anybody ever we borrowed, in the form of "servicing the debt". Another cute way the FOE and complicit government syphon off unlimited, unending profit.
trippie wrote:Every one working for the governemt is a big problem. Why should anyone have to work for any one else? Work is the problem. work means that someone is being exploited.
I think i understand, but have to pick on your words. Because both your point and the distinction are very important.
Work is good and necessary. Work is whatever useful effort you make toward staying alive and improving your life and your community. Work can be solitary or co-operative, voluntary or coerced.
It's jobs that are the problem. A job is work for somebody else, for wages set and paid by somebody else. That skews the relationship of people in a community, divides them into bosses and underlings, and causes no end of grief.
Siamdave, i agree. Too bad it was a smallish minority. Worse, much worse, that complicit government and sycophantic media (I should make a trademarked acronym for that congregate - the hands and mouth of capital) made those people very. very difficult to be heard.
Here is another thing on that subject. We're all the time told, by CGASM (naw! lacks cachet) that we just don't understand: these things are too complex, leave it to the experts. But, really, if you look through the fancy paintjob to the basic shape of the mechanism, any layman can tell whether it will work or not. An arrangement where energy goes around, will work. An arrangement where it all goes one way can only work as long as the base expands. A round planet can't sustain a funnel-shaped economy.
That'd be people like me, siamdave. I didn't know any of the important stuff in those days. Some babblers tell me I still don't.
- ah, but at some point you obviously realised you were being treated like a mushroom, and decided to look for the light - which, it appears, many have not, preferring the ever-so-tasty pablum fed to the 'shrooms ....
The real issue is how to distribute the resource of the world evenly and properly to everyone.
....
First we all decide what needs should be filled and then figure out how we all make it happen.
trippie, you are absolutely right. What you just said is one of the sanest things said in this thread. On the "Outside the box" thread you said you are constantly looking for new information to make sure you got it right (not your exact words), so I suggest you look at the book I linked to from the "What kind of Utopia..." thread. It describes a world of pure sanity, contrasted with our kind of world to make the differences stand out. That kind of Utopia, of course, is not possible here and now, but reading it gave me enormous confidence in my own sanity and it liberated me from the torturous task of trying to figure out how to tweak this system to make it work. You can't tweak insanity, you have to tear it down and rebuild it. It is like renovating a very old and decrepit house: sometime it is easier to reduce it to a big hole in the ground and start again.
The link to the book is:
.... You can't tweak insanity, you have to tear it down and rebuild it. It is like renovating a very old and decrepit house: sometime it is easier to reduce it to a big hole in the ground and start again.
...
- insofar as that is directed at our current situation, I don't really agree - another example might be a human with a disease - you don't say "Oh well, that proves the body is no good, so throw it all away and start again.." - (at least I wouldn't) - I would say - let's get rid of the disease. IN our current situation, our 'body politic', which is pretty sound, in my opinion, at the base, has been co-opted, usurped, whatever word you want, by a very serious disease called Capitalism - and that's what we need to get rid of, rather than throwing the baby out with the bathwater, so to speak ...
.... You can't tweak insanity, you have to tear it down and rebuild it. It is like renovating a very old and decrepit house: sometime it is easier to reduce it to a big hole in the ground and start again.- insofar as that is directed at our current situation, I don't really agree - another example might be a human with a disease - you don't say "Oh well, that proves the body is no good, so throw it all away and start again.."
Dave, I also said that this kind of sanity is not possible, here and now. It is not a suggestion for action, it is a suggestion for thinking it through: what kind of world would make sense if we could have anything we wanted. Once we know what we believe in, then we can try to find the next best thing to work for. It is like a compass helping us to find the direction, even if we can not hope to get to the destination in our lifetime. Every little bit helps.
- we'll just have to hash it out over a beer or three someday -
Excellent points, George and Absentia. Yes, plastic and credit to finance big homes that people won't be able to afford to heat and electrify before very long. And sports-wagons in every kid's parents' driveway while they flip burgers and put off higher learning for tomorrow, or whenever they opt to put that on tick, too.
George I thought I read that Canada as a whole is suffering indebtedness to the tune of more than $2 trillion dollars, from personal debts to federal debt and everything in between?
Yep. The $1.4 trillion (and a bit) is only the household debt, including mortgages. Federal/provincial debt is the rest.
But I'm really looking forward to seeing how others suggest that we can ignore the degree to which the someday-old-farts are into the market up to their armpits...exactly the way in which boomers today became dependent on growth for their current prospect of fun in the sun. That is, having reached what David Suzuki calls the "death zone" in life (The Legacy: An Elder's Vision for our Sustainable Future...he is 74) other venerable folks can ignore their own made-in-the-shade status while suggesting revolution for the late-comers.
You only spotted the problem in the 80s Dave? It was really set in concrete in the 70s.
I've been telling and telling you (but i won't anymore after this one, honest!):
You need to stop thinking 1970's, 80's and 90's. We're way past that kind of economics.
Most of the debt you all keep talking about doesn't exist. It's all in the bankers' imagination, or in their computers. It can be wiped out with the stroke of a legislative pen. It's gone the minute central banking is re-nationalized. We, and our heirs, are not bound to keep making the mega-rich and their heirs mega-richer in perpetuity. The sucking of effort and material all in one direction cannot continue, and therefore will not continue. If Canadian, US and European governments won't stop it, then Asian and South American governments will. They have to. The only alternative is revolution - and, this time, it wouldn't be limted to a single country; it couldn't be contained and isolated. Imagine the carnage. I wonder whether our glorious leaders are capable of imagining it, even while they are arming for it.
absentia, you are way out of the (insanity) box here.
Good luck!
It's gone the minute central banking is re-nationalized.
Apparently our Bank of Canada was nationalized in 1938 and still is today, or at least, it is on paper. They just choose not to use it for its intended purposes. And unlike Fannie Mae and Freddie Mac mortgage companies in the US, Canada's CMHC is also publicly owned. The Harpers introduced private mortgage insurance to compete with CMHC a few years ago, but that went badly early on.
And our big six banking monopolizers have expressed their desire to be too big for jail just like their Wall Street equivalents in years past. Opposition from the NDP and other groups have put pressure on the feds not to allow big bankl mergers in Canada. Canada's banksters wanted to be able to gamble bigger and better alongside their Wall Street counterparts all along. We can only guess that previous bailouts for Canada's banks in the 1980s left them realizing that Canadian taxpayers would be on the hook for even more of their gambling losses on foreign oil stocks and real estate fiascos later should they be caught over-extended in US markets and other markets, like this financial meltdown today.
If you can guarantee something for the old timers, absentia, (not the mega rich, but those with the ass out of their pants now) that would be good. In the meantime, I'm afraid it's the 1970's that best explains the thread's "how we got here." and its resolution the best chance for those who haven't begun wrapping themselves in their shroud.
George, let me quote Tommy at you:
Even those who are at the top-- and I don't mean Obama-- I mean the investment houses and banks, etc., can't change it.It's a runaway train.
Besides, I like my shrouds! 
The how we got here part is fine. But we can't go back along the same route: the bridges have all been... if not actually burned, badly damaged. All i'm saying is, in order to resolve it in a way that doesn't involve bloodshed, we need - desperately and urgently - to stop thinking in the grooves the FOE have laid down, stop using the language they perverted, stop respecting the institutions they built. Otherwise, we'll just go around in circles. And we don't have time for that.
If the "how we got here" is "fine", may I suggest that making that clear will be the only way we get back our little red wagon without bloodying it.
Absentia is on the right track when he talks about renouncing the national debts "owed" to the banksters. John Ralston Saul, in his book "The Doubter's Companion", wrote an interesting short history of the subject.
DEBT, UNSUSTAINABLE LEVELS OF:National debts are treated today as if they were unforgiving gods with
the power to control, alter and if necessary destroy a country. This
financial trap is usually presented as if it were peculiar to our time.
The reality may be less disturbing.1. The building up of unsustainable debt loads is a commonplace of
history. There are several standard means of resolving the problem:
execute the lenders, exile them, default outright, or simply renegotiate
to acheive partial default and low interest rates.2. There is no example of a nation becoming rich by paying off its debts.
3. There are dozens of examples of nations becoming rich by defaulting
or renegotiating. This begins formally in the sixth century BC with
Solon taking power in debt-crippled Athens. His organization of a general
default - "the shaking off of the burdens" - set the city-state on its
road to democracy and prosperity. The Athens which is still remembered
as the central inspiration of Western Civilization was the direct product
of a national default. One way or another most Western countries,
including the United States, have done the same thing at some point.
Most national defaults lead to sustained periods of prosperity.4. The non-payment of debts carries no moral weight. The only moral
standards recognized in Western society as being relevant to lending
are those which identify profit made from loans as a sin. Loans
themselves are mere contracts and therefore cannot carry moral value.5. As all businessmen know, contracts are to be respected whenever
possible. When not possible, regulations exist to aid default or
renegotiation. Businessmen regularly do both and happily walk away.
The collapse of the Reichmann financial empire - larger then most
countries - is a recent example. The family was able to turn around,
walk away and almost immediately begin a new life, promoting the
biggest property development in the history of Mexico.6. There are no general regulations dealing with the financial
problems of nations simply because they are themselves the regulatory
authority. There is however well-established historic precedent.
Mexico effectively defaulted in 1982-83, thus regenerating its economy.
The reaction of Western lenders has been to treat these crises as
special cases. The sort of thing that only happens to Third World
countries. That's nonsense.7. The one major difference between private and public debt is that
the public sort cannot be based upon real collateral. This makes default
a more natural solution to unviable situations. The question of national
collateral was fully addressed in the eighteenth century when it became
clear that an indebted people could not owe their national rights (their
land and property) to a lender. The citizen's natural and concrete
rights took precedence over the lender's abstract contractual rights.
One of the most peculiar and insidious aspects of twentieth-century
corporatism has been an attempt to reverse this precedence. The managerial
imperative suggests that national debts can be indirectly collateralized
in several ways. Governments can be forced to sell national property to
pay debts (privatization). They can also be pressed to transfer ownership
of national property to lenders, as has been done in the Third World.
There is also the threat that defaulting nations will be treated as
international pariahs. This is a strange argument since it doesn't apply
in the private sector (see 5). It is also an idle threat, as Mexico has
demonstrated (see 6).8. Debts - both public and private - become unsustainable when the
borrower's cash flow no longer handily carries the interest payments.
Once a national economy has lost that rate of cash flow, it is unlikely
to get it back. The weight of the debt on the ecomomy makes it impossible.9. A nation cannot make debts sustainable by cutting costs. Cuts may
produce marginal savings, but savings are not cash flow. This is another
example of the alchemist's temptation. Mrs. Thatcher spent a decade
trying to slash the British national debt. She had the advangage of
being able to use North Sea oil income for this purpose. The result
was a damaged industrial sector, economic stagnation and endemic
unemployment. The payment of debts is a negative process which can
only be a drain on investment and growth. The more successful major
repayment programs are, the more the economy will be damaged.10. Strong nations weaken their own economies by forcing weaker ones
to maintain unsustainable debt-levels. For example, in spite of enormous
efforts on all sides, the Third World debt has continued to grow. In
1993 it was $1.6 trillion. This costs them far more in interest payments
sent to the West than the West sends in aid. The practical effect is to
make economic growth impossible. The Third World thus constitutes a
dead weight in our ongoing depression; a barrier to renewed cash flow.11. Civilizations which become obsessed by sustaining unsustainable
debt-loads have forgotten the basic nature of money. Money is not real.
It is a conscious agreement on measuring abstract value. Unhealthy
societies often become mesmerized by money and treat it as if it were
something concrete. The effect is to destroy the currency's practical
value.12. An obsession with such false realities and with debt repayment
indicates a linear, narrow, managerial approach to economics. The
management of an economy is the profession of finance-department
technocrats, economists and bankers. Their approach is quite
naturally one of continuity. This is a means of denying failure.
To treat money or debt as a contractual matter - therefore open to
non-payment or to renegotiation - would mean treating the managerial
profession as of secondary importance and unrelated to fundamental
truths. What sensible people might see as originality or practicality,
financial experts see as a threat to their professional self-pride.13. Does all of this mean that governments should default on their
national debts? Not exactly. What it does mean is that we are imprisoned
in a linear and managerial approach which denies reality, to say nothing
of experience. Money is first a matter of imagination and second of
fixed agreements on the willing suspension of disbelief. In other words,
it is possible to approach the debt problem in quite different ways.14. There have been changes which limit our actions in comparison to
those of Solon or Henry IV, who negotiated his way out of an impossible
debt situation in the early seventeenth century and re-established
prosperity. First we have to recognize and protect the investment
made by citizens directly (government bonds) and indirectly (bank
deposits) in the financing of national debts. Second, there is the
new and unregulated complexity of the international money markets,
which now constitutes an important corporatist element.15. Our central problem is one of approach. For two decades governments
have been instructing economists and finance officals to come up with
ways in which the debt can be paid down and interest payments maintained.
No one has instructed them to propose methods for not paying the debt and
not maintaining interest payments. No one has asked them to use their
creativity in place of a priori logic.16. Were members of the Group of Seven (G7) each to pool their best
economists and give them a month to come up with modern versions of
default, we might be surprised by the ease with which practical
proposals would appear.17. There are two simple guiding points:
A. The appearance of continuity is easily achieved in
default scenarios through paper mechanisms which can be
categorized as "debt retirement."
B. What is difficult for a single country in contemporary
circumstances is easy for a group, particularly if that group
speaks for the developed world.
Saint Peter, don't you call me,'Cause i cain't go -
I owe my soul to the company sto'!
First, they abrogated the means of production and turned us into wage-slaves. Then they suborned our system of government and turned us into debt-slaves. Then they pulled the means of production, and thus wage- and tax-base out from under us, and turned us into a serf economy. That was rather short-sighted of them, no?
You can't get anything back. You can only make something new. But it won't be us; it'll be the Asians. Every empire has to end - whatever made us think ours would last?
The "Doubter's Companion" is one of my Bibles.
16. Were members of the Group of Seven (G7) each to pool their best
economists and give them a month to come up with modern versions of
default, we might be surprised by the ease with which practical
proposals would appear.
An ominous thought: it was published in 1994, 16 years ago, and they still have not come up with the practical solutions.
But it won't be us; it'll be the Asians.
You misspelled that word, absentia, I am sure you meant: Aliens!
