Quick question for libertarians

CSGnet Archive CSG2011
61

[From Rick Marken (2011.07.14.1500)]

Shannon Williams (2011.07.14.15:30 CST)–

Do you want to see the economy flowing again? Really flowing. Like it

was in the 90s? Imagine if big corporations and the ultra rich started

investing in new companies…

Right now big corporations are sitting on $2 trillion dollars of

savings accounts.

This is because there is no aggregate demand. Corporations are not investing their $ in new or expanded business because there is no demand ($) for what they would produce with this investment. There is no demand because a few wealthy people are hoarding a large proportion of the potential demand and not using it because they have so much $ they can spend only a fraction of it. So they are not turning potential demand into demand.

Because the rich are taking so much demand out of circulation there is little left over for everyone else so demand is generally weak. When demand is weak, there is no need to hire people so unemployment goes up. Unemployment didn’t go up during the first 8 years of the 2000s because the lack of demand was compensated for by borrowing (mortgages, for example). But once that game was up (with the housing bubble collapse) demand went crashing down and unemployment when right up. The government (Obama and the Dem congress) kept unemployment from skyrocketing by passing the “stimulus” bill but it was mainly tax cuts (which don’t do much for demand) so it appeared to have failed.

If, as you suggest, corporations used their saved $ to start hiring people, this would be a good way to increase demand. But I don’t think corporations are going to suddenly turn into welfare agencies, giving people jobs to produce for a market (demand) that will only exist in the future (the workers being paid now), and that will actually exist only if all corporations did this (started hiring for no reason other than to stimulate the economy) at the same time.

I don’t think it’s likely that corporations will simultaneously agree to hire people in order to create future demand. So probably the only way to really get things back on track economically is for the government to create the demand by contracting with industries to upgrade infrastructure, education, research and development, etc. That is, a New New Deal. This will put $ into the hands of consumers (the people who are hired by the companies to do this work) and it will also develop infrastructure (good roads, smart workforce, communications infrastructure, clean energy, etc) that make the corporations themselves more productive. The money that the government uses for this purpose should come from taxation (not borrowing) and the greatest tax burden should be on those who can best afford it; the rich who are basically just hoarding their $ anyway.

So the way to fix this sluggish economy is through increased taxes (on the rich) and government investment (in infrastructure that will increased the productivity of private industries). Of course, this isn’t going to happen in the US so I predict long term high unemployment (longer term and higher if the Republicans get back into power) which will stabilize eventually at some high level with very low wages. Although we might luck out and have another bubble of some kind; tulips anyone :wink:

Best

Rick

···

Right now here is what the money flow looks like:

You give a

dollar to the grocery store. The store gives a dollar to the clerk.

the clerk gives the dollar back to the grocery store. Or the clerk

gives the dollar for apartment rent, and then the rentor gives the

dollar to the grocery store. See the circle? Everyone gives money to

the grocery store. Everyone gives money to the gas companies.

Everyone gives money to the utility companies. etc. If these

companies dam the money, then we are in big trouble. that is what

is happening now. The big companies are controlled by a few people

who all have their goals met, so they are not spending. I can see in

this metaphor that Martin’s idea of handing every citizen a credit

card is just as legit as creating cash for banks. Money is a means of

flowing goods and services to the members of society. That is all it

is. Martin’s idea would work.

The metaphor is a flow of money and possible dams being built in an

Escher - type world.

Shannon Williams

https://donate.barackobama.com/page/outreach/view/2012/openthespillways

–
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

62

[From Rick Marken (2011.07.14.1501)]

Martin Lewitt (2011 July 14 1415 MDT)

        ML: I think I can agree that  Adam's point is a contributing

factor,

      RM: Unbelievable!!

ML: Even with the anecdote I mentioned?

I don’t do economics by anecdote. I leave that to my reactionary “friends”.

Rick

···

–
Richard S. Marken PhD

rsmarken@gmail.com
www.mindreadings.com

63

[Martin Lewitt 2011 July 14 1604 MDT]

[From Rick Marken (2011.07.14.1500)]

Shannon Williams (2011.07.14.15:30 CST)–

      Do you want to see the economy flowing again? Really flowing.

Like it

      was in the 90s? Imagine if big corporations and the ultra rich

started

      investing in new companies...

      Right now big corporations are sitting on $2 trillion dollars

of

      savings accounts.

      This is because there is no aggregate demand. Corporations are

not investing their $ in new or expanded business because
there is no demand ($) for what they would produce with this
investment. There is no demand because a few wealthy people
are hoarding a large proportion of the potential demand and
not using it because they have so much $ they can spend only a
fraction of it. So they are not turning potential demand into
demand.

      Because the rich are taking so much demand out of circulation

there is little left over for everyone else so demand is
generally weak.

There is no evidence that the rich are taking money out of

circulation, most of them don’t deal in money. Their wealth is on
paper, they may own as much stock as before the crisis, but that
stock is worth less, they haven’t taken money out of circulation.
The money that was created in a pyramid of credit that has actually
disappeared when the credit pyramid collapsed. That means the money
actually doesn’t exist anymore, and the Fed just didn’t have a way
to create it, and was late with the Quantitative Easing, that wasn’t
effective anyway.

      When demand is weak, there is no need to hire people so

unemployment goes up. Unemployment didn’t go up during the
first 8 years of the 2000s because the lack of demand was
compensated for by borrowing (mortgages, for example). But
once that game was up (with the housing bubble collapse)
demand went crashing down and unemployment when right up. The
government (Obama and the Dem congress) kept unemployment from
skyrocketing by passing the “stimulus” bill but it was mainly
tax cuts (which don’t do much for demand) so it appeared to
have failed.

A lot was unemployment payments and COBRA support which did sustain

some demand, as did the payroll tax cut. They reason it didn’t do
much for demand is because it was borrowed money. What it put in
the economies right pocket, it took out of the economy’s left
pocket. There was a slight stimulus because some of the borrowed
money was taken out of overseas pockets.

      If, as you suggest, corporations used their saved $ to start

hiring people, this would be a good way to increase demand.
But I don’t think corporations are going to suddenly turn into
welfare agencies, giving people jobs to produce for a market
(demand) that will only exist in the future (the workers being
paid now), and that will actually exist only if all
corporations did this (started hiring for no reason other than
to stimulate the economy) at the same time.

right.

      I don't think it's likely that corporations will

simultaneously agree to hire people in order to create future
demand. So probably the only way to really get things back on
track economically is for the government to create the demand
by contracting with industries to upgrade infrastructure,
education, research and development, etc. That is, a New New
Deal.

That didn't work then, and wouldn't work now, because it would be

borrowed money.

      This will put $ into the hands of consumers (the people who

are hired by the companies to do this work) and it will also
develop infrastructure (good roads, smart workforce,
communications infrastructure, clean energy, etc) that make
the corporations themselves more productive. The money that
the government uses for this purpose should come from taxation
(not borrowing) and the greatest tax burden should be on those
who can best afford it; the rich who are basically just
hoarding their $ anyway.

The devaluing of the dollar did help, but at the moral cost of

confiscating gold.

      So the way to fix this sluggish economy is through increased

taxes (on the rich) and government investment (in
infrastructure that will increased the productivity of private
industries). Of course, this isn’t going to happen in the US
so I predict long term high unemployment (longer term and
higher if the Republicans get back into power) which will
stabilize eventually at some high level with very low wages.
Although we might luck out and have another bubble of some
kind; tulips anyone :wink:

Taxes on the rich are already too high.

Martin L
···

On 7/14/2011 3:58 PM, Richard Marken wrote:

      Best



      Rick

      Right now here is what the money flow

looks like:

      You give a

      dollar to the grocery store.  The store gives a dollar to the

clerk.

      the clerk gives the dollar back to the grocery store.  Or the

clerk

      gives the dollar for apartment rent, and then the rentor gives

the

      dollar to the grocery store.  See the circle?  Everyone gives

money to

      the grocery store.  Everyone gives money to the gas companies.

      Everyone gives money to the utility companies.  etc.  If these

      companies *dam* the money, then we are in big trouble.  that

is what

      is happening now.  The big companies are controlled by a few

people

      who all have their goals met, so they are not spending.  I can

see in

      this metaphor that Martin's idea of handing every citizen a

credit

      card is just as legit as creating cash for banks.  Money is a

means of

      flowing goods and services to the members of society.  That is

all it

      is.  Martin's idea would work.



      The metaphor is a flow of money and possible dams being built

in an

      Escher - type world.





        Shannon Williams

        [https://donate.barackobama.com/page/outreach/view/2012/openthespillways](https://donate.barackobama.com/page/outreach/view/2012/openthespillways)

  --

  Richard S. Marken PhD

  rsmarken@gmail.com

  [www.mindreadings.com](http://www.mindreadings.com)
64

(Gavin Ritz 2011.07.15.11.25NZT)

[Shannon Williams
(2011.07.14.15:30 CST)]

[From Bill Powers
(2011.07.14.1148 MDT)]

I suspect that with further back-and-forth this
discussion will only

degenerate. I’m going back to what this
discussion forum is about.

Do you want to see the economy flowing again? Really
flowing. Like it

was in the 90s? Imagine if big corporations and the
ultra rich started

investing in new companies. Just like they did in the
90s. That is all

it takes. Martin do you agree? It does not matter WHY the spending

occurs. Love, guilt, greed, whatever the
motivation, the result is

the same.

I was hoping that my communication
with Bill on interacting
of two Control systems would highlight the problems of how to model an economy.
I don’t think I have succeeded at all. Love, guilt, greed are not
anything we can actually say are controlled variables at all.

In any economy it doesn’t
matter how one cuts it the relationships between lenders and borrowers are
where the rubber meets the road. Not only in the physical world but in the
mental worlds also. That’s why a PCT model of the economy will be how
interacting PCT models work. So this is where PCT is the critical key link.

I agree it is not
possible to create a set of “greeds” variables, so this type of
thinking is not that useful in terms of creating a model of the economy and not
really that helpful either.

I think what we see as so
called greed is the accumulations of resources of any kind that has breached
the optimal flow criteria
of any system, in this case the human economy. It’s almost like extinction.
In any pumping system if the pressures exceed the design criteria it pops and that’s
it. Although Bill doesn’t
agree with me the very fundamentals of PCT say that there is a flow on the
outside of each and every control system that exists on this planet. The evidence
for this is pretty compelling, simply in most living systems if we don’t exchange
gases with the external world continuously that’s it the games up.

To be quite frank I don’t
really fully understand how the economy works or for that matter the concept of
life as we know it.

Most of the arguments I
see being put forward on the list are really “greed or love” type
arguments. Just the statement “question for libertarians” highlights
this. As if there is such a thing as libertarians. PCT in my mind is pretty
clear on this issue.

Regards

Gavin

···
65

[From Rick Marken (2011.07.14.1945)]

Martin Lewitt (2011 July 14 1604 MDT)_-

      RM: Because the rich are taking so much demand out of circulation

there is little left over for everyone else so demand is
generally weak.

ML: There is no evidence that the rich are taking money out of

circulation

True. That’s theory.

      RM: That is, a New New

Deal.

ML: That didn't work then, and wouldn't work now, because it would be

borrowed money.

It worked like a charm. The idea that the New Deal didn’t work (to reduce unemployment and increase growth) is simply a right wing myth. Look at the data.

      RM: This will put $ into the hands of consumers (the people who

are hired by the companies to do this work) and it will also
develop infrastructure (good roads, smart workforce,
communications infrastructure, clean energy, etc) that make
the corporations themselves more productive. The money that
the government uses for this purpose should come from taxation
(not borrowing) and the greatest tax burden should be on those
who can best afford it; the rich who are basically just
hoarding their $ anyway.

ML: The devaluing of the dollar did help, but at the moral cost of

confiscating gold.

The first phase is a non-sequiter and the second is, well, a non-sequiter.

      RM: So the way to fix this sluggish economy is through increased

taxes (on the rich) and government investment (in
infrastructure that will increased the productivity of private
industries). Of course, this isn’t going to happen in the US
so I predict long term high unemployment (longer term and
higher if the Republicans get back into power) which will
stabilize eventually at some high level with very low wages.
Although we might luck out and have another bubble of some
kind; tulips anyone :wink:

ML: Taxes on the rich are already too high.
On what basis do you make this statement? You really like those rich people, don’t you. I hope you are one because otherwise the policies you advocate are just going to help me;-)

Rick

···

–
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

66

[From Rick Marken (2011.07.14.2020)]

AM: PCT wasn’t developed with a government grant. There is not much interest in a psychology that says “rewards and punishments don’t really work the way you think they do”.

It wasn’t developed for profit either. Some people do great things simply because they want to.

AM: That’s why all this calling for laws (a threat of violence) that attempt arbitrary control makes me wonder if I’ve missed some crucial thing learning PCT.

Laws are just rules that people agree to as a basis for cooperation. Breaking some laws carries a threat of violence but not all laws carry the threat of violence if broken; ndeed, not even a majority probably. The crucial thing you might have missed about PCT is that it doesn’t rule out cooperation, kindness, social harmony and mutual aid. It doesn’t invalidate Isabella’s wonderful observation in “Measure for Measure”:

O, it is excellent

To have a giant’s strength; but it is tyrannous

To use it like a giant.

Rick and Bill, what I hear you saying is “I could simply try to force my rich friends to give money to my poor friends, and then everything would be better”. I just can’t see how that would work and how is it possible that you guys think it could work.

You may have heard us say something about “forcing” rich people to give money to the poor but, if so, it’s because you spend too much time hallucinating things that confirm your paranoid theories of government (which may be an understandable paranoia given where you come from). I believe (with the US founders and most civilized societies) that there should be no taxation without representation. Once my elected representatives agree to a tax law then I follow it, even if I don’t agree with it. And I don’t agree with the current tax laws in the US – I think the wealthy pay far too little – but that’s what my representatives want so that’s the rules. When I owned a condo I had to pay condo fees that were agreed to by all members of the condo association. Sometimes we do things that might be a little less than what we want for the good of the group (we had a very well maintained common area, which I was happy about). It’s called civilization and you’ll find that it works great, unless you have a bunch of selfish thugs on the condo board who don’t want to contribute to the common good, like we do now in the US.

AM: Most of economic data is like SR psychology data.

Data can’t be like a particular theory. Data is data; theory is what explains the data.

AM: It has the same foundation in SR, reliance on statistics, and uselessness.

Economic data concerns large aggregates of individuals and the way to describe such aggregates is by using descriptive statistics (means, medians, sds, correlations, etc). There is nothing S-R about that. Indeed, I have a spreadsheet control model of the behavior of those “S-R” economic aggregates.

AM: Also, both is funded by your tax dollars :smiley:

How fun is knowing that you’re paying for all those cognitive and behavioral psychologists work? :slight_smile:

I would guess that the amount of tax $ that goes into funding cognitive and behavioral research is now matched nearly equally by the amount of corporate dollars (from big pharma and tobacco, corporate “management improvement” programs, right wing think tanks, private foundations, etc) funding such research.

Best

Rick

···

On Thu, Jul 14, 2011 at 3:33 PM, Adam Matić adam.matic@gmail.com wrote:

–
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

67

[Shannon Williams (2011.07.14.20:30 CST)]

[Martin Lewitt 2011 July 14 1521 MDT]

�But money flowing for legitmate economic
activity is a good idea.

What is illegitimate economic activity? Are porn shops legitimate?
Are disposable boats designed to save the whales legitimate? Are wild
and crazy parties or wild and crazy party planners legitimate? Are
stupid restaurants or night clubs or various other 'businesses' that
only survive 2-3 years legitimate?

The big company's goal is to make money,

OK

they can't see a way to do it in an
era of high unemployment and risk.

They could not see a way to do it in 2001 to 2004 either. High
unemployment and Obama insurance were not a factor then.

Nearly everybody becomes a dam in periods of uncertainty.

No. most Americans do not have any savings. Check out
(http://www.billshrink.com/blog/10053/how-much-do-american-save/)

�Somehow the
Fed has squandered that amount and more.

The money flowed to the big corporations. The corporations are big
because they are sitting where the money flows. More money flows
into the corporations than out. Lots more money. $2 trillion more in
the last ten years.

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways

68

[Shannon Williams (2011.07.14.23 CST)]

[From Rick Marken (2011.07.14.1945)]

ML: There is no evidence that the rich are taking money out of circulation

True. That's theory.

It is becoming common knowledge that the ultra rich and big
corporations are taking money out of circulation. The argument now
is: do you elect government representatives who will take away this
right. check out
http://online.wsj.com/article/SB10001424052748704312104575298652567988246.htm

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways

69

(Gavin Ritz 2011.07.15.15.25NZT)

[Shannon Williams
(2011.07.14.20:30 CST)]

[Martin Lewitt 2011 July 14 1521 MDT]

But money flowing for legitmate
economic

activity is a good idea.

What is illegitimate economic
activity? Are porn shops legitimate?

Are disposable boats designed to save the
whales legitimate? Are wild

and crazy parties or wild and crazy party
planners legitimate? Are

stupid restaurants or night clubs or
various other ‘businesses’ that

only survive 2-3 years legitimate?

Ø
The big company’s goal is to make
money,

I don’t entirely
agree with this, funds gives the organization a way of knowing that it’s
energy balance is positive, but not always. One can be making profits but the
seeds of destruction are already sown into its fabric. The real goal of most organisations
is adding utility to the consumers of their produce. Money is not the goal, it’s
when it is the goal and the sole goal of an organisation is when there are problems.

The real purpose of
organisation is not money, money is the result of a pursuing a goal where there
is a vacuum in the economy that can be filled.

Or in PCT when the
controlled variable of organisation disturbs other control systems (either
individuals or organisations).

OK

they can’t see a way to do it in an

era of high unemployment and risk.

They could not see a way to do it in 2001
to 2004 either. High

unemployment and Obama insurance were not a
factor then.

Nearly everybody becomes a dam in
periods of uncertainty.

No. most Americans do not have any
savings. Check out

(http://www.billshrink.com/blog/10053/how-much-do-american-save/)

Somehow the

Fed has squandered that amount and
more.

The money flowed to the big
corporations. The corporations are big

because they are sitting where the money
flows. More money flows

into the corporations than out. Lots
more money. $2 trillion more in

the last ten years.

If it didn’t they
would fail.

So I’m not sure why
this would be a surprise.

This has been going on
for many many years. See Means and Berle “The Modern Corporation”
1932. This inflow of capital has been the engine of the US economy
for 100 years.

There are probably not
more than 800 companies that earn all this income. This was the case in the
1950’s.

Shannon Williams

https://donate.barackobama.com/page/outreach/view/2012/openthespillways

70

[Shannon Williams (2011.07.14.2300 CST)]

[From Rick Marken (2011.07.14.1500)]

If, as you suggest, corporations used their saved $ to start hiring people,

That is not what I suggest. You don't have to hire more people to
spend more money. You can pay more to the ones that you have. You
can pay your contractors more. You can have advertising promotions.
You can invest in small businesses that sell items to your business or
that you sell items to. You can add work place amenities. You can
invest in your equipment. You can do all kinds of things. and if you
still have so much money that you can't spend it, then you can give it
to Uncle Sam. And note to Martin: If you have that much money, then
the money that you spend will end up back in your hands because you
are obviously sitting on an industry that a lot of people pay into.

I don't think it's likely that corporations will simultaneously agree to
hire people in order to create future demand. So probably the only way to
really get things back on track economically is for the government to create
the demand by contracting with industries to upgrade infrastructure,
education, research and development, etc. That is, a New New Deal.

Or the 'government' can take a short cut and say, spend your money
yourself or give it up as taxes.

So the way to fix this sluggish economy is through increased taxes (on the
rich)

Or the threat of taxes if the money is not spent. You can make the
tax rate really high but with plenty of loop holes that allow the rich
to spend the money they way that they want. The key is that they must
spend it.

Also, once we no longer control for saving the money, once we start
controlling for spending the money, then there will not be this fear
that the money will stop coming. We know that someone, somewhere is
looking for a place to spend. That is, as long as there are big
corporations then we know that their employees will be looking for a
way to spend their money. The big corporations will then become a
boon to the economy. They will be like lakes that collect the rain
water for big cities.

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways

71

[Shannon Williams (2011.07.14.2330 CST)]

(Gavin Ritz 2011.07.15.11.25NZT)

� Love, guilt, greed are not anything we can
actually say are controlled variables at all.

I agree. Those are emotions. Emotions manifest while one struggles
to maintain their controlled variables. However, when you use those
words the person you are communicating with has a good image of what
dynamics are occurring. Love- he is driven to
see/hear/smell/touch/taste more of something. Guilt- he is driven by
conflicting goals, greed - he is not controlling for making it easier
for someone else to control their variables.

In any economy it doesn�t matter how one cuts it the relationships between
lenders and borrowers are where the rubber meets the road.

I disagree. there would be economy even if every item in the world
were cheap enough to be bought out-right by every person in the world.
Your statement is equivalent to saying that there would be no economy
if everyone were rich. If everyone were rich and everyone were forced
to spend their money then there would be LOTS of economy. The economy
would be mostly about parties and various entertainment and 'save the
whales' projects. But there would be lots of it.

I think what we see as so called greed is the accumulations of resources of
any kind that has breached the optimal flow criteria of any system, in this
case the human economy. It�s almost like extinction. In any pumping system
if the pressures exceed the design criteria it pops and that�s it.

OK. I agree that accumulation of resources is stopping the flow of
the economy. But it does not need to pop the system We just clean
out the accumulation. We are having trouble with stopping the
accumulation because we have so many variables associated with money.
When we deal with money we deal with every imaginable emotion- love,
greed, fear, hope, hate, etc. This is because our very lives depend
upon money and we have developed a zillion references around it.

If we explicitly teach our children that money is means by which goods
and services are transferred to member of society, they will not have
so many emotions about it. They will think of it in terms of transfer
of good and services. The will not think of 'rich and powerful',
'rich and safe', 'rich and happy', rich and loved', 'rich and famous',
'rich and smart', 'rich and productive', 'rich and independent', 'rich
and welltodo', 'rich and sexy', etc. They will simply use it to
control for the transfer of goods and services. Not all of these
other things too.

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways

72

(Gavin Ritz 2011.07.15.17.38NZT)

[Shannon Williams
(2011.07.14.2330 CST)]

(Gavin Ritz 2011.07.15.11.25NZT)

In any economy it doesn’t matter how one
cuts it the relationships between

lenders and borrowers are where the rubber meets
the road.

I disagree

Hi there Shannon

The very basis of money
is debt creation; there is no other way money is created in our modern economic
system. The Money is created by an act of the treasury issuing debt. Money is therefore
created out of nothing and then the banks lend and lend again I think it’s
about 8 or 9 times with the
same dollar.

So the basis of this relationship
is between those that lend (institutions and private individuals) and those
that borrow (institutions and private individuals).

At the end of each
banking day the Reserve bank makes sure that all deposits and withdrawals equal
zero with each bank, if there is a shortage then the banks can inter-lend or
get the shortfall from the Reserve. The banks liquidity is squared off every
day.

So when there is a
problem (people just can’t make incremental loan repayments) in the
system the asymmetrical relationship between lenders and borrowers may skew in
the wrong direction (like the toxic debt we have now- it’s a disastrous
situation). Simply put those that borrow just cant pay the interest and/or
principal on their loans that banks require to remain liquid. If they lend to
people who can’t pay (sub prime people) then the liquidity of the banks
becomes a problem. It’s really as simple as that.

In the financial debacle
the quick thinking of the Bank of England saved the world, it forced the
Federal Reserve to follow suite and pump liquidity into the system. If they had
not done this we would all be f……. now. And sitting in another
Great Depression. It came that close.

They could move so fast simply
because our computer systems can tell us right away when the systems liquidity
is in trouble. Money is like blood in a living organism.

Some really good books on
this is

·
The Lords of Finance-Ahmed

·
The Ascent of Money-Ferguson

·
The Creature from Jekyll Island
(forget about the conspiracy stuff in this book it explain the US
system quite well actually).- Griffen

Regards

Gavin

···
73

(Gavin Ritz 2011.07.15.17.13NZT)

[Shannon Williams
(2011.07.14.2330 CST)]

(Gavin Ritz 2011.07.15.11.25NZT)

Love, guilt, greed are not
anything we can

actually say are controlled variables
at all.

I agree. Those are emotions.
Emotions manifest while one struggles

to maintain their controlled
variables. However, when you use those

words the person you are communicating with
has a good image of what

dynamics are occurring. Love- he is
driven to

see/hear/smell/touch/taste more of
something. Guilt- he is driven by

conflicting goals, greed - he is not
controlling for making it easier

for someone else to control their
variables.

In any economy it doesn’t matter
how one cuts it the relationships between

lenders and borrowers are where the
rubber meets the road.

I disagree. there would be economy
even if every item in the world

were cheap enough to be bought out-right by
every person in the world.

Your statement is equivalent to
saying that there would be no economy

if everyone were rich.

I don’t understand
how you can say this; even the rich borrow money, that’s how we make
money by leverage. I have a personal project where I buy property (a lot of
them), I always use the banks, that way at a particular leverage point I make a
lot of money. It all has to do with the cost of capital and the line is very
fine between success and failure. There’s a sort of Goldilocks zone, if I
go too far from that I get burned. Stay in the zone and I’m okay.

Even rich folk are often
short on cash.

If everyone were rich and everyone were
forced

to spend their money then there would be
LOTS of economy. The economy

would be mostly about parties and various
entertainment and 'save the

whales’ projects. But there would be
lots of it.

It’s not the money
that matters it’s the game of making it and what one can do with it. As I
have said before it’s an energetic game, internal concentration external accumulation.

Money is qualitative converter.
You choose the quality.

I think what we see as so called greed
is the accumulations of resources of

any kind that has breached the optimal
flow criteria of any system, in this

case the human economy. It’s
almost like extinction. In any pumping system

if the pressures exceed the design
criteria it pops and that’s it.

OK. I agree that accumulation of
resources is stopping the flow of

the economy. But it does not need to
pop the system

It always does, it’s
called a bubble and it always bursts, play outside the Goldilocks zone and it
always pops. This has been going on since the South Seas Bubble, the Tulips of
Holland, the Great Depression ete etc etc.

We just clean

out the accumulation. We are having
trouble with stopping the

accumulation because we have so many
variables associated with money.

When we deal with money we deal with every
imaginable emotion- love,

greed, fear, hope, hate, etc. This is
because our very lives depend

upon money and we have developed a zillion
references around it.

If we explicitly teach our children that
money is means by which goods

and services are transferred to member of
society, they will not have

so many emotions about it. They will
think of it in terms of transfer

of good and services. The will not think
of ‘rich and powerful’,

‘rich and safe’, ‘rich and happy’, rich and
loved’, ‘rich and famous’,

‘rich and smart’, ‘rich and productive’,
‘rich and independent’, 'rich

and welltodo’, ‘rich and sexy’, etc.
They will simply use it to

control for the transfer of goods and
services. Not all of these

other things too.

Hey we’re just
playing the social affair.

Regards

Gavin

···
74

[Martin Lewitt 2011 July 15 0032 MDT]

[Shannon Williams (2011.07.14.20:30 CST)]

[Martin Lewitt 2011 July 14 1521 MDT]

  But money flowing for legitmate economic
activity is a good idea.

What is illegitimate economic activity? Are porn shops legitimate?
Are disposable boats designed to save the whales legitimate? Are wild
and crazy parties or wild and crazy party planners legitimate? Are
stupid restaurants or night clubs or various other 'businesses' that
only survive 2-3 years legitimate?

Those are legit, I was thinking in macro economic terms, where artificially low interest rates lead to risky speculatively high asset prices. A dot.com bubble financed by equity rather than borrowing could not have built up as high or been as consequential when it burst.

The big company's goal is to make money,

OK

they can't see a way to do it in an
era of high unemployment and risk.

They could not see a way to do it in 2001 to 2004 either. High
unemployment and Obama insurance were not a factor then.

That wasn't an exhaustive list, but 2001 was seen as a risk of contraction, since the dot.com bubble had just burst followed by 9/11. Recall that Bush had to urge the American people to get back to shopping.

Nearly everybody becomes a dam in periods of uncertainty.

No. most Americans do not have any savings. Check out
(http://www.billshrink.com/blog/10053/how-much-do-american-save/)

Savings rates tend to go up in a recession.

  Somehow the
Fed has squandered that amount and more.

The money flowed to the big corporations. The corporations are big
because they are sitting where the money flows. More money flows
into the corporations than out. Lots more money. $2 trillion more in
the last ten years.

Except I don't see how QE1 and 2 explain that accumulation, corporate revenues are not significantly up, their outflows are down due to "productivity increases", partially due to a reduction in R&D and customer service, neither of which bodes well for the future. It is sad that double taxation incentivises keeping that money instead of distributing it to share holders, even when the corporations don't see a productive use to put it to. When the dam breaks, we'll see a flurry of M&A activity, but it will take longer for that dam to break because the consensus is that most mergers were ill advised failures.

-- Martin L

···

On 7/14/2011 9:23 PM, Shannon Williams wrote:

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways

75

[Martin Lewitt 2011 July 15 0052 MDT]

[Shannon Williams (2011.07.14.23 CST)]

[From Rick Marken (2011.07.14.1945)]

ML: There is no evidence that the rich are taking money out of circulation

True. That's theory.

  It is becoming common knowledge that the ultra rich and big
corporations are taking money out of circulation. The argument now
is: do you elect government representatives who will take away this
right. check out
http://online.wsj.com/article/SB10001424052748704312104575298652567988246.htm

That link didn't work. The "ultra rich" and "big corporations" are different entities. The "ultra rich" are usually just rich on paper, so are you saying they liquidated their stocks and other assets? And then what did they do with their money, stuff it in a mattress? If the money is in interest bearing accounts, it wouldn't be the rich taking it out of circulation, but the banks failing to find willing borrowers, other than the government, which doesn't pay very high interest. The same argument can be made for corporations, except they didn't have to liquidate assets. The rich usually lost a lot of money "on paper", as stock and real estate values declined.

-- Martin L

···

On 7/14/2011 9:39 PM, Shannon Williams wrote:

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways

76

[Martin Lewitt 2011 July 15 0059 MDT]

[From Rick Marken (2011.07.14.1945)]

        Martin Lewitt (2011

July 14 1604 MDT)_-

                RM: Because the rich are taking so much demand

out of circulation there is little left over for
everyone else so demand is generally weak.

        ML: There is no evidence that the rich are taking money out

of circulation

      True. That's theory.

RM: That is, a New New Deal.

        ML: That didn't work then, and wouldn't

work now, because it would be borrowed money.

      It worked like a charm.  The idea that the New Deal didn't

work (to reduce unemployment and increase growth) is simply a
right wing myth. Look at the data.

Unemployment peaked in 1937.

              RM: This will put $ into the hands of consumers

(the people who are hired by the companies to do this
work) and it will also develop infrastructure (good
roads, smart workforce, communications infrastructure,
clean energy, etc) that make the corporations
themselves more productive. The money that the
government uses for this purpose should come from
taxation (not borrowing) and the greatest tax burden
should be on those who can best afford it; the rich
who are basically just hoarding their $ anyway.

        ML: The devaluing of the dollar did

help, but at the moral cost of confiscating gold.

      The first phase is a non-sequiter and the second is, well, a

non-sequiter.

Gold was confiscated, at $20, then the dollar was devalued, to $30.

                RM: So the way to fix this sluggish economy is

through increased taxes (on the rich) and government
investment (in infrastructure that will increased
the productivity of private industries). Of course,
this isn’t going to happen in the US so I predict
long term high unemployment (longer term and higher
if the Republicans get back into power) which will
stabilize eventually at some high level with very
low wages. Although we might luck out and have
another bubble of some kind; tulips anyone :wink:

ML: Taxes on the rich are already too high.
On what basis do you make this statement? You really like
those rich people, don’t you. I hope you are one because
otherwise the policies you advocate are just going to help
me;-)

For ordinary income the rich are already at the top rate, but for

the ultra rich most of their income comes from dividends and capital
gains that are supposedly taxed at a reduced rate, but both of those
are sources of income are double taxed, so really the rich are
paying the corporate rate PLUS that reduced rate. That is what
Warren Buffet failed to appreciate in his ill informed statement
about paying lower taxes than his secretary. You can tell that the
rate is too high when it leads to tax avoidance, rather than
economic decision making, such as corporations retaining earnings,
investing in lower returning investments when the stockholders could
obtain higher returns elsewhere, if it weren’t for the double
taxation.

-- Martin L
···

On 7/14/2011 8:42 PM, Richard Marken wrote:

      Rick

  --

  Richard S. Marken PhD

  rsmarken@gmail.com

  [www.mindreadings.com](http://www.mindreadings.com)
77

(Gavin Ritz 2011 July 15, 19.02NZT)

[Martin Lewitt 2011 July 15 0052 MDT]

[Shannon Williams
(2011.07.14.23 CST)]

[From Rick Marken
(2011.07.14.1945)]

ML: There is no evidence that the rich
are taking money out of circulation

True. That’s theory.

It is becoming common knowledge that
the ultra rich and big

corporations are taking money out of
circulation. The argument now

. The “ultra rich” and “big
corporations” are

different entities.

Very rich people are not
power structures how ever corporations are, so different entities they certainly
are. Very rich people often have no power at all.

The “ultra rich” are usually just rich on
paper,

That’s for
sure.

so

are you saying they liquidated their stocks and other
assets? And then

what did they do with their money, stuff it in a
mattress? If the money

is in interest bearing accounts, it wouldn’t be the
rich taking it out

of circulation, but the banks failing to find willing
borrowers, other

than the government, which doesn’t pay very high
interest. The same

argument can be made for corporations, except they
didn’t have to

liquidate assets. The rich usually lost a lot of
money “on paper”, as

stock and real estate values declined.

I never understand why the
rich are singled out as some weird, controlling elite all working together to
break the system. If the system breaks it breaks for all, rich poor and indifferent.
The rich are also not in some club all controlling the world finances. Although
conspiracy folk say it’s the Bilderberg Groups controlling the whole world
and its finance. I just don’t understand this. It’s in everyone’s
interest for the system to work. If the man in the street stops buying, borrowing
then we are all in trouble. The ultra rich still have to drive to their
destinations, still use the same services the only difference is they buy a
fancier car and a gold plated toilet seat.

Same roads and same sewer
system.

That’s really the
only difference. Some of my friends and family are ultra rich and believe me
they are just like you and me.

Regards

Gavin

···
78

[Martin Lewitt 2011 July 15 0112 MDT]

[Shannon Williams (2011.07.14.2330 CST)]

(Gavin Ritz 2011.07.15.11.25NZT)

   Love, guilt, greed are not anything we can
actually say are controlled variables at all.

I agree. Those are emotions. Emotions manifest while one struggles
to maintain their controlled variables. However, when you use those
words the person you are communicating with has a good image of what
dynamics are occurring. Love- he is driven to
see/hear/smell/touch/taste more of something. Guilt- he is driven by
conflicting goals, greed - he is not controlling for making it easier
for someone else to control their variables.

In any economy it doesn�t matter how one cuts it the relationships between
lenders and borrowers are where the rubber meets the road.

I disagree. there would be economy even if every item in the world
were cheap enough to be bought out-right by every person in the world.

I disagree with Gavin and yet also agree that it characterizes current economic thinking, because tax policy has biased our economy towards debt rather than equity financing, so it all looks like a highly leveraged borrower/lender relationship.

  Your statement is equivalent to saying that there would be no economy
if everyone were rich. If everyone were rich and everyone were forced
to spend their money then there would be LOTS of economy. The economy
would be mostly about parties and various entertainment and 'save the
whales' projects. But there would be lots of it.

At some point there is just rising prices, but that risk is low when you have unemployed, deflationary debt repayment behavior, and foreign entities manipulating their currency by honoring yours. But why just mention things as frivolous as parties and entertainment, why not medical research and space exploration? Those are luxuries too, wealth is wonderful.

-- Martin L

···

On 7/14/2011 11:11 PM, Shannon Williams wrote:

I think what we see as so called greed is the accumulations of resources of
any kind that has breached the optimal flow criteria of any system, in this
case the human economy. It�s almost like extinction. In any pumping system
if the pressures exceed the design criteria it pops and that�s it.

OK. I agree that accumulation of resources is stopping the flow of
the economy. But it does not need to pop the system We just clean
out the accumulation. We are having trouble with stopping the
accumulation because we have so many variables associated with money.
When we deal with money we deal with every imaginable emotion- love,
greed, fear, hope, hate, etc. This is because our very lives depend
upon money and we have developed a zillion references around it.

If we explicitly teach our children that money is means by which goods
and services are transferred to member of society, they will not have
so many emotions about it. They will think of it in terms of transfer
of good and services. The will not think of 'rich and powerful',
'rich and safe', 'rich and happy', rich and loved', 'rich and famous',
'rich and smart', 'rich and productive', 'rich and independent', 'rich
and welltodo', 'rich and sexy', etc. They will simply use it to
control for the transfer of goods and services. Not all of these
other things too.

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways

79

[Martin Lewitt 2011 July 15 0122 MDT]

(Gavin Ritz
2011.07.15.17.38NZT)

[Shannon Williams
(2011.07.14.2330 CST)]

          > (Gavin Ritz

2011.07.15.11.25NZT)

          > In any economy

it doesn’t matter how one
cuts it the relationships between

          > lenders and

borrowers are where the rubber meets
the road.

I disagree

Hi there Shannon

          The very basis of money

is debt creation; there is no other way money is created
in our modern economic
system. The Money is created by an act of the treasury
issuing debt. Money is therefore
created out of nothing and then the banks lend and lend
again I think it’s
about 8 or 9 tim es with the
same dollar.

No, the treasury issuing debt is just borrowing.   That is why it is

not stimulative. The money is created when the Federal Reserve.
purchases debt with money created out of nothing. They also create
money through lower reserve requirements and low interest lending to
banks, who get the benefit of being allowed to expand the money
supply through fractional reserve banking And unfortunately it is
bond holders and banks who benefit.

It would be much more efficient to print money directly to the

people. This mechanism would be powerful enough to allow banks to
fail without collapsing the system. If the Fed needed to stablizing
the banking system, we would be in a regime where the banks were
less important, and where any assets the Fed used to prop up the
banks would be accounts owned by the people and accessible by their
debit cards.

-- Martin L
···

On 7/15/2011 12:02 AM, Gavin Ritz wrote:

          So the basis of this relationship

is between those that lend (institutions and private
individuals) and those
that borrow (institutions and private individuals).

          At the end of each

banking day the Reserve bank makes sure that all deposits
and withdrawals equal
zero with each bank, if there is a shortage then the banks
can inter-lend or
get the shortfall from the Reserve. The banks liquidity is
squared off every
day.

          So when there is a

problem (people just can’t make incremental loan
repayments) in the
system the asymmetrical relationship between lenders and
borrowers may skew in
the wrong direction (like the toxic debt we have now- it’s
a disastrous
situation). Simply put those that borrow just cant pay the
interest and/or
principal on their loans that banks require to remain
liquid. If they lend to
people who can’t pay (sub prime people) then the liquidity
of the banks
becomes a problem. It’s really as simple as that.

          In the financial debacle

the quick thinking of the Bank of England saved the world,
it forced the
Federal Reserve to follow suite and pump liquidity into
the system. If they had
not done this we would all be f……. now. And sitting in
another
Great Depression. It came that close.

          They could move so fast simply

because our computer systems can tell us right away when
the systems liquidity
is in trouble. Money is like blood in a living organism.

          Some really good books on

this is

·
The Lords of Finance-Ahmed

·
The Ascent of Money-Ferguson

·
The Creature from Jekyll Island
(forget about the conspiracy stuff in this book it explain
the US
system quite well actually).- Griffen

Regards

Gavin

80

[Shannon Williams (2011.07.15.700)]

(Gavin Ritz 2011.07.15.17.38NZT)

The very basis of money is debt creation; there is no other way money is
created in our modern economic system.

Hey, if you believe that then believe that it needs to change. If you
do not see how to change it then build a model and figure one out.
Martin has a method of entering money into the economy without debt.
You can develop one too. Martin's method conflicts with many other
variables that we believe are controlled by money. If you design one,
yours will too. Until we all control for money exclusively as a means
of delivering goods and services then any change we think of will
threaten a myriad of irrelevant controlled variables.

Here is an exercise: Imagine that you are shipwrecked with 1 million
other people on an unpopulated planet. What steps need to happen to
get the money supply flowing?

At the end of each banking day the Reserve bank makes sure that all deposits
and withdrawals equal zero with each bank, if there is a shortage then the
banks can inter-lend or get the shortfall from the Reserve. The banks
liquidity is squared off every day.

We need this balance applied yearly to all corporations. We could
allow savings to be as large as the average of the previous three
year's spending for individuals. And based on some other metric for
corporations.

They could move so fast simply because our computer systems can tell us
right away when the systems liquidity is in trouble. Money is like blood in
a living organism.

Very cool. Or it is like water on our planet. The blood analogy does
not highlight the fact that a billion different individual control
systems depend upon it.

Some really good books on this is

��������� The Lords of Finance-Ahmed

��������� The Ascent of Money-Ferguson

��������� The Creature from Jekyll Island (forget about the conspiracy stuff
in this book it explain the US system quite well actually).- Griffen

Thanks!

Shannon Williams
https://donate.barackobama.com/page/outreach/view/2012/openthespillways