What will you do when you are told that your company pension is bust? Or that the pension you thought you were going to get has to be cut to a fraction of what you were promised?
Will you expect your political leaders to put people in prison? Will they? Or will they have an enquiry and then say ‘lessons have been learned’ and ‘new safeguards have been put in place’, and will they appoint a Pension Commissioner/Tsar who will draw a large salary and in return hold meetings with the heads of the pension industry and agree a code of conduct and draw up rules for ‘better’ self regulation?
What will you do when you are told that because of a decade and more of ultra-low interest rates, the insurance company that holds your private pension is in very deep trouble and just cannot pay?
What will you do if you are told that you will have to bailout various insurers in order to save the pension industry?
What will you do when you are told that the state pension can’t afford to pay retirements any more? What will you do if you are told that to expect a pension is a form of entitlement neither you nor your children any longer have a right to?
Next time maybe we finally get to celebrate the end of money and inequality as it becomes clear we can no longer afford the real parasites that worship inequality and the status quo, that requires armies of inequality sustainers, poverty management workers, debt management armies, bullshit jobs, pointless growth, and endless weapons of fear and propaganda. But it is all down to the Siegfried problem, we can be brave but can we gather the clear sighted knowledge and understanding we need?
I too hope the pensions crisis will unsettle many more people from their fear and acceptance and spur them to question. I certainly hope that it does because the alternative is the end of democracy in any form.
It seems to me unfortunate that in politics we seem so focused on what is bad, there is of course a lot of it, because if people are to change they need to believe democracy could work better and could offer them so much more, we need to do more to imagine a better future, with less competition, stress, growth, hierarchy, consumption, waste, polution, etc and much more purpose, free time, enjoyment, security, common ownership, engagement, responsibility, family life, friendship, study, etc. We need higher expectations, clear values, if enough of us start to think differently, change is unavoidable, the people committed and benefitting from inequality are few, they are powerful but fearful, yet they are completely dependent on the cooperation and compliance of the majority, we simply have to see the benefit and possibility of withdrawing our compliance, and in the long run the super-powerful will be better off too, putting aside their fear, learning to share, giving up the impossible stasis of the status quo and the strain of trying to maintain it.
Wow, David, that’s exactly how I see it. Yes, the rich will benefit from living in a much nicer society. Our brains are very neuroplastic and can change according to environment, and also, our genes are epigenetic and programmable according to the environment as well. In some parts of the world too many people are very violent due to their culture. This happens in Latin America and in places like Afghanistan, but in Sweden, and in many parts of Europe, the culture is very gentle.
If we invest in people and help troubled families we can help ensure their children are not brought up in the terrible hardship which could make them violent, aggressive, drug abusers, or drink too much alcohol. As these children grow up they are more likely to become productive happy people contributing to our economy and paying higher taxes, which will lower the tax burden on the rest of us. Win, Win! And their children will be brought up in a better environment meaning they will do better at school and become happy and productive adducts too.
In this way we could expand the middle-class and have more gentle people in society. Gilad Atzmon, the sax player an intellectual, says the working class have given up voting for labour. That’s not entirely true but he does have a point. When Corbyn’s Labour party did so well in the last general election it was found that Labour’s support came largely from the middle-classes and the upper class. So, by expanding the middle-class not only do we get a gentler society, but one that is more likely to lean left, although we will need to sort out the ruling elite’s stranglehold on the media, it’s propaganda machine.
The understanding of Money is one of the greatest weaknesses of the population.
Money is not Wealth, It is a coupon, a means of Exchange to facilitate efficient trade, it has no intrinsic value in itself, apart, from making a good basis for fire.
When issued as debt by the private banks ,it becomes a means of extortion and control.
What gives money its value, is the demand by Govt to pay taxes in the form of money.
Money can be anything you wish it to be, conch shells in the South Sea, wampum feathers by the American Indians. Tally sticks were used since Henry 1 and used up into the 19th century and was the cause of the Fire in Westminster, where they were stored.
The latest is the popularity of Crypto-currencies, electronic numbers in a ledger like Blockchain.
Under the UK Currency Act 1844 ,only the UK Govt had power to mint money in the form of coin and paper.
This has long been undermined by the private banking systems issue of credit cards, cheque books ,bank drafts etc.
The cash money we see circulating is indeed issued by the Govt and issued to the banks as intermediaries , who are charged seignorage to cover production costs.
The greatest amount of money is created as credit, when the private banks issue a loan to a creditworthy person.
The cause of the Great Financial Crash of 2008 was the issue of mortgages/loans to uncreditworthy persons, who failed repayment. Thus crashing the system.
The banks were saved by their Central banks creating money and bailing them out. The citizens were treated to austerity.
A Sovereign Govt that issues its own currency can NEVER run out of money. This is the reason that Finance houses buy Govt bonds in times of Stock market uncertainty.
For the Govt to say they have no Money for pensions is akin to saying you can have no roads because there are no miles.
see Georg Friedrich Knapp, ‘State Theory of Money’. the precursor to Modern Monetary Theory.
Hello Salford Lad.
I agree, of course, with what you say about the true nature of money. All I would add, as a matter of political expediency, is that we do still have to start with what people – both the wealthy and the poor, currently think money is. That is, if we wish them to trust us to make a transition from an economic and political system based on one idea of money and wealth to a different one. I really think that is the challenge.
What that means for me is, for example, that although MMT theory says a government cannot run our of money, or as some put it, a currency issuer can print up as much money as it needs, this has to be tempered with the realisation that any nation that adopted this programme would be doing so within the context of a world order that did not share the assumptions of MMT.
What I mean is that while we could issue as many token as we needed, domestically, we would still have to keep an eye on what effect this had on the willingness of international traders to accept our token in payment of foreign goods and services.
So I agree with your understanding of money but think we need to be careful both how we explain it and how we would set about instituting it in practice. We could end up like Cuba – where other nations went out of their way to make them fail.
Golem XIV — all I ask is that you publish more. So much to discuss and educate people about.
Casey…I couldn’t agree more!
David,
Iran was shut out of the dollar trading system by sanctions imposed by the USA. A form of Economic warfare .also practised on Cuba for over 60 years. Iran found a means around this by trading with gold via the Dubai exchanges.
I agree that external trading is a problem with conversion issues of a Sovereign currencies.This is where Crypto currencies may be a solution as recently envisaged by Venezuela.
The Money Powers rule the world by their control of the money issue.This Power is preserved by all the power of Western military and corrupted political means.
Lord Acton quoted;’ The issue that has rolled down the centuries is the power of Finance versus the People.This will have to eventually be confronted’.
As an aside, I do not advocate a Govt issuing money irresponsibly to vanity projects. Rather money requires to be proportionate to Production and to the aim of full employment. to avoid debasement by inflation.
Take care of employment and the Economy will take care of itself, (JM Keynes)
I agree with you that as long as MMT advocates include your phrase ‘proportionate to production’ then people will understand.
Proportionate to production is the key David as you say. Money and Good are different Carol Quiggley put it very well thus.
”Thus, clearly, money and goods are not the same thing but are, on the contrary,
exactly opposite things. Most confusion in economic thinking arises from a failure to
recognize this fact. Goods are wealth which you have, while money is a claim on wealth which you do not have. Thus goods are an asset; money is a debt. If goods are wealth; money is not wealth, or negative wealth, or even anti-wealth. They always behave in opposite ways, just as they usually move in opposite directions. If the value of one goes up, the value of the other goes down, and in the same proportion.”
Quigley Tragedy and hope.
“”Who hasn’t experienced the following? Just the other day
it happened to me! Just like any other weekend, I went
to the supermarket to replenish my empty pantry and as
always, I made the mandatory stop at the fresh produce
section, where I placed some tomatoes in one of those
little plastic bags that you tear from a dispenser. As
always, I went to one of those electronic scales full of
those colourful figures that represent the different
produce: I put the bag on the scale and pushed the key
with the little tomato on it. And oh my God, the
following message appeared on the screen! “Error: This
scale has run out of grams. Please excuse the
inconvenience”. What a pain and just at the worst
moment! But then again, we all know that given the
times, grams are scarce…””
http://bibocurrency.com/index.php/money-psyop-2
The eternal Energy resource and the Petro Dollar where does it all end, needless to say I agree with Salford Lad-
http://letthemconfectsweeterlies.blogspot.se/2018/03/energy-returned-on-energy-invested.html
Indeed.
In the past century, academia has played a central role in the subversion of some fundamental economic principles.
One of these principles is the distinction between savings and investment.
This notion could only be subverted once academia successfully subverted the definition of capital.
By equating capital with money, academia open the door to the pillaging of wealth through devaluation
The final nail in the coffin of individual wealth was hammered in during the 60s.
In forcing individuals to contribute to social security, governments effectively forced labor to put their savings in the hands of capital.
Like all pyramid schemes worth their salt, this one looked good at the beginning and some players actually made out quite well.
The diminishing marginal utility of this system however eventually guarantees that most players will get shafted.
We’ve seen this movie before. It happened to all the great civilizations of earth.
Fiscality will always and everywhere bite you in the ass.
Far better in my veiw if gov. only had the power to collect revenue, perhaps as transaction taxes, on the money citizens choose to create as debt to the state. Such ‘money’ issuance being restricted by both the needs and ability to repay of individual citizens, with ‘tax’ levels being determined by some agreed criteria, That way every citizen could create sufficient credit for their needs, and would have personal responsibility for repaying their debt to society, thus freeing the financial services sector for useful employment.
Any money whether transferred by Governmeent or by the Commercial Banks can cause inflation although not always. Look at all the QE that has been going on and not a pinch of inflation in sight. The statement of ‘proportionate to production’ is therefore irrelevant. What comes first? It has to be the money which causes the production. Then you must ask yourself when does Government step in? When private enterprise slows down its activity. When Government steps in it creates the production and employs people which creates the money supply for private enterprise to get active again. It is a circular activity.
The mistake in this circular argument Patricia is that You can not eat money, this is the basis of the legend of King Midas and also of various other legends and folk wisdom.
Money is an abstract human construct as such it can be anything and does not exist in or by nature but through laws to paraphrase Aristotle.
Just a last technical point on Inflation. The cause of inflation is actually Interest or usury, The money supply has to expand if Interest is to be paid as money is created without the interest component this argument gets a lot of flack from economics based reasoning from all sides of the monetary debate but I think Bernard Leitaers parable of the 11th round explains the point best and empirical data can be found in Kreutz’s The Money Syndrome.
http://www.lietaer.com/2010/09/the-story-of-the-11th-round/
http://userpage.fu-berlin.de/roehrigw/creutz/geldsyndrom/english/
http://letthemconfectsweeterlies.blogspot.se/2017/09/money-does-not-initiate-economic.html
Steve Keen says the interest to be paid does not need to be created by banks because money is recyclable by what he calls the velocity of money. Once a loan has been made it can circulate in the economy forever until the loan gets repaid. So the banks might get the money come back to them several times before the money gets repaid and extinguished. Money is not a use once ticket like a voucher, it gets reused again and again. Not all economists agree with Steve Keen, but I hope he is right because it means we might be able to stop the expanding money supply.
Hi Kevin, Steve Keen wrote a piece in Forbes about it and admitted in the discussion ion the Comments that only at the simplest level of understanding is his claim true.
You will find a full examination of the full question along with relevant links here.
http://letthemconfectsweeterlies.blogspot.se/2017/04/economists-apologists-and-sophists-for.html
Indeed you are not wrong.
In a healthy monetary system, what matters is not what is used as money. Anything can be used as money.
What matters is whether individual economic actors are free to accumulate their earnings
In a centralized, therefore closed, monetary system, by imposing interest on the use of one exclusive variety of money, the economic center will gradually but arithmetically divest the periphery.
This happens for 2 reasons:
In a first instance, because they are the only purveyors of the medium of exchange
In a second instance, because the enforcers of the system run perpetual fiscal deficits
Because of the diminishing marginal utility inherent in debt, these two drivers, will gradually divest the majority
Hello Patricia,
Thank you for commenting. Given how little I write I am amazingly grateful that any of you take the time to comment here.
I understand you point – I think. If I understand you make the point that the money will create production, which creates real wealth which provides salaries an stuff to buy. Fine. But that is IF the money creates production. It is not guaranteed. You can create money and invest in very unwisely – which is exactly what QE has done for a decade.
So surely there is an important relation between money and production on score alone. Second if a government were to print up money so that everyone was a millionaire then there would be such a disparity between the number of tokens and what there was to buy that it would have an effect.
I also disagree that there has been no inflation. I have argued before and still feel there is something to the argument that we have essentially two currencies and to some extent two oddly connected/disconnected parts to the economy.
The one currency is the debt currency which circulates mostly around the financial institutions in the form of debt obligations – loans, bonds etc. Then there is the little people’s currency which is what we use for most of our purchases except those things we have to go to the banks for.
Of course these two currencies are connected and can be exchanged. But their connection and exchange is very akin to the relationship between currencies in different countries. I think we have difficulty seeing this because we are sued to all the currency within a country being of one type and only expect and see differences between countries.
Governments via QE have helped the banks vastly inflate the ‘high’ level currency. And I would say you only have to look at the DOW and see that it has gone from 6000 to over 20,000 and that house prices have spiralled in most QE countries to argue that that is inflation.
But the Foreign exchange-like relationship between the high level and our currency has meant that that inflation does not always flow into our currency. In fact I think there has been a major effort to make sure it hasn’t. The exchange rate between the high level and the ordinary has been ‘pegged’. To the vast benefit of those doing the pegging.
What has this achieved? It has meant the financial institutions have given themselves a huge amount of new tokens and been able to use those tokens to buy up anything they want.
Sorry. This started as a reply to you Patricia and has morphed into a separate essay. Apologies.
Thanks Golem and I am glad to see your new article. I check everyday!
As I see it if the people have money they will spend it. If the rich get money they don’t spend it and nor, these days, do they invest in productive enterprises . They just hoard or speculate with it. As you said we see that with the increase in the Dow and house prices. That is what QE did. Yes, as Salford says it was a swap but the only real inflation that occurred was in those two items and that was world wide. The masses could only borrow it which, gradually resulted in a loss of their purchasing power. There are not that many closed shops here in New Zealand but surely where there are must indicate a lack of the people’s purchasing power The idea that a Government will spend willy nilly, if what MMT says is true, surely indicates the fault of the politicians rather than MMT itself. MMT has been done in the past. How little New Zealand did all the things we did when we only had around 1million people tells you everything. Austerity for the people will not make any country grow. I would like to see a UBI tried out here for say 50 years in a little town called Kataia. Kataia is a poor town. Now if everybody there received the same amount that all superannuatints do in New Zealand, namely NZ$390pw irrespective of age or wealth then I bet it would prosper. It is just commonsense.
Hello Patricia,
Where is Kataia? I was in NZ recently so I’m interested to know. I am currently working for a NZ company with a NZ director called Leanne Pooley. She made Top Twins.
After all that my reply disappeared! The Topp twins is a a TV favourite in NZ.
Kataia is a small town of around 6000 people north of Auckland and even north of Whangarei with a good climate. It is a poor town with most schools there being decile 1 or two. Decile 10 schools are in the highest socio economic areas. The current Govt is providing money to the provinces instead of concentrating on the big cities so that is why I thought a UBI would be a good experiment. Such an experiment would have to be for a long time because just giving people money for a short period of time does not solve anything. You may or may not know that NZ has a universal superannuation for all people, irrespective of wealth, over the age of 65. It has been in existence for probably around 80 years. It is paid fortnightly and indexed to wages and inflation. Consequently there are next to no people in NZ over the age of 65 who live in poverty. That is why I thought a UBI in Kataia would be a good experiment. Saying that though the current Government is giving all superannuitant and extra $100 in May, June and July to help with the electricity bills in the cold winter months so life isn’t a bed of roses for all.
I forgot to add that merely giving the citizens of Kataia a UBI is not sufficient. The money that the NZ Govt is providing for the provinces must be directed towards a goal. In other words money itself is not sufficient; Kataia has an airport and was to have a railway so would be ideal for direct Government investment and a UBI. Northland is a poor area and is predominately Maori who, although are indigenous to New Zealand, have the greatest poverty and imprisonment rates. Incidentally China did all this after the GFC. When the rest of the world wasn’t buying its ‘stuff’ it then directed its production to its people. It is always a matter of scale.
Patricia – If people can can BORROW it then they will spend it!
Patricia,
It always amazes when I hear “there’s no inflation”.
Inflation is everywhere – in some asset prices particularly.
I.e global equities and global property prices.
Stock buybacks etc. have artificially elevated stock prices (as have margin accounts which are at record levels).
Record low interest rates (a result of Gov. monetization of bonds) have fueled property price rises that are now completely unconnected to earnings.
Record levels of personal debt, credit card debt, student loan debt, etc. have also fueled bubbles in new auto prices, college fees etc etc.
Seems to me private enterprise has maxed out in a number of ways and has nowhere to go, do we really have much need for it any more, we have forced ourselves to cap public expenditure for no good reasons just ideology and wishful thinking, we are crying out for simple robust public services and non-profit delivery of basic goods, keep our consumption down, no excess luxuries, work less, much more equality, etc. Time to squeeze out private profit and rent seeking for more public, non-profit, cooperative and voluntary economy.
Patricia
The reason that QE did not cause inflation is that there was a swap arrangement. The Central Banks credited the Private Banks accounts in exchange for bonds and other financial products,
Very little of this money entered the High street , because in the main borrowers were loth to take on debt.
The greater majority entered the Stock market, property development, and commodity exchanges, driving up the indexes. Also Corporations used cheap money to buy back shares to drive up their company shares and thus increase their executive bonuses,
Very little entered the Wealth creating Industries such as manufacturing, Engineering, Agriculture, etc, to create employment.
Take a walk down your local High St, and see the boarded up shops. This is caused by debt deflation. A lack of spare cash to spend after domestic essentials are paid.
Boarded up shops lead to closed factories, lead to unemployment, caused by the Govt austerity policies.
Austerity is a spiral down to the abyss of poverty, as you can see from the homeless sleeping in the shelter of the shops in many English cities.
Few politicians understand real economics. A political career does not require education , merely the ability to blow hot air and sound convincing to an insouciant people.
I agree with your point that QE money has produced asset price inflation but has not diffused out into the spending economy. However I suspect the boarded up shops have more to do with the the rise of internet shopping, especially Amazon, rather than debt deflation.
It’s late so all I have to say for now is welcome back Golem!!
Redshift,
Are the closed factories also down to internet shopping.? and explain the homeless on the streets.
In the US, the political Right has for some years busy laying the groundwork for the sort of pension grab you mention.
The rhetorical trick has been to (1) redefine the pension or Social Security contribution from something paid in by the worker (and therefore his or her property, in trust) whilst (2) recasting pension payments as a type of welfare springing from the benevolence, but at the discretion, of the payer.
For private pensions, this propaganda battle has been largely won. Corporations in trouble are fully expected to dip into the pension fund. Ordinary people do not believe pension funds can or even should survive corporate bankruptcy. And no executive will be punished beyond a wrist slap for putting his hand in cookie jar.
There is a US government program that insures against pension-fund failure, but it, like the pension funds themselves, is arguably underfunded and would not survive a large-scale crisis. (Like all insurance, it also has an unexpected consequence of engendering moral hazard for the above-mentioned corporate executives. If the insurance company will pay for repairs, who cares if you crash the car?)
Political organizing around pensions is a tricky business. The issues divides old from young, the “greedy geezers” who are getting theirs now vs the working taxed who have no expectation of seeing anything. The politicians and business have all the power. Absent a change in that, my advice for the young is save all you can while you, buy gold, and bury it in the back garden.
I am quite confused at this stage. Governments in concert with large business have propped up the malaised economic system for nearly a decade. Part of me wondering if it can go decades more, perhaps with turbulent epochs. What is their alternative? Allowing any one part of the system to fail could propogate in other parts of the system leading to economic attrition in all sectors. An economic reset would lead to political instability. I think at this stage now that populaces along with governments want to keep the status quo even if there are some costs like… Inequality, data privacy infringements, corpoarate tax avoidance, asset buyouts wealth concentration, debt servitude, zero hour contracts, dilution of democracy, international law favouring corporations and superceding governments with private hearing, and so on…. Devolution could be long and protracted. It has been somewhat incremental over the last 40 years. Still, it is better to be aware than to ignore it all.
@ Stephen.
We are all familiar with the Privtisation of our State utilities ,beginning with the Maggie Thatcher neo-liberal regime.
Those who regularly commute by bus or train are all too familiar with the ‘wonderful’ benefits of privatisation.
What many people do not realise is that our Money issue was privatised also and became largely unregulated after the collapse of the Bretton Woods Agreement and the Gold Standard in 1972.
Today we reap the ‘benefits’ of private issue of money which has resulted in high unemployment and property costs.
Prof Bill Mitchell addresses the issues of Exchange controls with reference to MMT and State control of the issue of Money.
https://mail.yahoo.com/d/folders/1/messages/42317
Hat Tip to Bill Mitchell ,
To solve the Pension debacle;;
The government could create a National Savings Fund, fully guaranteed by the currency-issuing capacity of the government, which could provide competitive returns on savings lodged with the fund.
There would be no public debt issuance (and the associated corporate welfare by bond issues and government debt management machinery) required.
The government could meet any nominal liabilities that would arise from this system at any time.
Not like me to be so late to such a gathering, but stuck in yet another long hours learning curve, which is fine as it is a love thing, but inevitably results in neglect elsewhere.
I recently watched with no amusement, the Varadker version of an empty Neoliberal suit, at the end of one of his happy shiny videos, trying to sugar the pill of likely pension problems ahead, by announcing a cunning plan to raise the retirement age for public sector workers to 70. It would be voluntary of course & after all according to the good Doctor 70 is the new 50. But never mind everything else is great unless you are one of the 20% of the population who suffers from chronic pain, who can no longer have access to the medical profession’s recommended prescription because according to the above swearer of the Hippocratic oath, there is a problem of possible dependency – much better to go out & get yourself a nice cheap bag of opioids.
I am not sure about the idea of a universal basic income, especially if it gets tied to Rogoff”s push for demonetisation. From what I have experienced of a time when working class communities functioned very well in comparison to the present, many people work well in a collective & are not likely to be interested in taking up solo basket weaving or whatever.. Of course those coalminers, steel & pottery workers I once knew are a thing of the past & there is no need for people to work as hard & as long as they once did, but something fundamental was lost other than jobs when that was all sent away with no decent replacement. This is obvious to see for me, in what was once a vibrant community, which is now a pretty rotten somewhere you just go to stew in.
Bill Mitchell hits the nail on the head I think with this ” When Austrian’s ate dogs “, in describing a situation which is obviously recurring all over the West in those once engines of prosperity :
http://bilbo.economicoutlook.net/blog/?p=36298
bout time you had a blog of your own!
Thanks for the thumbs up but I don’t think it’s a good idea for many reasons not least time. In any case I would rather hopefully add stuff that supports the effort of people like David, rather than ramble on & on probably in effect largely to myself.
Hi Steviefinn
What matters is not how hard one works.
What matters is whether or not what you earn will be taken away from you.
What matters is the right to private property.
The taking away does not have to be physical.
In a context of perpetual fiscal deficits, taking away happens in terms of purchasing power.
Legislation takes away in terms of increased fees or increased taxes.
Perpetual fiscal deficits guarantee that legislation will progressively divest all.
The first in line to be divested are salaried employees.
Entrepreneurs can only push back in time the moment of total divestment by progressively phagocityzing other entrepreneurs.
This happens because the monetary system is centralized and imposed by law.
In this system, perpetual fiscal deficits bring to bear the diminishing marginal utility of debt.
As this dynamic develops it eventually goes critical.
Hence the reason for example that US sovereign debt suddenly doubled from 2008 to 2016. That’s your proverbial hokey stick. It is an arithmetical progression
” Entrepreneurs can only push back in time the moment of total divestment by progressively phagocityzing other entrepreneurs “.
Yes I am seeing this as the crumbs let fall from the table diminish, many who sustained themselves in the pre- 2008 world are now scrambling for scraps.When once I was easily floating now I am bobbing & how hard I or anyone works is as you say not important within the greater scheme of things, but is I believe an important need at the individual level in order to avoid sinking into an ever deepening abyss.
Although there is confusion as to the why of it, I am seeing signs that there is a growing realisation that precarity is working it’s way up the food chain, with at least some erosion of the complacency that the damage was most usually only reserved for the bottom feeders.
I guess they aren’t worried about pensions because they think most people will not survive the upcoming nuclear war.
Just a guess though . . .
I am relieved that you don’t have anything definite on that & as yet no-one has advised me in the previous Cold War style to paint my windows white or asked me how I would spend a certain 4 minutes – bunker sales are apparently up though.
I think that the lack of such advice is quite worrying. It is as if they don’t want you to survive.
Unless you can afford your own bunker of course . . .
Well, I have long given up on the idea that the elites except for a few exceptions ever gave a damn about the little people, except for the purpose of various forms of fodder, human capital etc.
As for bunkers, I would prefer to be instantly vapourised in the arms of the Missus than be stuck in a hole in the ground which I believe even if they get the Strangelove 20 virgins could likely turn into a version of hell.
Imagine if the nuclear winter didn’t allow for any escape, or the way out was damaged, but the worst aspect I believe would be the fact that the majority of the people stuck down there, as in politicians, CIA, Neo-Cons, Trump, billionaires etc who it appears are already half crazy, selfish scumbags would soon degenerate into some sort of horror film scenario, perhaps like that of those Bounty mutineers who ended up on Pitcairn island.
It would get really interesting if they started running out of food, but at least they would truly be able to indulge in their dog eat dog policies they have enforced on everybody else.
I hope they don’t get out & re-populate the world in their own image & I would rather that was left to an isolated group of bonobos who had somehow survived the idiocy of their supposed superior primate cousins.
HA!
At least
this Yank
will forever
be eternally
grateful
that your Pop
Had a PAIR!
https://www.youtube.com/watch?v=iul4SBlHIf8
Future of pensions noted here: https://harryshutt.com/2018/04/08/the-end-of-wage-slavery/
https://www.theautomaticearth.com/2018/04/the-mother-of-all-deflations/
@Patricia further explanation of QE;
Bank of England website and hat tip to Prof Bill Mitchell
The Bank of England can purchase assets to stimulate the economy. This is known as quantitative easing , They spent £485 billion in QE to the banks with no effect on the real economy.
Quantitative easing does not involve literally printing more money. Instead, we create new money digitally …
Quantitative easing is when a central bank like the Bank of England creates new money electronically to make large purchases of assets. We make these purchases from the private sector … The market for government bonds is large, so we can buy large quantities of them fairly quickly.
The purchases are of such a scale that they push up the price of assets, lowering the yields (the return) on them. This encourages those selling these assets to us to use the money they received from the sale to buy assets with a higher yield instead, like company shares and bonds.
As more of these other assets are bought, their prices rise because of the increased demand. This pushes down on yields in general. The companies that have issued these bonds or shares benefit from cheaper borrowing because of these lower yields, encouraging them to spend and invest more …
No printing presses involved.
Having sold their gilts back to the Bank, investors bought up company stocks and bonds or property – sending prices to record highs – instead of creating new activity in the real economy, higher growth and jobs … The result was that the injection of money caused a stock-market boom in the financial economy, but on the real economy – the target of the policy – it had little effect.
Yes, I understand all that Salford Lad and I am a great fan of MMT. I think we are both singing from the same song sheet but using different words. I know I do use the word ‘printing’ when I should use the word ‘create’ but whether it is the Commercial Banks or the Central Bank creating money, that money has been used to buy assets whether it is shares or houses and inflation has occured in those assets. But it is not the money per se that causes the inflation; it is allowing the created money to buy non performing assets. No body is employed and nothing is developed. But surely if that created money were spent on something that gave a return or made people’s lives better then that wouldn’t cause inflation because it would be spread out. I am not sure of the word ‘return’ either. Building better hospitals and schools etc does not give a ‘return’ as such but does make the people’s lives better so perhaps a better future can be regarded as the ‘return’. I do worry about encouraging us to give up cash in favour of digitally created money though. Isn’t that the ultimate in privatisation? Or am I just looking for a conspiracy where there isn’t one. But I guess I am rabbiting on to the converted! There just has to be a better way.
Yes the Labour Party came up with the term Peoples QE, which is not really correct .Rather the term Overt Financial Investment is the correct term as there is no swap arrangement,
OFI can be used to build infrastructure,give employment and improve productivity in projects such as transport ,broadband, roads etc.
The 2 main pillars of MMT in Bill Mitchells view are the Sovereign States issue of the money supply into productive Industry and the Job Guarantee.
The State has relinquished almost completely its power to create money and influence the Economy to Private interests.
It will be difficult to regain this power.
“It will be difficult to regain this power.”
But not impossible:
Cf. https://www.jacobinmag.com/2018/04/brexit-labour-party-socialist-left-corbyn
Look at at this Salford Lad
https://www.macrobusiness.com.au/2018/05/switzerland-prepares-vote-sovereign-money/
Careful. The natives around here don’t like monetary reality.
http://letthemconfectsweeterlies.blogspot.se/2018/05/mmt-are-they-gatekeepers-of-usury-or.html
No JohnG , we do not like authoritarian know it alls’.
http://letthemconfectsweeterlies.blogspot.se/2018/05/mmt-commissars-and-thought-police.html Welcome to the Jungle.
What you will do or not do does not matter.
What matters is what the sovereign will do.
The current geopolitical juncture we are witnessing has everything to do with the fiscal impasse in industrialized nations.
Here is the macro equation that has to be resolved
On one hand
80% of the global population is centered around Asia
The bulk of global industrial capacity is centered in the same geographic area
On the other hand
Industrialized nations have declining demographics (declining fiscal revenue)
Industrialized nations have hollowed out economies (declining fiscal revenue)
Industrialized nations have burgeoning state budgets (outlays outpace fiscal intake)
Industrialized nations are in a fiscal impasse
So how do you right this ship?
Our predicament is the complete erosion of private property.
If we agree that the right to private property is a desirable feature of a functioning healthy economy, then our current monetary system has thoroughly subverted this fundamental principle.
The arithmetic underpinning this monetary system can only result in the concentration of profit, thus the concentration of title.
In this construct, government is a mere enforcer of expropriation effected through legislation.
In this construct too, government will merely be the last casualty of the total loss of power to the benefit of the owners of the monetary system.
Eventually, government will have to square off agains the people
In the later stages of this dynamic however, government has to square off on two fronts: against the people and against the owners of the monetary system
We are now in the later stage of this dynamic
The spirit of Gerrard Winstanley appears to be alive & well in France at least, with the barricades arrayed in the commons at Zad in the Bocage. Any doubt to Macron’s Neoliberal credentials & his faux Green policies as he attempts to stamp out this attempt to live outside the prescribed box, should be abandoned – particularly by those Europeans Greens who have been of late supportive.
A long read but an illuminating one.
https://zadforever.blog/2018/04/24/the-revenge-against-the-commons/
An interesting post. It reaffirms what I said at a talk you gave at Lancaster University in 2010. At that time young economics students were poo-pooing your idea that the pension provision was gone. As a much older student I knew mine had already been slashed and stated I was expecting to work until I died. I have been proven right. I will not be able to afford to retire.
From the US but perhaps a sign of things to come in terms of CB’s reaction to pension shortfalls – it sounds to me like what was once called a double whammy.
http://www.wirepoints.com/chicago-feds-answer-for-illinois-pension-crisis-is-a-statewide-property-tax-wirepoints-original/
How about a bit of rioting before we conclude that the whole pension legislation was all too wonderful but alas not well enough looked after / saveguarded?
And lets depose all royalty for starters! Goddam inbred psychopath parasites.
There is another attempted shoe-in for the establishment and therefore neo-liberal choice for the Green Party Leadership.
http://davidmalonegreenpartycandidate.weebly.com/blog-for-comments-and-new-content/green-party-leadership-2018
Golem to bring the discussion closer to home, you ask imagine if your state pension is scaled back ? I don’t have to imagine, my partner at 62 is a WASPI women and for some reason it all kicked off tonight its as if she saw George Osborne across the dinner table.
It is scandalous but its happened and they’ve got away with it, doesn’t bode well.
I’m in the somewhat fortunate position that my life expectancy is such that when the wheels come off I will be long gone. I have, however, some responsibility to the next generation and do wonder what to tell them.
Your Question does bring that distant day into sharp focus, and I do recall one savvy American girl saying that she has no expectation that her pension will be there when she retires. She had, so to speak, “got it.”
That realisation is the first step. Somehow, over the last 50 years the financial industry has sold the idea that pensions have some similarity to death and taxes,
I suppose 2008 was my real wake up call, though I already knew that the Pension Establishments were ripe for predation by other parts of that sector, and, if you were awake, you would have noted that Gordon Brown also had his teeth into that part of your flesh.
Life would have been simpler without the Pension Industry. People could have saved or hoarded or made other arrangements. The problem then would have morphed into protecting your nest egg from the Government, and would be constantly in the thoughts of PAYE employees as well as the self employed.
Just last week, the first signs of your Question appeared in my real world, with a note from one of my pension providers telling me that all was not well and flagging that a cut of ten percent might, maybe, possibly, at some time in the distant future, have to be made. So my mind is somewhat more attuned than others to the problems.
I can, however, provide an answer to part of the Question, and to one of Jonathon’s queries. The reason nothing gets done is because the people doing the prosecuting will be putting their fathers, brothers, sisters and cousins in jail. Civil war or revolution has a greater probability of occurance.
Sadly I think you are right it will come to those things. And our children will ask us , “How did you let come to this?”
I’ll offer a critique of your Question: “they” know that if every person in the UK got a letter though the post on the same day telling them that their pension was “vapourised” then it would not be long before criminality and corruption would make daily headlines.
I’ll avoid putting forward what I think will happen. “1984” is already being treated as a “How To” handbook, and most of the events and processes are already obvious.
If my children ask “How did you let it come to this?” my reply will be “you should have listened to me instead of the fake news media, and to take on the responsibility for change to yourself”.
“What will you do when you are told that the state pension can’t afford to pay retirements any more?”
The obvious answer is to call bullshit. Because it is bullshit. Sovereign governments issue the currency. They can’t run out of that which they issue at no cost by keystroke.