What you can do is participate in our Credit Free, Free Market Economy, which will be launched as soon as the number of our registered share holders reaches 123,456,789. Check it out at 1776 - Annuit CÅptis Don't lose hope! "Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spiritsâof a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come. Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die;â though fears of loss may have a basis no more reasonable than hopes of profit had before." John Maynard Keynes The General Theory of Employment, Interest and Money, Chapter 12: The State of Long Term Expectation, VII December 13, 1935
Its likely you are right. The simply fact that the M1 multiplier tanked in the 90's and the economy boomed shows this metric is probably outdated. During the 30's this was a HUGE number, the fed failed to raise it and that made the deflation worse but now financial innovation has changed a lot of the numbers we should be looking at. If somebody use $50k from their checking account and put in a savings account this would drop the M1 money multiplier but the money is still readly avaliable for purchases and to create rising prices, all it takes is for the animal spirits of spending to be restored
Shalom.....good points.... After reading the article....what seems to come to the fore is that credit itself ....somehow ventured all the way from being a liability....to an asset.... Debt has never been an asset....and if debt was used....the asset that it bought....must equal or outpace the debt utilized.... Then comes ponzi....debt onto debt onto debt....ponzis are bad enough when actual assets are utilized.... And at the end of the day....in order for price stability to remain....the debt on debt ponzi must be allowed to continue.... Everyone knows what happens to cash on cash ponzi schemes....much less debt on debt ponzi schemes.... The problem has become so complex....that the chances of a group of lawyer-politicians solving the problem is nil....as they are one of the biggest Xis of the problem equation..... Thus without structural change....ponzi has to continue in order for prices to resemble what they once were....
Everyone acts as if the Great Depression "did not have to happen" when in fact it did. You simply can not have such a long period of excess as we had in the 20's and not eventually feel the pain. It's the same type of thing that I suspect many people experienced on January 1st. If you go lay one on, the next day you will suffer for it. You simply don't escape natural cycles because they suck and you wish you could avoid them.
You are right Libertad, when the economy get in a Liquidity Trap no one can repay their Credit. Not only the Credit Market is a Ponzi Scheme but also any Market for long-term assets. Stocks, Businesses, Real Estate... You are right in saying that vested interest will prevent politicians and civil servants to reach to the obvious conclusion. We are also worried to see how much individual freedom (libertad) has been impaired in the recent years including by the use of credit, which has allowed an unlimited collection of data pertaining to our private lives. We have hence decided to propose a system that would provide that Credit Free, Free Market Economy without the possibility of ever using that economy for law enforcement purposes. By the way let me provide you with a link to the Press Release of my open letter to Chairman Ben S. Bernanke: Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won't Work. I am, Libertad, Sincerely Yours, Shalom P. Hamou
Good Shalom.... Let's revisit a simple explanation that you briefly included regarding real estate and ponzi issues.... Condominiums.....100 units....All equal.... 1996.....4 sales....average $50,000....$15,000 Equity 2000....4 sales ....average $72,000....$15 moves to $37,000, and new owners $22.000 Equity..... 2008....1 sale.....$50,000....1996 owners equity $15,000 2000 owners negative $22,000 equity.... However these people treated equity as savings....and spent on consumables that held no future value....via bank loans.... .................................................................................. Staying with simple concepts for visualizing the issue....one knows that ponzi attributes are within the appraisal/loan process whereby a single transaction can revalue all assets.... Although this is quasi ponzi....it does spell out the need to not confuse hard assets with cash....and in order to create a more sound economic base....one needs not to be subject to demise at the mercy of one transaction....Adam Smith calls this "an invisible hand".....I call this explanation ....the inability to explain.... The list goes on.... In effect....it could be argued that the US Economy is largely a ponzi- based economy.... And obviously a ponzi related economy is not all bad....because if it were not available....the majority of the popluation would not have the asset related experiences that they have had.... Thus the idea being is to label it what it really is....and to thus find ways to keep it going....thus evergreen.... This is a lot like inflating a ball a little too much....letting some air out....and thus inflating it again.... The ball is needed ....for play.... Privacy....the internet unfortunately is a tool of full disclosure....and the ponzi cannot be maintained without it....because of collateralized property rights.... In an internet world....privacy becomes obsolete....all digits have an address....all value will be labeled by an address.... The sad part in todays issues....is that the government treats those who save as expendible assets....that should have known better....What is today's incentive to save at 0% ? To be more healthy is to have savings.....but government policy just has indicated that more debt is good....This alone shows just how perplexed the policy making individuals really are....
In order to emit money a Capitalist economy Central Banks make credit to banks with the hope that it will finance long-term investments and trickle down to the ordinary people. Because Income / Wealth disparities increase long-term interest rates keep going down hence the value of long-term investments. When those same long-term rates become so low as not to pay what is known as interest rates risk people refuse to lend. Money creation stops. No one can repay credits. The Ponzi schemes is uncovered. Yours Sincerely, Shalom Hamou
Good Shalom.... Ok ....I see what you are saying.... We exist....so one has to give it up to get it back.... The higher the crests....the lower the troughs.... .............................................................................. Hard assets do not know their price labels.... ie tent cities sit besides rows of empty houses.... At some price houses are occupied.... ............................................................................... ie GM Would sales occur at $50,000 per unit ? At $25,000 ? At $0 ? ........................................................................... At some price it works.... The houses are structures that are physically there regardless of the price label.... ......................................................................... Thus a truly poor county would be one where there are no houses....and one would be lucky to have a tent..... ......................................................................... One could argue that the US is going through a "price label adjustment period"..... ............................................................... Also "ponzi" and "velocity" could be related....
I rather have no Depression. I know the 10 year Depression led to a world war and then a 60 year boom period. But i am in my most productive years soon. The guys that were there born in 1960, the baby boomers enjoyed the good life in their 20's was a economic boom.. now in my twenties is an economic depression.. how unfair..