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Calling all Austrians: Money is not a bright, shiny object

Via Big Picture, this fascinating graphic, originally published in, of all places, Popular Science, is making the rounds. Check it out (unless you're a member of the Austrian school, in which case you can go directly to jail in the note at the end of this post).

money-where-infographic_popsc

Today, in the 21st century, money is digital. And money "really is" a spreadsheet. Just like the MMT (Modern Monetary Theory) school says. Popular Science, in the article that accompanies the chart, has an extremely interesting take on the digital nature of money, omitted by Ritholz:

So where is your money today? What's not in your wallet is in a spreadsheet ...

Lambert here. I don't think that's quite it. One day, paper in your wallet might turn into only a representation of what's in the spreadsheet.*

... in what's called a core data center, a massive concrete building full of servers. But really, says information-security executive John Meakin, "Your money is everywhere."

.... What he means by "everywhere" is that with ATMs and online banking, servers can deliver your money anywhere, anytime.

And everywhere there's a "delivery," there's an opportunity for the banksters to charge you a rent (for example). Just like everywhere there's a leaf or a flower, there's a pest. So the obvious course of action is to use this wonderful system as little as possible, eh? Since happiness, merit, and accommodation to usury are inversely related?

But don't go on faith.

Feh. Faith (ideology) is exactly what we're going on. If, by flipping a few bits, whoever's programmed the servers can "deliver" your money, then, by flipping other bits, they can jack up the rent on delivery, or not deliver it, or freeze it, or reroute it, or confiscate it. Of course, they would never do that. And that would be the "faith" part.

As a financial citizen, it's important to understand how a digital bank knows what you're worth.

"Financial citizen"? Financial citizen?! I don't recall that concept from Civics 101. I wonder what the operational defintion of that concept could possibly be? Total compliance with the demands of rent-seeking banksters? Could that be it? (SASQ**)

Anyhow, you notice what's left out of this "blinding us with science" description of "your money," right? The telling omission?

The money in this chart from The Big Picture***:

bailoutnationchart-912x1024

The bailout money is just as much "my money" as the money in my wallet or in my account, because it's taxpayer money, and I'm a taxpayer because one way or another I'm going to pay for it****. Yet oddly, or not, the Popular Science diagram omits all mention of it. And $22 trillion of bailout money is a lot of mention to omit.

I can only speculate why Popular Science has misdirected its readers in this way. I suspect that's because were it to have been fully informative, certain questions might have been raised, questions that MMT asks and answers as follows:

1. Who creates money? The state. See Article I, Section 8, at "coin money." *****

2. Why should money be created? To serve the public purpose. See the Preamble at "general welfare."

Of course, as The Big Picture's diagram above shows, the public purpose has nothing to do with the bailouts whatever, and everything to do with bailing out our kleptocratic banana republic-style overlords from the consequences of their bad bets, and further reinforcing their control over our political economy.

Welcome to the brave new world of financial citizenship! Reach me that soma, wouldja, hon?

* * *

NOTE * Cash, of course, isn't trackable, so although it's on whatever spreadsheet the Fed uses, it's not on the spreadsheets the banks use. Of course, the banks can't charge you a quarter every time you take a bill out of your wallet, which is why they'd like to find an excuse to abolish paper.

NOTE ** Oui. Bien sur! Gail Pearson of the University of Sydney defines the term:

The greater freedom of individuals to invest and borrow for their future in this market has resulted in the development of a new concept of human being – a financial citizen[11] – and the need for a unique system of financial regulation. This financial citizen is somewhat knowledgeable about market risk; a willing participant in the market for financial services; and dependent on the financial services market for long-term economic security. ...

[11] Condon, M and Philipps, L ‘Transnational Market Governance and Economic Citizenship: New Frontiers for Feminist Legal Theory’ (2005) 28 (2) Thomas Jefferson Law Review 105 use the term ‘economic citizenship’; Gray, J and Hamilton, J Implementing Financial Regulation: Theory and Practice, John Wiley & Sons, 2006, use the term ‘financial citizen’. I prefer the term ‘financial citizen’ as it captures engagement with financial markets.

I like "engagement." It sounds so neutral. Like a cog in a big machine. Or that which precedes a marriage. A totally unforced marriage, of course. Pearson's book was published in 2009; how anyone sane could imagine, after the crash and the subsequent depression, that "dependen[ce] on the financial services market for long-term economic security" would be achieved through anything other than the force of the state (what "progressives" call nudging) is beyond my comprehension. Then again, it's not clear that our transnational ruling elite of banksters and rentiers is sane. Judging by outcomes.

NOTE *** I'm pleased to collect the two best visualizations I've seen of the financial system in one post. It's two, two, two charts in one!

NOTE **** Paul Krugman explains one way here. Other ways are through disemployment, the theft of my Social Security, gutting Medicare, and the collapse of housing values.

NOTE ***** More precisely, only the state can create money "exogenously," from outside the financial system, by fiat. It does this -- which should come as no surprise to you, at this point -- by changing numbers on a spreadsheet (or functional equivalent). By contrast, a bank does indeed create money, but endogenously, from inside the financial system, when it makes a loan. But what is a loan on the bank's books is a credit on somebody else's books, so in the economy taken as a whole system, the transaction nets to zero. If you move a twenty dollar bill from your right hand to your left, you still have twenty dollars, and not forty.

* * *

NOTE Other misfeatures of the Popular Science diagram: (1) The fetishization of the physical plant (the building, the servers, the cute little armored car) is interesting, too, since it's really the data structure -- the spreadsheet itself, its rows and columns, its macros, which parts of it are password-protected -- that's important. (2) There are no feedback loops. But, as we know, the financial system is reflexive, and incorporates both feedback and feed forward mechanisms, managed through precisely the data structures conveniently omitted in point (1), through the decrement of the value in the chocolate ration row from thirty to twenty grams a week, and like that.

JAIL NOTE When I wrote Austrians," I really meant to write ... I meant... Well, it's a nice day today, the birds is singing, there's stuff like . . . kittens and stuff, so I will direct you to this fine post by Randy Wray.

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Submitted by jawbone on

This financial citizen is somewhat knowledgeable about market risk; a willing participant in the market for financial services; and dependent on the financial services market for long-term economic security. ...

"Somewhat knowledgeable" means knows enough to get invetested to the point of losing a lot, but not enough to know what the banksters are really doing to the little people.

"Willing participant"? Well, to the extent they do anything but sign up for credit, 401K's, etc. And the MCM (Mainstream Corporate Media) pushes the banksters' lines about financially "wise" things to do. "Willing"? As willing as one can be when having no real alternatives.

And this is the scariest part: "Dependent on the financial servieces [read "banksters"] for long-term economic security." And once the banksters and Repubs and Obama get through with SocSec that will be total. They will get their various rents for allowing you to get your hands on SocSec, etc. Pensions? Gone, or going fast.

Lambert, chilling post. And since it's a lovely moderately warm and low humidity day here in Northern NJ, it's leaving me feeling dead cold. Coulda used it the past few days....

editor_u's picture
Submitted by editor_u on

Was that a Tyrolgraphical error?

Submitted by lambert on

No, but I have heard they wear funny little hats with feathers.

* * *

I actually just updated the lead to make the in-joke more clear. Austrian (to caricature) means "gold bug." Ed Harrison is at least partly an adherent of the Austrian School of Economics, so I don't want to be too harsh. There's kittens n stuff....

Stirling Newberry's picture
Submitted by Stirling Newberry on

it is our system for estimating money.

When the people we buy oil from stop taking the data transfers, then it stops working.

Submitted by lambert on

You're saying... What? Money isn't the data in the data structure, but another level of abstraction up? (That would make the data a proxy for money, and currency a proxy for data. Every programming problem requires a level of indirection to solve...)

Stirling Newberry's picture
Submitted by Stirling Newberry on

is the amount of exchangeable value in an economy. We estimate money with currency. Presently we have a very complex series of interlinked computer systems that do this.

However, the "map is not the territory." To the extent that people accept the money game, it works. But not everyone does, and as importantly, it is not definitional that key players will

For example, during the Arab oil embargo, they didn't accept our dollars for oil. It didn't matter how many dollars we had, the did not buy oil. Only when the US was willing to pay a great deal more for oil, were dollars accepted again. There were also non-economic provisos, including that the US would sell advanced defense hardware to Saudi Arabia, which spends 10% of its GDP on defense.

Right now, the powers that be think that if they keep the working people of the world on a short leash of money, then those poor will not demand more of capital goods and production than those that control them can, or wish, to produce. We will continue to have the best economy that they choose to provide. This is not working because what is getting squeezed out, is investment in what is needed to transition off the current economy and to the next one.

The other thing the powers that be believe is that they can print an unlimited amount of money for themselves, so long as it does not become "real" demand for real things. But some of that money always leaks out, and is distorting the real economy.

Submitted by lambert on

I'm really not sure about that, Stirling (and I know you posted on this very topic earlier, but this stuff is hard for non-finance people to grok).

To translate this into terms that I do understand, I think we're talking about the difference between a resource (as in that which is identified by a URI) and its representation (data which served in response to a request for a URI):

resource the intended conceptual target of a hypertext reference
resource identifier URL, URN
representation HTML document, JPEG image

I'm seeing that money as the representation (the data) and not the resource ("the intended conceptual target"), which is value. Leaving open the idea of what value might be ("the lineaments of gratified desire"? (e.g.)). Now, what the resource identifier is, I'm not sure. Perhaps currency?

Stirling Newberry's picture
Submitted by Stirling Newberry on

The difference between the information at the URI, and whether the person receiving gets what they want. If not enough people get what they want, then they stop requesting the URI.

Money is the same way, we store representations of money, but if people then use them and don't get what they thought, they start to rebel against the whole system.

Always ask first what happens in the real economy, and whether that is closer to, or farther away from, the best possible real economies. Currency is a tool to get us closer to one of those better states, but it isn't, itself, the thing it measures.

This is why the gold bugs go crazy, they want value to come in absolute units, like inches.

Submitted by lambert on

... since "Ding!" on "always ask first what happens in the real economy" -- you did notice the focus on financial power structures in the post, yes? -- but I think that the representation is best termed "money." It's data, and it does comes in countable units (some of which still have a physical representation as currency, if I do not misunderstand your use of that term). And no, value (the potential to gratify desire) does not come in absolute units. Unless you're the dwarf Alberich, of course.

scoutt's picture
Submitted by scoutt on

"Chiang Kai-Shek had irreparably alienated the last of his supporters, the urban middle class, who had surrendered their savings in hopes of resuscitating the economy. Instead, they had lost everything; they'd been robbed and "shaken down" by their government. Bitterly, the Shanghainese "whispered that the sole purpose of the transaction was to confiscate the people's wealth for the benefit of the Four Great Families."

From Shanghaiby Stella Dong

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Submitted by letsgetitdone on

Great diagrams and commentary on them.

On the exchange with Stirling. I think Stirling has a penchant for defining things the way he wants to, rather than the way other people do. Money is not:

. . . the amount of exchangeable value in an economy.

The amount of exchangeable value is the amount of exchangeable value. Money is only the medium of exchange we use to facilitate the exchange of valued things, and the relationship of valued things to money is changing all the time.

Anyway, in our society, money is US Dollars and its ultimate source is the authority of the US Government.

Sure the Saudis may decide to stop selling us oil in return for US dollars at any time, but if they don't have dollar credits then they won't be able to buy our goods or services and they still use a lot of both. Furthermore, if they raise our oil prices and drive prices up in this country, we will charge them more for our goods and services. Still further, if we have the courage we can stop US oil companies from exporting any US oil and we can then ration the use of oil here in the United States while switching to alternative energy sources. This will be difficult and will take a few years. But frankly it will do us good to live on less oil, and the productive activity needed to switch to alternative sources will get us out of the recession quickly.

Stirling Newberry's picture
Submitted by Stirling Newberry on

Wrong on just about everything. If we could "raise the price of our goods" we already would have. In fact, that's what Bush just tried to do, and it failed. Badly. A renewable economy is not "a few years away."

Finally, the definitions I use are the ones in the equations, in the classical proof of a Walrusian equilibrium, money is precisely the value of exchangeable commodity and production values. There's no fiat authority involved.

I do not think many of the enthusiats for MMT have thought through what they are nakedly saying. I thank "letsgetitdone" for saying it outright: MMT says that we will kill or imprison or threaten with same anyone who does not take our dollars. That's what "authority" of the US government is: the monopoly of violence. The ability to punish with the full weight of the law and military instrument those who will not comply. If people here want to agitate for a totalitarian state that has a "dictatorship of the proletariat" by all means do so. But have the courage to admit you want money based on the prison camp. The Republicans did in the 2000's. And they meant it. But you can have paper money, or the rights written on paper, but not both. This fact was not lost on the Supreme Court when it wrote what are called the "legal tender" cases: according to the law, when it comes down to the survival of the government, no other rights can withstand the claims of the perpetuity of the government.

On the other side, gold bugs, while they present themselves as being of the market, are much the same, except they want to have permission to kill anyone who won't do whatever is required to get gold. Or to put it another way, a right wing totalitarian state run by corporations and landholders.

That's the reason the gold bugs and the paper money people argue all the time, because they both want to use violence to reshape the world in the way they see as immediately necessary.

So why MMT? Why now? Because one of the drivers of the ratchet right is the fundamental belief that the left will not engage in effective violent revolt, or will not upset the apple cart and take the consequences. MMT is a stab at telling the right that there are at least some members of the left that will do this. However, it is out of order: right now the most committed plurality is the conservative movement. In the event of the social unrest that MMT or any similar regime would cause, bet on the conservatives winning.

Submitted by lambert on

... it looks to me like a Jobs Guarantee, which is pushed by MMTers across the spectrum*, is very much in the mode of FDR saving capitalism from itself. So I'm really not sure where this "dictatorship of the proletariat" idea enters in.

NOTE * Since MMT begins with an operational focus, it doesn't prescribe left or right policy solutions. You can have small government MMTers and near socialists. Another reason why I'm a bit non-plussed by your comment, Stirling.

UPDATE Another reason I'm non-plussed that at least structurally, from where it emanates in our political system, MMT looks like a third force thing.

Stirling Newberry's picture
Submitted by Stirling Newberry on

"authority of the US government" =

monopoly of violence.

Submitted by lambert on

I'm unsure of your argument:

Are you saying that (a) that the current operations of money creation do not involve the state's monopoly of violence? and that (b) this is a good thing? A bad thing? Both seem debatable to me.

Stirling Newberry's picture
Submitted by Stirling Newberry on

MMT asserts that violence alone is enough, and that there is never any end state other than violence. That is what fiat is. Note that this is MMT's declaration. I'm not putting words in anyone's mouth. "Authority of the US government." Read killing or imprisoning those who refuse to take the dollars - with nothing else. Naked violence.

All monetary systems rely, in the end, on using coercion to deal with some percentage of the population. The strategic nature of a monetary system is based on who is winning, who is accepting, and who is being killed. The run of a crisis, civil war or revolution, is offering paper money, for some end state. MMT has no end state other than "a jobs guarantee." Ergo, it's marxism, because that is the formula of marxism, a dictatorship that gives everyone jobs.

The Bush era made a bet on paper money, the end state they offered was the US as a petro-economy with a colony in Iraq. All of the force of the US military was not enough to bring about this end state. The Bush era was a putsch to put in place an era of fiat money backed by the US military.

MMT asserts that it can wrangle what will probably amount to 150 million people here in the US into accepting its fiat money, plus the oilarchies. With the same or smaller military. Not going to happen.

I'm not adverse to revolutions, but I am adverse to preaching a losing one, particularly just after someone else tried the same trick and failed.

letsgetitdone's picture
Submitted by letsgetitdone on

Sometime ago I posted this piece on the role of coercion in establishing the value of the currency. If you read it you'll see that the MMT position doesn't force everyone to use US Dollars for transactions. People can still barter. States can still pay people in script when they run out of US dollars. Rather, the MMT position is that Government money receives its value ultimately from making obligations to the Federal Government payable in Government currency alone. Since people need Government money to pay taxes, they are inclined to use it in transactions because they need the Government money anyway.

Having clarified that I also quite agree with Lambert about your totalitarianism remark. It's nonsense. What's totalitarian about requiring people to pay taxes using Government money? That notion completely escapes me.

You said:

All monetary systems rely, in the end, on using coercion to deal with some percentage of the population.

So what? All Government, whether in traditional or modern societies relies on this too.

The strategic nature of a monetary system is based on who is winning, who is accepting, and who is being killed.

I'm afraid I have no idea what this means starting with:

'The strategic nature of a monetary system . . ." What exactly does that mean?

The run of a crisis, civil war or revolution, is offering paper money, for some end state. MMT has no end state other than "a jobs guarantee." Ergo, it's marxism, because that is the formula of marxism, a dictatorship that gives everyone jobs.

Actually, MMT's goal, when viewed as a normative system is the attainment of "public purpose." Full employment and price stability are two aspects of accomplishing public purpose. But there are many other aspects as well. Take a look at this for a better idea of the various things that MMT is concerned with.

In addition, even if MMT's only purpose was providing a Federal Job Guarantee (FJG) to say that because of that "Ergo, it's Marxism," is a very elementary error. First, because even if two systems have the same goal in common, the means of getting there may be vastly different. Second, because the theory underlying either getting to that goal or why it's desirable may also be very different. And third, because saying that two movements are the same because they share a single attribute is an elementary logical error.

I know I stung you a bit in my earlier reply attacking your definition of money. But that is no excuse for you to go off the deep-end with a bunch of outlandish and extreme charges.

Submitted by lambert on

I think this comment shows uncharacteristic carelessness both analytically and in polemic.

1. "....asserts that violence alone is enough..." How else do you think that money is created? By the state. MMT isn't advocating for that, it's taking what it considers a historical and operational given as a starting point. You seem to think that they're advocating putting that as some sort of financial innovation, when in fact they're saying that's been the truth all along. And it's important to make that point, because it's a step on the road to the idea that money exists for a public purpose (Article I, Section 8, and Preamble).

2. "... MMT has no other end state than a Jobs Guarantee ..." Huh? MMT is a way of looking at how money works. It's a model, and a dynamic one. Trivially, a dynamic model has multiple policy outcomes, not one. Therefore, "no other." Next, it's a bad case of a category confusion to conflate a model with a single outcome of that model. Third, your statement is false in fact -- there are many policy recommendations that MMTers make; I don't agree with Mosler's tax holiday, but it's enough to disprove "no other."

3. "... the formula of marxism, a dictatorship that gives everyone jobs ...." Let's at least respect our analytical tools, shall we? Last I checked, MMTers weren't advocating the collective ownership of the means of production. And back in the FDR's day, I'm sure that people said exactly the same things about FDR, as he went about his job of saving capitalism from the capitalists. You might at least consider responding to the substance of the policy proposal, and its unfortunate that the scary kneejerk vocabulary choices prevent you from doing this.

4. Finally, you throw the idea of violence around a lot. NV, as I have consistently argued, is key. Obviously, the failed experiments with Marxist-inspired states in the 20th C should never be emulated (ditto the Fascist ones, of course). But we need to weigh the present circumstances and real alternatives now. Assuming for the sake of the argument what you have not shown, that MMT advocates violence, what's the net? How in the name of sweet suffering Jeebus can you show that a program that could enable a public works program to fix our infrastructure would kill more people than the rentiers and banksters are already killing?

letsgetitdone's picture
Submitted by letsgetitdone on

Stirling, You said:

Wrong on just about everything. If we could "raise the price of our goods" we already would have. In fact, that's what Bush just tried to do, and it failed. Badly. A renewable economy is not "a few years away."

No Stirling, that's not right.. Since the 1980s, there's been a truce between us and the leaders of the Cartel. You see they found out two things during the oil inflation of the 70s. First, they found that if they raised prices high enough, they would get to the point where demand would break. That is what happened, and the Cartel finally found itself with huge over-supplies and the price of oil fell through the floor. Second, they found that when they raised their prices, that we responded with higher priced manufactured goods that they needed, so a great part of what they were doing was just reinforcing inflation for everyone. So, the way things were settled was that a truce developed on oil pricing. It's still in effect, today, though certainly strained by the growth in worldwide demand for oil.

Third, I never said "a renewable economy" is a few years away. What I said was that a switch to alternative energy sources was only a few years away. You may not think this is true. But I put to you what we did in the little more than 3.5 years of WWII. When we're focused. When it's an emergency. We can move very, very fast. If half our oil was unavailable, we'd get that alternative energy in place fast. Perhaps we couldn't replace it all in 3 years. But we can replace enough of it to keep our economy growing in a real national emergency.

You also said:

Finally, the definitions I use are the ones in the equations, in the classical proof of a Walrusian equilibrium, money is precisely the value of exchangeable commodity and production values. There's no fiat authority involved.

First, it's the Walrasian Equilibrium. Second, what does Walrasian Equilibirum Theory have to with the nature of money in modern fiat systems? Third, why do you think the conditions of applicability of Walrasian Equilibrium Theory are satisfied in modern economies using fiat monetary systems like the US? Third, if the definition of money you've used is the same as that used in the classical theory of the Walrasian Equilibrium, then please provide a link to this definition of money. Fourth, even if it is true that this is a definition of money in the classical school of economics, why should anyone accept that conception of money since it obviously has nothing to do with monetary operations today?

Finally, if I think the MMT paradigm is correct, then why ought I to accept the definition of money in Walrasian Theory, rather than the conception used in MMT, explained here?

letsgetitdone's picture
Submitted by letsgetitdone on

Stirling, You also said:

So why MMT? Why now? Because one of the drivers of the ratchet right is the fundamental belief that the left will not engage in effective violent revolt, or will not upset the apple cart and take the consequences. MMT is a stab at telling the right that there are at least some members of the left that will do this. . . .

This explanation for why people propose MMT is ridiculous, Stirling. It has no basis other than in your wildest imaginations. Has a single MMT proponent talked about "violent revolt." If so, I've never seen anyone do that. the reason for "why MMT, why now?" is very simple. MMT thinking is needed to disenthrall people from the spell of neo-liberal ideology that has brought so much pain and suffering around the world. neo-liberal economics has failed. MMT presents an alternative theory that corresponds to the facts a lot better than neo-liberalism. It seems to offer some answers people can try out. That's why it's gaining adherents. "The Right" has nothing to do with it. In fact, the whole left-right spectrum is largely irrelevant here. This is about corporate neo-liberalism vs. Economics and Government for the Public Purpose. It's about getting rid of the coalescing global ruling class. Again, it's not about those familiar "left" and "right" categories.

However, it is out of order: right now the most committed plurality is the conservative movement. In the event of the social unrest that MMT or any similar regime would cause, bet on the conservatives winning.

You mean like the "most committed plurality" of conservatives won during the 30s? I really don't think so. The side that will win is the side that delivers the goods. The conservatives can't do that because they don't know how the economy works. They'll play into the hands of the oligarchs every time. But an MMT regime won't. It will deliver what's needed: New Deal 2.0.

Submitted by Xavier Onassis on

For anyone living in a human body the potential to meet needs and gratify desires most certainly does come in absolutely measurable units. They're called hours. (And, to a lesser-important extent, calories.)

Work is the first and most fundamental condition of life for creatures cursed with having stomachs requiring to be fed. It's like this: in a state of nature, if bear no pickee berries or catchee fish then bear no eatee berries or fish. And if bird no catchee worm then bird no eatee worm. It's the same for humans: no workee = no eatee. Food doesn't just fall into our mouths whilst we lie about in sun or shade. The insertion of money between work and eat does nothing to change the fundamental situation humans are in.

Only work creates wealth (goods and services). (For anybody who isn't yet sure this is true, right now is a good time for you to take a dollar bill out of your wallet and tell it to fix you a sandwich.) All the wealth in the world = all the work done in the world. No work done = no wealth produced = all the money is worthless.

Work is one of only 2 things: either it is the work done for all for free by Mother Nature (putting the gold and minerals in the ground, giving us bees to pollinate our crops, etc.), or it is the sacrifice of an individual's irreplacable time (hours) and renewable energies (calories). Time is the only real currency anybody living in a human body ever really has to spend.

The rich get richer and the poor get poorer means this: the rich are getting more and more for a unit of work (=sacrifice) while the poor get less and less for a unit of work. As no rational argument can be brought in defense of unequal pay for equal sacrifice, this practice is theft. Legal theft. Theft is injustice. Every theft comes with an angry person attached. Injustice drives violence.

James Madison: The purpose of government is justice.

The state built on injustice cannot stand. Every empire has been strong in the beginning, when inequality was small, and every empire has fallen when inequality grew large.

The human species now goes to bed every night with an economic inequity factor residing in the billions - whilst no one can...it is not physically possible... for any individual to sacrifice to working more than about twice the hours average working people do.

The total pool of wealth is finite, so overpay for the rich has nowhere to come from but from underpaying the poor. Those who deny that the total pool of wealth is a finite number are confusing potential for growth (or shrinkage) with the actual. The number of workers working is finite, the maximum hours an individual living in a human body can sacrifice to working is finite (we eat and sleep or die).

The flaw in capitalism is inherent in the very nature of transaction itself - though no economist has yet seen it. Humanity does not yet realize the can of worms we opened when we began division of labor, when we began to specialize in our work and trade the workproducts we produce and provide. Before wealth became portable and storable, inequality wasn't much possible.

What is supposed to happen in an exchange of specialized labours is each party goes home having taken out of the pool of wealth an amount equal to what he put in by his own sacrifice. But the amount of work in any 2 things exchanged is not equal, is not known or knowable, so one party walks away having got his own labor out of the deal while the other party got out of the pool of wealth less than he put in. So every transaction is an equal exchange of labour PLUS a drop of legal theft on top.

While only work makes wealth, money rakes and takes it. Over trillions of transactions, the "invisible drop" of theft grows exponentially. Humans have yet to grok the necessity to install a counter-measure to correct for the inherent flaw created by division and exchange of labor. Humans have yet to understand that in the age of E=mc2, the non-negotiable price of survival is justice, specifically economic justice.

Here's an animated "chart" for yiz:

http://www.youtube.com/watch?v=woIkIph5xcU

Bottom line, the rich, the bankers, the elitists are not the enemy or the problem. The enemy and the problem is an idea: the obnoxiously irrational, utterly stupid, and ultimately fatal idea to allow unlimited individual withdrawals from the finite pool of wealth for what is necessarily limited individual contribution. Culture is ideas. It is the ideas in peoples' heads that is driving everything going on. Only 1% are overpaid, 99% of people on this planet are underpaid (do we suffer from a vice that is the polar opposite of greed?). The human species will either rid itself once and for all of the diabolically stupid idea to allow unlimited personal fortunes, or we WILL succumb to the results of having the next and the next and the next wealthpower giants, ad infinitum until the injustice drives the violence to set off the global bombs now capable of 60 times planet death.

If we fail to grok the fundamental misconceptions all current human economic dystems are founded upon, there will always be a handful of wealthpower giants having the ability to make human history be what they say it will be.

Wake up and smell the uranium, humanity.

A just cap on personal fortunes beats all methods past, present, and future to prevent the circumventure of justice.

We can have limited personal fortunes economics or we will have history on repeat on steroids kaboom.

Somebody remind me of the very good reason we humans ever had for allowing unlimited personal fortunes on Earth??

Oh, and Howdy to all from a first-time poster. My name is pronounced "Save yer Own asses". Sorry if this post is a bit disjointed (I have a raging headache going and it's distracting me). Is it ok if I post links where I've written in much more detail about the word-of-mouth campaign for fairpay justice?

Stirling Newberry's picture
Submitted by Stirling Newberry on

"It's the same for humans: no workee = no eatee"

However, there are several orders of magnitude of output for worked input. Hence people who are on the winning side of their rent kill to protect it. Paying people for hours means nothing, since one "hour" is not of the same value.

Submitted by Xavier Onassis on

Are you saying an hour subtracted from 2 (or 2000) different people's lives is somehow not the same subtraction? I'm afraid I don't get your meaning - can you clarify what you mean, please?

Submitted by lambert on

You can purchase the time of a "human resource" for a lot less money than you can make from selling the resources the human creates in the time that you hired them for.

Making globalization a sort of arbitrage, I suppose? (Not sure about that).

Submitted by Xavier Onassis on

Hi, lambert. Thanks for your reply. I have re-read mod policy but am still not sure where I fit in, I'm embarrassed to confess. (and, erm, While my ignorance is on display, what does SEO stand for, please?) I don't have my own blog. Never have had. When registering here I had to provide a homepage, though, so I entered the link to a page I started back in March in the forum at Conceptual Guerilla - a page where I have offered some chapters from a book in progress I'm still working on. They are readable in short enough time, but long for comments posts. I would like to post a link to that page in a comment in this thread is all, and if it's ok, to 2 other pages in that same forum that speak to a) the big blind blunder of libertarianism and b) to the fact that total economic collapse is not possible because of what an economy really is. (Not that there's nothing to worry about (!), just that collapse won't happen in the way people think, and anyway we could stop it if we would.)

Maybe you wish to read a bit of the page I registered with to decide if the links I want to share are ok to give in a comment here? I have the idea you might love the content. Chapter 8 (an analysis of quotes) is my favorite.

I'm not sure what to do, because there is also this; I've been told CG is going to reorg his site (he himself has been absent a long time) and everything there will disappear soon. As a matter of fact, it was supposed to have happened by now, but my stuff is still there for the time being.

Submitted by lambert on

I just don't want a link dump, that's all. (SEO = Search Engine Optimization. People come here, dump a link in comments, hoping to garner a little traffic. That's not what we're here for...)

Submitted by Xavier Onassis on

Here then is where my chapters are still up, for now. They only cost your time to read them and think.

http://www.conceptualguerilla.com/?q=nod...

I hope all who do read there will see clearly that my intent is to help humans re-connect with their reality, prioritize correctly, and get focused like lasers on the fact that overpay-underpay is what's killing us all and this planet. I hope the writing helps people gain whole-picture economic clarity so as to move us along toward peace and justice. The staus quo acquiesed to everywhere is unlimited personal fortunes economics, and we humans have no future as things stand now.

I am the world's most self-ish person: I want my maximum happy while I'm here on Earth.

I just understand that my own maximum happy cannot exist without maximum happy for the people I share the planet with, those other 6+ billion humans who are my environment.

Thank you, lambert. I'd love to know what you think of the L-curve animation from my first post...

bungalowkitchens's picture
Submitted by bungalowkitchens on

made it very clear. A stack of hundred dollar bills 30 miles high puts the inequities in very clear focus.

Turlock