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Debt Loop Strangling Economy - Watch
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Debt Loop Strangling Economy - Watch
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Steve Keen considers the following as important:
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| Debt Loop Strangling Economy - Watch |
Das Geld Syndrom in a nutshell. Most religions sanction usury for a reason.
This is also another way of saying “effective money” is destroyed by interest rates. Or “inflation”. It functions like decay in tangible goods but in systemically toxic way because economic power continues to accrue to creditors. One measure that circumvents it, is demurrage. Gesell formalized it with Freigeld.
Interest rates are not the problem. The issue is: the money earned by interest rates must be spend for consumption of goods and services.
@@ThomasVWorm I disagree, both because price increases themselves carry side effects and because money doesn’t fill an economy like a perfect gas. It’s a fluid following the contours of financial water basins capturing their flow or current flowing in circuitry according to impedance mismatches.
@@GhostOnTheHalfShell I was not talking about price increases but interest.
Interest is just debt. And debt is money.
The money does flow from the creditors, who did create it into the economy and from the economy out to the creditors who then destroy it. Both flows must be in balance. To be in balance the money must be spend on the goods the creditors must supply to be able to service their debt.
Therefore it does not make any sense to lend this money again, since this will create a short circuit.
The idea of Gsell goes into this direction. Today it can be easily improved, since money is just bookkeeping with computers. So when money will be created by credit, we can attach the term of the credit contract to the money being created with this contract. Then the money will expire at the same time as the contract. So it will either be spend before the end of the term or it will become invalid.
Codswallop.
The real problem is government debt. Why is it that socialist economist never talk about the trillions owed by welfare states for pensions?
Never talk about the austerity it causes? ie. Money not going on services but on pension and other debts?
They will complain about wealth inequality but not its cause, the trillions paid in and spent.
Government debt is no problem at all – unless you make a problem out of it like they did in the Eurozone. But then not government debt is the problem but the remedy.
Money going on pensions does not cause austerity at all because this way it goes straight into consumption. Pensioner will spend it.
@@ThomasVWorm Define austerity.
Mine is low take home pay
Second is low income in retirement
Third is tax money not going on services.
@@ThomasVWorm So government debt is a problem. The reason is the size and the nature, inflation linked, of the majority of government debts.
To pay inflation linked debts you have to take from one segment of society, and with no corresponding services hand it over to the creditors. You can't print to pay because as fast as you print, you get inflation, and the debts get correspondingly bigger. That's why inflation linked matters
So the reason now why the size matters, is that transfer has to come from people working and living in the UK. There's a limit on what they can pay, and are prepared to pay. For inflation linked debt, unlike fixed rate the system works like a household.
@@adenwellsmith6908 austerity is simply a reduction of spending. Low or no incomes are the result of it.
Then tax money is always going nowhere. Tax is the end of the flow of public money. The money the government spends origins in credit, which means government spending causes an inflow of money into the economy and taxes an outflow of money from the economy.
So austerity can also be defined this way: the outflow is bigger then the inflow, which means that the government reduces the money in circulation.
@@adenwellsmith6908 when the government spends, money will be always printed. Collecting taxes means burning the money.
Printing money does not automatically cause inflation. That's a myth with no sound basis in reality. The economy can also expand and it does prefer to expand because raising prices comes with risks for the companies: a loss of customers and a loss of market share when your competition prefers to expand production.
So it depends more upon how the government spends and it can prevent inflation by taxation. The government controls the inflow and outflow of the money.