Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

[Jim Nickerson]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

Jim,

As for only you yourself knowing your honesty - you are again assuming everyone has the same standards. They do not.

There are plenty of people for whom telling a lie to a foreigner/outsider/heretic is not dishonest.

You believe you are honest, and from your personality I'd guess you probably are.

Even disregarding the above, very few people are absolutely honest - because honesty itself has different meanings to different people.

Have you ever told a lie? a white lie? how about an exaggeration? A sin of omission? An over-emphasis on a certain point to illustrate your view? A deliberate ignorance? The list goes on and on.

While certainly any one person cannot accurately judge an individual, nevertheless it is not the individual judgement that is the key.

The sum of all those who know you can pretty accurately judge honesty.

Because lack of it, and knowledge of such, spreads throughout the population.

That's why con artists and grifters drift around. No matter how good an actor, it is impossible to completely conceal your actions over time and the circle of those around you.

I agree with the problem of just whose moral code does one use.

I believe the only thing anyone has that is of value is their life. After that in my book, the next thing of value is one's self-respect, which in attempting to measure it would depend upon one's objectivity.

You can choose to be judged however you wish, but my assessment of my honesty is the only one that counts, despite whatever flaws I have in reaching that assessment.

As far as all the "sins" you mentioned, I have committed them all more than once, some much to my chagrin, and few worse than you mentioned; in my defense, not that I have to provide it, but I have few regrets, very few about my actions resulting in fuckingover my fellow man EDIT, and those are long past and will never be repeated.

[Guest]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

Modern day Calvinists tend to be crashing bores. Born into the wrong century.

[marvenger]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

I surely mistake at least some of his statements due to their opacity, but that doesn't condemn him as much as it illustrates my relative lack of depth.

I think you've made a humble and smart assessment here; hope doing so doesn't make me less humble.

Sapiens to me is obviously very thoughtful and this immediately puts him at odds with most of the population, and I think he handles this conflict very well. I wish I had more time to get know his philosophies a little quicker.

[orion]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

You are correct.

The fundamental issue is peaceful co-existence. Unfortunately in this world, the requirements of our fundamental constitution compels Man to desire gain without effort.

In simpler words, the desire for the free lunch corrupts our soul.

-Sapiens

Sapiens, I don't see where risking my money, I should not receive compensation in the form of interest. The theft I see is in central banking and human regulation which always seems to go amuck. I am currently reading Rothbard, "What has government done to our money", and the K Wave (can't recall author). Maybe we need a time for Jubilee where debts are forgiven? Sounds like the Paulsen plan, we just save everybody. The consequences? Well those were baked in the cake and we will pay one way or another.

[Sapiens]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

Sapiens, I don't see where risking my money, I should not receive compensation in the form of interest.

freelunch = infinite return on nothing risked.

[Rajiv]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

To understand the problems associated with the time value of money, one may consider reading the following

Michael Hudson
The Mathematical Economics of Compound Interest - (Part One)
The Mathematical Economics of Compound Interest - (Part Two)

Also

Margrit Kennedy
Why do we need monetary innovation?
A Changing Money System: The Economy of Ecology
Inflation and Interest-Free Money

also useful - Poor Because of Money

More reading at the Complementary Currency Resource Center Library

[The Outback Oracle]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

So what's so different from his usual bag of tripe? It just builds an hypothesis based on an assumption that compound interest is the problem, works it's was through a whole lot of verbage and then concludes compound interest is the problem!

[Rajiv]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

The following quote from Hudson is key to understanding the issue with interest and particularly compound interest

The basic idea of interest-bearing debt is one of doubling times. An ancient Egyptian saying that “If wealth is placed where it bears interest, it comes back to you redoubled.”[8] Babylonian agricultural debts at the typical 33 1/3% rate doubled in three years. The Laws of Hammurapi appear to reflect the view that held that when creditors had received interest equal to their original principal – after three years of service – the debt should be deemed to be paid off and the debt bondservants freed.

Babylonians recognized that while debts grew exponentially, the rest of the economy (what today is called the “real” economy) grows less rapidly. Today’s economists have not come to terms with this problem with such clarity. Instead of a conceptual view that calls for a strong ruler or state to maintain equity and to restore economic balance when it is disturbed, today’s general equilibrium models reflect the play of supply and demand in debt-free economies that do not tend to polarize or to generate other structural problems.

It should be noted that the Babylonians were operating when the resource constraints on the planet were still negligible -- that is not the case today.

[Guest]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

Rajiv - If exponential debt were a progressive reality that really did extend directionally in time consistently everywhere, then every single economy in the history of the world would have locked up in the space of two or three generations, due to the trap-like power of compounding. Evidently they have not. The thesis that compound interest contains at it's core a "fatally dysfunctional paradox" that leads to the abrupt demise seems to not mention that throughout history compound interest in commerce has been ubiquitous yet without cataclysmic consequences everywhere. The "reset button" on compounding debt seems to be the correcting mechanism imposed by economic history, and not just sporadically at the "cataclysmic" level, but constantly in the form of many smaller and larger debt destructions happening all the time.

It certainly seems to be, in that we've witnessed several thousand years of compound interest in commerce proceed without causing massive lockups at every turn. Quite clearly the penny compounding in worth since Christ's birth to become transformed into untold billions today would imply that unrestricted compound interest causes economies to lock up like nine-pins every 20-40 years or so, except that they don't. Also look at contemporary OECD economies, such as for example Germany today. They employ compound interest same as we do, yet where is the "collapse led by insurmountable paradoxes" to be observed in Germany today? There is maybe a fallacy of assumptions nested in here somewhere regarding the inevitability of collapse instrinsic to compound interest?

[Rajiv]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

It certainly seems to be, in that we've witnessed several thousand years of compound interest in commerce proceed without causing massive lockups at every turn. Quite clearly the penny compounding in worth since Christ's birth to become transformed into untold billions today would imply that unrestricted compound interest causes economies to lock up like nine-pins every 20-40 years or so, except that they don't. Also look at contemporary OECD economies, such as for example Germany today. They employ compound interest same as we do, yet where is the "collapse led by insurmountable paradoxes" to be observed in Germany today? There is maybe a fallacy of assumptions nested in here somewhere regarding the inevitability of collapse instrinsic to compound interest?

Empires and civilizations have collapsed with a fair degree of regularity -- to some extent the 20-40 year deadlock did not occur, simply because financial systems generally tended to be local -- with a limited capacity of destruction and there was always a large time lag, the further away in geographical space one went.

In certain societies, debt jubilees allowed for the system to recover, and both the debtor and creditor took some loss. But all of this was generally taking place when societies were not running up against planetary limits.

Today, the financial systems are much more interlocked, greed is more rampant, and there is little face to face (social) contact between debtor and creditor. In these circumstances, people are far less cooperative, and may not come to workable solutions.

[Guest]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

Yes, the part about a globalized economy and limits to growth I'm on board with - runaway compounding debt and the consumption in 2008 is hard to see continuing. But I was skeptical about the notion of compound interest as an AXIOM which is supposed to "bust civilisations at every turn". Lots of countries which have had compound interest for centuries, and show few hints of financial seize-up like the US here.

Looking backwards, I'm not sure where I'm supposed to spot any axiomatic linkages between compound interest and the "collapse of civilisations". Periodic outbreaks of debt destruction seem to work efficiently to keep that compounding debt function well in check. I read Hudson's posted article this week which is built around this idea, and could not help feeling the examples had a "stretched" kind of sense to them, such as claiming the entire Roman Empire's fall to the "end-game" of compounding debt.

This is a sweeping assertion that summarily relegates everything else that might have contributed to that empire's fall to mere secondary corollaries. I detect a "pet thesis" at work shoehorning history to fit the thesis, and I don't buy it. Debt peonage does not seem to me plausibly to have been the "sole significant reason" that the Roman empire fell, and indeed that assertion seems so narrow as to be quixotic frankly. It puts me on my guard as to what other socio-economic parts of the thesis may be too narrow.

Clearly this sole reason for Rome's fall would be quite startling to have effected this outcome all alone wouldn't it? I am not on board that it is "axiomatic" as a "civilisation slayer". Axiomatic assertions need to be nailed down to the floor in the elapsed history, and this one isn't.

Empires and civilizations have collapsed with a fair degree of regularity -- Today, the financial systems are much more interlocked, greed is more rampant, and there is little face to face (social) contact between debtor and creditor. In these circumstances, people are far less cooperative, and may not come to workable solutions.

[Guest]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

I'm not sure if you were quite serious in this initial observation Marvenger, but if so - beware of unconsciously "receiving apparent accepted wisdoms" around this community. The assertions have a way of being surreptitiously slipped onto the menu such that we simply conclude the ideas have been fully vetted by iTulip, who, one concludes, "must know better than I do" and therefore it would be churlish and bad form to presume the premise were false until proven true. To my view, the notion that "compound interest is unsustainable" contains some stealthy falsities embedded within it - but I notice you did not scrutinize it too closely before stating it within your reply as a truism.

In the course of two years reading around here I've seen more than one "truism" which was repeated by multiple iTulipers without challenge then suddenly at some later date quietly become an "un-truism" in that either EJ or someone else posted a clear and definitive rebuttal of that assertion and the assertion was dropped. Then another thing I notice is that no-one can seem to remember that they were all previously endorsing it as a truism for the longest time. Here's a very clear example: A rising real oil price can never cause inflation because inflation "belongs to the banks to issue".

Today we know this would be a very imperfect (means "false" really) assertion, because EJ has fully clarified that inflation can emerge from restricted supply of goods relative to money, just as much as from excessive supply of money relative to goods. But if you tried to glean some light on this point around here maybe 18 months ago, amazing as it may sound, the "wise consensus" with regard to petroleum or underdeveloped minerals being aBle to cause inflation was a chorus of very emphatic assertions that "inflation is always and everywhere a monetary phenomenon". (That was supposed to mean that only the banks could "make" inflation).

Even Rajiv, who is one of the brightest and most punctilious people around here in my view, subscribed to this "truism", such that he was quite explicit about it when questioned in the spring of 2007. But when eventually, the apparently self evident "axiom" gradually falls into disfavor, and a few months later that "axiom" has become an orphan, another curious mechanism appears, that no one can recall ever having promoted the discredited axiom in the first place.

I suggest what you are regarding here as "self evident", that compound interest "must be unsustainable" has all the characteristics of one of that same breed of soon-to-be orphaned axiom-ducks. Sapiens buys it. Rajiv buys it but do you buy it without giving it a really careful scrutiny? After all what you are being asked to accept is an all-embracing AXIOM which must then fit, snug as a cookie cutter, all the way back through the ages! And here's the question - if it is eventually shown to be a construct with only an imperfect real world application, will you then recall that you uncritically endorsed it when Sapiens put it before you as an inalienable axiom?

The common denominator of a lot of academic and only partially applicable insights is their initial appeal for being so "elegantly exclusive".

If I can understand that compound interest is unsustainable and being able to create it out of nothing is downright dangerous then I'm sure EJ and others do too.

[Rajiv]

Re: Thomas Greco: The Inevitable End of the Central Banking and Political Money Regime

I think there is a confusion in the understanding the role of compound interest in catastrophic collapses.

In general, societies that rely upon compound interest in their financial system (and I truly believe that the concept of a time value of money is quite useful) will build into the system safeguards that allow for the failure to pay interest -- that is not what leads to systemic collapse! Theoretically, if the money supply and the economy are growing at the same overall rate, compound interest would not normally be considered problematic. However, if money supply growth outstrips economic growth, then the differential between the two rates will at some time lead to a system wide default, or a system wide reset -- something in the nature of what we are currently going through. The current battle is between "deflationists" and "inflationists," and how to reset the system.

But this "financial/credit" reset is not going to cause civilzation to crash -- pain and much hardship, but no collapse.

The reason why compound interest can cause societal collapse -- is because it engenders a necessity for "economic growth" -- and sustained economic growth is not feasible when resource availability is constrained.

Thus we have to differentiate between the cyclical necessity of a debt jubilee -- this is what brings money growth and economic growth into a balance, and societal collapse brought about by a collision between economic growth and resource constraints.

In the past, whenever a society outran its resources, it died, and the survivors moved to greener pastures, and started again -- but this time, there may be no place to go to!