Folks i NEED your help (Please)

[*T*]

Re: Folks i NEED your help (Please)

Perhaps this is where I don't get the point - why are savers paying off debtors debts? In my world, savers would be relatively better off. Currently savers are the only ones carrying the burden. They get nil interest and their savings are confisacted so others can have cheap borrowings. So any scheme which spread the load around would certainly be of some worth.
You're right, practically it isn't going to happen. Already we have Governments raising taxes to make ends meet rather than reduce the size of Government or its benefits. Similarly, the greates trade union of all, the Law Society, is not going to allow any cut in its members standard of living etc etc
So I guess my position is, contrary to Keen, Hudson et al...there is no solution . The solution, by my estimate, in Aus case lies back in about 1957. We'll just keep on doing what we have been doing over and over and expecting a different outcome!

Marvenger is I believe referring to Fisher's Debt Deflation Theory of Great Depressions.

You oppose printing money because it redistributes wealth. This is true, but so does paying down debt and so does lending money in the first place.
The ability to create fractional reserve or interest bearing loans should not be in private hands as it is a form of taxation (without the corresponding representation).

Debt jubilees have been the rule since at least Sumer.

[The Outback Oracle]

Re: Folks i NEED your help (Please)

Sorry...I'm still not getting it....
If you create new money without interest (note i am distinguishing between "interest" and" fractional reserve banking") What incentive is there anywhere to forestall consumption or disincentive to overconsume.
Further "profits" are really just another form of interest. Profits are the interest I earn on the capital in my business.
Are we banning that too?

Again, I feel around here that not enough thought is given to distinuishing between interest and the leveraged fractional reserve chaos we now have.
Again if you need to use 4x2 please do so.

[Rajiv]

Re: Folks i NEED your help (Please)

Outback,

In this regard, you might find Sapiens thread La Usura en la Historia del Derecho useful. Also enlightening is Andreuccio's comment. If you have difficulty with the Spanish, you could use babelfish

[c1ue]

Re: Folks i NEED your help (Please)

Outback,

Sorry I've apparently been so mean to you.

As I've said before, I am philosphically on your side (a saver), but pragmatically point out that those who save (and don't protect themselves) are just holding the piggy bank for the pirates to get around to.

Please note that the battle right now isn't even between savers and spenders.

It is between those with monster debt who want to default, and those who own the debt and want to maintain debt service.

Those without debt but who don't own much other's debt are a chip in the game.

[unlucky]

Re: Folks i NEED your help (Please)

Yes but I'm frustrated by the lack of discussion about how that infaltion happens. Itulip's position is that the money is already overseas; but US has to give something in return to get those dollars back to US something they don't have or are unwilling to give up, the Asians can't spent it themselves in the US it seems.

My understanding, which I am pretty sure is incomplete, is that the Fed ultimately creates inflation by purchasing securities in the open markets, thereby replacing those securities with newly printed dollars (or the electronic equivalent). The Fed is already doing this.

The Asians come into play because they hold a lot of US debt-based securities. If they start to sell, that will cause US interest rates to rise, thereby forcing the Fed to step in as a buyer to keep prices up and interest rates down. The thing could gain momentum because rapid inflation in the US would be a key reason for selling US debt-based assets in the first place. Fortunately much of the debt is held by governments...

[The Outback Oracle]

Re: Folks i NEED your help (Please)

Nah C1 that was just a friendly reference to what I considered a pretty good debate
Cheers

[The Outback Oracle]

Re: Folks i NEED your help (Please)

Outback,

In this regard, you might find Sapiens thread La Usura en la Historia del Derecho useful. Also enlightening is Andreuccio's comment. If you have difficulty with the Spanish, you could use babelfish

Rajiv, maybe I am displaying my ignorance but I am a relatively simple bushie type in many ways and a bit inclined to call a spade the bloody shovel that it is.

It looks to me like this Islamic thing dresses interest up in lots of different ways but it is still interest. I can't see that when it is all worked down there is any difference. I'm sure the Islamists even use a "discount rate" in order to calculate the difference between the bank selling and buying prices.
The only other alternative being to let the Bank in on the ownership of your business. Now I don't know if you run a business but......the last damn thing you need is some pig-ignorant Banking rep, who knows damn all about your business, having a say in it.
So sorry to be a single-minded old grouch but I still reckon the problem is fractional reserve banking...NOT...interest as such.
As such, an amount of interest is out there in the open for everyone to see, and to make rational decisions on.

[Rajiv]

Re: Folks i NEED your help (Please)

At the end of the day, how this works is that when the lessee is unable to make payments, the asset is sold, and both share of the returns equally

Suppose, I agree to buy a house for $100,000 -- the bank pays cash for it and then tells me to pay in 20 annual installments a total of $150,000 in other words, $7500 per year. Suppose at the end of 10 years I cannot pay any more, and the house has to be sold for $80,000. Then, the bank gets $40,000 and I get $40,000 -- which is quite different from what I would under compound interest deals structured under the Western Banking System

The bank will get a total of $75,000 +$40,000 = $115,000 while I get to live in the house for 10 years, and still have savings of $40,000, while in the Western System, I would end up with no money at all, Since I would still be owing the bank perhaps $85,000, and I would also be faced with the stigma of bankrupcy!

So there is much more downside protection for the consumer than in the Western system. In some ways the consumer and the bank are more equal partners than in the Western System.

[The Outback Oracle]

Re: Folks i NEED your help (Please)

Rajiv
The borrower is more equal....but...the saver gets screwed. If the borrower is not being asked to pay for the attendant risks, then the saver will pay with a lower return. Further would not the Bank charge some "administration costs in the case where you cannot pay? It still looks like a pig to me! You can bet the bank is not going to lose...and i don't care what religion runs the damned thing.
As is the case, all anyone seems to be concerned about is looking after the borrower and it is the sole focus of the whole financial spectrum including itulip. I'm not seeing how the saver fits into all this.
Just for information, from the saver's viewpoint, because I'm ignorant of how this works, i.e. the provider of the money the bank lends, how is he paid? Does he get a share of the house?

[marvenger]

Re: Folks i NEED your help (Please)

No one's got a complete understanding but your description is succinct and therefore I think shows a good understanding.

The Fed and the treasury are working together to swap private debt for public debt and to bail out rotten companies, but all this is doing is keeping crap companies going for a while longer, building up reserves in banks and creating astonomical public debt that can only be serviced if rates are close to zero. Non of this is working though, and it didn't in Japan either. People are more scared of leaving their cash in the bank than holding treasuries and this is why the rates on 3mth treasuries have gone negative. This means that there's a serious lack of interest in investing in anything real. Which is shocking, the world has virtually stopped.

So as the privately generated money supply is shrinking and the publicly generated money supply is expanding even faster but just sitting in bank reserves, how do you get prices and real wages to rise so the debts can be paid off? EJ thinks all the foreign money will come running home to bid up prices and wages. I guess it sounds theoretically possible but I just don't feel like there's been enough of a description of how this can happen and why its a good idea for both parties or why one party can force the other to do it.

[The Outback Oracle]

Re: Folks i NEED your help (Please)

On top of all the other problems associated with these bail-outs, the least deserving are being looked after first. For example in Australia's case the Govt here last week bailed out CAR DEALERS...NOT manufacturers, to the tune of $2B. Now if ever there is a group should have been a bit more careful with money in case of bad times it is this lot. MOst of them provide little in terms of the ecomnomic health of the economy. ABC learning are being given money...and so it will now go on. By the time everything turns to pulp we might have a few good exporting companies or industries who might need a bit of a hand for a year or so, and at that stage we will have bailed out the rubbish and have no money for those that it really might be worth helping out with a few bob.

[marvenger]

Re: Folks i NEED your help (Please)

yeah its scary how people cling to the status quo as everything is falling apart. Hopefully it'll have the effect of making making the unproductive nature of FIRE economy and other industires supported by it more obvious and there'll be greater vigilance to protect against the short term gains it can generate in the future. I'm trying to be optimistic here. Looks like EJ's just got good piece out about his views on deflation, gonna take a while to read and digest.