NotRexButCaesar wrote: Thu Apr 01, 2021 1:27 am
mmmPI wrote: Wed Mar 31, 2021 2:32 pm
I would say the way money is created relies on models that themselves relies on the idea that growth can be constant over virtually infinite amount of time.
It is was
fine happening for much time and i think part of it is based on the fact that population growth was following the same trend.
I think you more mean “value” than “money” (currency). Unless you mean how money is
earned? I would say value is created when less valuable ingredients are formed into a more finished product.
No i mean money, as in monetary creation, quantitative easing, increase the monetary mass via emission of new amount of money ex nihilo.
The way the money is created for states by central banks or federal reserve.
In
very moderatly short and simplistic, a government need 10 billions. It ask "the market" for a lend. But government don't pay back the money, instead they pay interest forever. ( the bond system).
So if you need 10 billions as a government the bank will study the request for a lend and then ask if the money will be used for something that will generate a stable income over long period so as to perceive interest from it. (is it reasonnable to emit bond based on this activity ?). Later that one government receive the 10 billion and spend it in something that earn says 1 billion per year. The bank takes 100 million per year as interest that' just like 1%, quite cheap (or pay interest to bond owners). And the governement will pay 100 million every year forever. That's just the interest, when you can't pay for the interest the bank will require the government to sell stuff to purge the initial amount of debt, or to sell stuff to pay for the interest one more year, another year, another year, and so on. Roads, airport, seaport, train , school, retirement funds, hospitals , national companies and so on are then sold.
It REQUIRES constant growth. otherwise the very mechanism that our world use now to control the monetary creation can't function.
If a government stop paying for bonds, then the people/banks who owned bond see their value decrease as the bonds are worth nothing anymore, and the other people owning shares of banks or companies that owned bonds see their assest value decrease and so on.
If a government say " i would need 10 billion to clean up the sea from the bombs of WWII". the bank study the request and ask, but how are you going to pay interest on that ?
Once i write up with my pen on your account 10 billions, the money is just created. But then you'll have to pay for this, and the way you are going to use it will not generate any cashflow/growth, therefore you will not be able to pay interest, hence i am not acceding to the request, i refuse to create bonds and sell them for you sorry mister governement.
If a governement tries to force the banks to create money with no intent of paying it back , or with the intent of paying the interest by forcing again the bank to create money we have the situation that occured in 2008 and because of covid, where many government ask their bank to print massive amount of money to prevent the system from collapsing because if growth stop, governement finances can't function anymore. So during crisis, money is created to prevent the system from gripping, and that money is distributed to big companies that don't invest it in "risky" asset during crisis. So they all buy shares of each others, creating massive inflation in their stockprices which is considered to be a good sign to give confidence to "the market". That look like growth on paper so the system can still function a little more time.
Each successive crisis during the time i was in age of remembering saw diminishing effect of that mechanism of quantitative easing. This means in the 2000's when 1 dollar was created by banks oustside of the regular money creation, for crisis relief, it would boost the GDP by 2 dollars. Say the company that hire you receive the money, they pay you with it, and you pay the grocery store with it. The grocery store then proceed to buy a stock, or gold, or a governement debt bond and then the money doesn't change hands anymore and doesn't count in GDP, isn't taxed , doesn't participate in (real) growth aside from inflated value of debt bond, gold, or stock. Later when 1 dollar was created it was boosting the GDP by 1 dollar only, later again for 1 dollar created, there was only like 10 cts increase on the GDP. ( those are made up number just to illustrate the trend, but the order of magnitude are way worse).
This means during crisis, the very money that's created outside the regular money creation that require growth, that money that is created to avoid the system stalling and thus falling, is not given to people that use it in a way that does the job, which in a way make sense since that money is given to big companies that all buy shares of each others, they know what's happenning and it fails at creating inflation, no growth happens, real or fake, and the only tools available is even more money printing.
There is this need for constant growth that's embedded deep in the roots of the economy as it is setup today at least from an accounting/ownership point of view.
It's roughly the same cause that prevent money to be created for non-profitable causes such as ecology that could also be described as a constant need for growth which harms ecology (imo). That is quite a digression from the topic of climate change as an environmental phenomenon. But that is some interpretation on why is it so hard to stop/change the machinery that is the financial system driving the industry towards more and more all the time.
The idea of taxing the carbon and regulatory measures that are discussed by people who think they have any influence on that regard are usually thought to incorporate the "new data" to the "old system", meaning that ecology should be taken into account and somehow mathematically integrated into the existing system as a parameter amongst others that could be dealt with tradeoffs and pros and cons. Which could even possibly create a new boom that would be called green growth . I think that's just crap, telling people what they want to hear, like "don't change anything in your life we'll make measure from our desk of law makers , then the industry will do magic, and you will continue as before except everything will be green and ecofriendly". That's not taking in account all the datas and failing to understand how big would be the impact on things that we take for granted.
sum-up : people don't do useful stuff to face emerging problems, it could be tied to the way people are doing stuff mostly for money, and that money is not created nor utlized for useful stuff, or that people having money and using it to make other people do stuff are unable/unwilling to make them do effective stuff regarding a particular matter which is quite problematic since that particular matter is ecology and we all rely on it to continue doing stuff.
NotRexButCaesar wrote: Thu Apr 01, 2021 1:27 am
As a rule, people are almost never (or at least never have been) fully satisfied: especially when it comes to material conditions.
maybe you need to meet more people you could have a biaised view on them atm
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maybe you didn't meet enough of those people that would have left you think differently ...
maybe you could be one of those person that makes this pseudo-rules a little less true in your own eyes
maybe if there's many person doing it, the rule will become more false than true in everyone eyes
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