E. Zachary Knight's Favorite Techdirt Posts Of The Week
from the safer-than-rioting dept
This week's favorites of the week post is by E. Zachary Knight, who's been posting some great comments lately.
It is an honor and a privilege to share with you my favorite Techdirt posts this week. I love this site and feel extremely tempted to just say, "Everything." However, I will constrain myself and point out a few relevant and interesting stories from this week.
First, I want to point out the Dilbert comic on patents. This is the second time since I started reading this site that Dilbert has been cited; I doubt it will be the last. The thing with Scott Adams is he has immersed himself in technology and business and knows what he is making fun of. So when he is making fun of patent trolls, you know it is a serious business problem. I think too many companies took Dogbert's Top Secret Management Handbook seriously and are actually running their businesses in that way.
Next, we have a couple of stories about patent trolls getting their just desserts. First we have the story of EON-NET getting a smack-down from CAFC for filing bogus lawsuits. When is a non-practicing entity who files patent infringement lawsuits not filing a bogus lawsuit? Then we have the story about Fark standing up to Gooseberry. Seriously, with a name like "Gooseberry," they should have known what was coming. What is really sad about this particular exchange was the nature of the patent itself. "Generating a press release online." Well, if you happen to use Google Apps or Wordpress to write press releases for your business, you owe these guys some money. Well, maybe not after the thrashing Fark gave them.
Coming up next were another pair of stories, case studies really, about the problems with the current direction of copyright law and fighting infringement. We learn in one that even the death penalty will not stop infringement. If the threat of death was not enough to stop people from copying fabric patterns, does anyone think applying current copyright to fashion will stop fashion copying? Will three strikes or PROTECT IP really stop online infringement? No. We also learn that the manipulation of the letter of the law has happened in the past to kill innovative services, particularly in a 1984 (a good book by the way) case against a movie rental service, just as it is now and will be when PROTECT IP and other such enforcement legislation passes. We are already abusing the Computer Fraud Act. Will prosecutors and copyright holders restrain themselves from abusing the broad language of PROTECT IP? I think not.
In this day and age of economic turmoil, who isn't thinking about the state of jobs in America and around the world. The White House certainly has jobs at the forefront. In fact, they have two very clearly laid out plans to create jobs. First, they plan to increase the number of non-practicing entities and the lawyers they employ by expanding, sorry, reforming our already bad patent laws. We have seen case study after case study that shows, with evidence, that patents, and particularly our current patent system, are killing innovation and job growth. Patent lawsuits take money, that could be spent creating new technologies and employing people to build them, and put it into the legal system, wasting years of time and man hours to maybe not get completely screwed in the end by a court in East Texas. Next, the President and Congress want to use the government to create jobs directly. I don't know what kind of jobs they could create, but I honestly don't see them creating anything that the public wants or that really benefits the economy. Any job the government creates and pays for is at the expense of the economy, not in benefit of it. GOP candidate, Gary Johnson has the right idea, get the government out of the way of entrepreneurs and they will create jobs. Of course, even if the government could create jobs, they would probably end up inflating just how many jobs were created.
Speaking of governments, we also have the UK government's response to the London riots. First, I would like to extend my sympathies to all those who have been harmed by the violence, looting and property destruction. However, in their attempts to stop the violence and rioting, the government wants RIM to block messaging to the rioters. Not sure how many rioters use RIM for their messaging, so this could either not change things at all, or worse, tick off a bunch of people who are already pre-disposed to rioting and violence. To further conflate the UK government's complete lack of understanding, they also want to ban rioters and other suspected criminals from Facebook and Twitter. Not only is this easy to bypass, but what exactly does this accomplish? They can't seriously consider that this will stop people from planning criminal activity.
Back on the subject of Copyright and more specifically "piracy," we have the US Chamber of Commerce sharing a video in which artists air their grievances about how much piracy hurts them and steals from them. I didn't know this before, but one guy lost 50% of his digital inventory due to piracy. By the way, what is 50% of infinity? Mike was kind enough to actually research who these artists were; I had never heard of them before this video. Perhaps rather than piracy hurting them, it is a lack of exposure to the general public that is really hurting their sales. Perhaps they can learn to connect with their fans and learn what they can do to capture those fans' interest.
Contrast that story with the awesome Wil Wheaton sharing his thoughts on piracy and how television studios can compete. Wil recognizes that piracy is the result of poor service on the part of content creators. If they would provide a level of service that is as convenient or more so than piracy, those willing to pay will do so. Sadly, his employer SyFy (I still think that is a stupid name) does not share the sentiment. After airing some complaints I had about Syfy's new policy of waiting two months or more after airing to stream episodes of their most popular shows and pointing out my only legal options were paying for cable I couldn't afford or waiting two months to watch what my friends are watching today, SyFy brushed me off through Twitter with the following comment. "Those are perfectly reasonable legal options. I wait for shows & movies to come out on Hulu & Netflix all the time."
That's that. A number of great stories and many others I couldn't list that were awesome in their own rights. Thanks again, Techdirt, for the honor.
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Top Secret
Ahh, that explains it why Dilbert is on the blacklist of forbidden websites where I work.
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I think both of them are wack-jobs.
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I would kill for a Paul/Johnson ticket in 2012.
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Jobs are a matter of the money supply and the supply is short.
We won't have any economic prosperity until the Federal Reserve is wiped out and the government issues it's own faith-backed currency rather than the Federal Reserve's debt-backed currency. Right now, the central banks of the world control our money, and through it, every economic boom or bust. They manufactured the great depression and the sub-prime mortgage disaster because they control the money supply. They can create another depression, if they were inclined to, by raising the rate, calling in loans and refusing to give out new loans. Oh wait, they're doing that right now! National economic hardships don't happen by accident, they're premeditated.
When the money supply is plentiful, there are lots of jobs to be had. When it's constricted, like it is now, jobs are hard to find. So, the solution to create more jobs is to have more money in circulation. If more people have money, they buy more goods and services, which justifies employers to hire more workers to meet the demand. But it's not enough to simply have more money, the people need to be free of debt to really be prosperous. That's why interest and fractional reserve need to go away. Fractional reserve and interest are two components that work together to keep the system going. Fractional reserve gives banks the power to loan out money that doesn't exist so that the interest doesn't centralize all of the money and make the money worthless. The interest makes certain that enough people owe enough debt to back the currency they create out of nothing.
So with that, to have true economic freedom and prosperity, we need to get rid of the Fed, fractional reserve, interest, and have a government issued faith-based currency to replace the willfully created, debt-backed currency we use today. To cement this new system, they need to require all banks graduate to, and maintain, a 100% reserve. That means they can no longer loan more money than is held in deposits. Ron Paul hasn't a clue.
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Re: Jobs are a matter of the money supply and the supply is short.
So please tell me, where is Ron Paul going wrong?
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Proxies for the people, all those discussions should happen in the public space and then just be voted in congress and not be hijacked by little special interests.
Maybe we don't even need politicians anymore, maybe we just need a computer terminal for people to vote directly on what they want and decide collectively what they laws should be, needing only an administrator to take care of execution.
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He wants to abolish the Fed?
He wants to outlaw interest?
He concludes that more money in circulation means more jobs?
He wants to create a full reserve currency system?
That's what I'm arguing for and I don't mean more money for entrepreneurs, but for consumers. If that's what he's for, then I was wrong. I disagree that a gold standard is a good idea. The banks worked hard to get to the gold standard when the public wanted to use silver. The banks wanted gold because it is more scarce, which makes it easier to control. We don't need any commodity to back our currency, so long as everyone agrees that the currency is acceptable for trade of services and goods. Actually, fiat currency would serve very well to maintain a stable economy. The money supply can be controlled by the issuance of the government. They can issue more or less money as needed, but it won't suffer the perpetual inflation of fractional reserve.
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The Tea Party just showed people how, what they didn't had was any plan in place, they didn't debate the laws they wanted, they didn't wrote the laws they wanted and so they will get nothing but the same things they got before.
Crowdsource the laws now!
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What I really want to know is, why manufacture economic hardships? What purpose do you think they serve for whoever it is you think controls the fed? I mean it's clear we have them and if they're premeditated there must be a reason they are created so what is it?
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All of this however completely ignores the real problem, which is the imbalance of trade with China, India etc etc.
That problem was hidden from the 1980's till 2007 by ever increasing private debt. From 2007 till now it has been hidden by ever increasing state debt. But when the problem is the trade imbalance in real goods you can't fix it by fiddling with the little green pieces of paper (although you can make things a lot worse!).
The root of the problem is that the labour of most people in the west is uncompetitive with that of the developing world. This is mostly because we let them pay wages and offer terms of employment that have not been acceptable in the west since the 19th century and yet we continue to buy their goods and invest in their factories.
The result is that we are importing their economic conditions into the west. Unless we do something radical then we will end up with 3rd world poverty for around 3/4 of our populations
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The U.S. haven't had a positive commercial balance since the middle of the 60's, but had times of great wealth and stability during that time and great busts too.
That is why the central bank and politicians passed all those laws about credit that created a rush of expending and a catastrophic failure with the prime bubble burst.
Also for reasons not entirely understood economies go up and down no matter what people do with an emphasis on the down part.
http://en.wikipedia.org/wiki/Business_cycle
http://en.wikipedia.org/wiki/Golden_Age_of_C apitalism
http://en.wikipedia.org/wiki/The_Great_Moderation
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economic growth comes from the city-region replacing it's imports with locally produced products, allowing the money previously used for those imports to be used to import Other things. growth comes from the internal economy of the city region getting bigger. eventually you may well end up with higher costs than if you just imported the things in the first place, but you'll also have more income and better conditions. basically, you pay more, but in exchange get more, better, things that, while they cost more, cost a Smaller Percentage of your available wealth.
(poorly explained. go read 'the economy of cities' by Jane Jacobes. 'economyths' is good reading too. i forget the name of the author at the moment)
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i will, however, admit that i'd be quite surprised if it hadn't been done deliberately at least once or twice.
also: silver standard's not a terrible plan... a Better plan, if you can properly streamline the beaurocracy (and really, the only way to do that for something the size of the USA is to devolve this to At Least the state level, city region's more useful) is to keep an actual record of all goods in circulation as being a function of time+materials (and do the same for those materials right down to the point where they were imported from a different region) and have your currency be representative of a percentage of That. probably borderline impossible, but even a partial attempt would be more useful than the current system which seems to amount to 'guess. adjust if economic consequences are sufficiently sub-optimal.'
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They do this intentionally. Economic downturns such as the great depression were created by the banks constricting the money supply. They start wars to get nations to borrow money to pay for war. England was deeply in debt to the bank after the war with France and New England was printing their own debt-free currency, a currency the banks didn't control. The colonists were doing quite well on it too. The bank lobbied the king to outlaw the currency, then tax the colonists for all the gold currency they had so the king could pay the debts back to the bank. This created mass poverty and unemployment, which incited the American Revolution.
WWI was set off by a Serbian who was hired to kill the Archduke of Austria. This set off the already unstable situation in Europe and started a war.
They have started wars and given more money to the side most likely to win, because the winner would pay for the debts of the loser. The nation ends up in huge debt, but the banks clean up.
Several presidents in the early years of America fought against the banks. They (The Carnegie's and Rothschilds in particular) publicly, and on the record, announced that if the government didn't charter a central bank in the US, they would call in all loans and refuse to give out new loans. This caused massive market panic and economic upheaval, resulting in the government caving into demands and chartering a central bank. We've had several central banks that have been created and destroyed in the US over the short time we've been a nation.
If you still don't believe me, check out "The Money Masters" on Google video, Money as Debt (Youtube), and "The History of Money" (Which is available to read for free. It's the first hit on a Google search.), they will make it clear to you.
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Huh?
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Only people who don't realize that the central banks are in control of it all don't understand. They control the money. They create it out of nothing, so they have the power to contract the money supply because they create money in the first place. They create these crunches intentionally to get the government to act in a way that benefits them, like going to war or giving bailouts while bigger banks absorb failing smaller banks. These ups and downs occur according to their designs. When you realize that, the patterns make perfect sense. Every conflict we've been in has been preceded by an economic turmoil. The American Revolution, the Civil War, WWI, WWII, and the Gulf War all occurred after a downturn in the economy. Jobs were scarce and money was tight. Then, war breaks out and jobs are plentiful, money is widely available, the banks make a killing in war debt, and they start it all over again.
Now we are occupying Iraq. Our economy is in the shitter. Jobs are disappearing because Americans don't have the money to consume like before, so companies are moving their operations to other nations with lower wages and looser environmental laws. We just went through an economic bust in the sub-prime crisis. I think we're ripe for another conflict that will kick in the next market bubble.
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For the early part of that period the difference was made up for by capital flows and invisibles so it didn't matter however in recent years the imbalance has progreesively racked up. A large country like the US can ignore it for a while - but in the end it will come back and bite - as it is now.
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It does make some sense to put a wall around the region where all aspects of the economy are equally free.
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Right.
This is a proposal better suited for sandboxing in SimCity than in an actual real-world economy.
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We're talking about the Rothchilds, the Carnegies, and the Rockefellers of the world. Those people, those banks are the people pulling the strings.
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An LLC bank does not charge interest on loans. Instead, they require you to deposit money and keep it in savings to accrue "savings points" with which you can then use to apply for a loan. The only way to qualify for a loans is to contribute capital for the bank to loan to others (you gotta give some to get some). With interest out of the picture, people can take out loans and can pay them back much more easily because they are only paying back principle instead of that and the interest which doubles according to the rule of 72. This puts more money in the hands of the majority and stimulates the economy because people have more buying power, which increases demand, which increases commercial output, which creates jobs, and so on.
They do this in a few banks in Sweden: http://en.wikipedia.org/wiki/JAK_members_bank
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It's literally Mitch Bainwol and Cary Sherman's transfer on a larger level.
The Tea Party is funded by the Koch brothers, and were screaming about the Constitution while they were a minority. Then, they become a majority and what happens? They infringe on the Constitution.
New boss? Old boss, +1.
*sigh*
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My biggest concern with the LLC bank is that people who have nothing in terms of capitol won't be able to take out loans. How would that work if you have nothing in the first place? It's literally a return to 16th century concepts from just the look of it.
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They've done a pretty good job at keeping themselves hidden from the public eye for centuries. For instance, The Federal Reserve Bank isn't even a government entity. It's a privately held bank run by businessmen and a couple government appointed members. A private bank, with incentives for personal gain, is in charge of our money system. They put a lot of effort into making it look like a branch of our government, when they're really a private bank in business for themselves while pretending to be in charge of controlling the money supply for the good of the people.
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Well, we have movies that have commentary about this such as "The International"
We have wikipedia showing information about the Feds along with exposes on the Chamber of Commerce (who isn't a part of the government but loves to think it is) and their anti consumer behavior.
If you've watched "Hot Coffee", then you know about CoC's push into tort reform, which is very bad for people through mandatory arbitration that goes against people ~97% of the time. Yes, you read that right. Sign with a company, complain, go to arbitration instead of open court and you will not win, the case is never heard of again.
The other side of the problem arises from our elected officials. On maplight.com, it's quoted that Senators spend $3900 a day on campaigning, visits, etc. So you would have to find a way to change the entire game of politics. That's something that just isn't possible unless we had critical mass.
I hate to say it, but the situation will be very dire in the next few years. Fighting so much monetary interest concentrated in one spot, I doubt anyone could get anything done. Honestly, how far has Lessig's radicalism in changing Congress gotten? I might respect what he's doing, but it's damn near a vertical mountain to climb with a lot of gnarled branches in between.
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He said we needed 0% interest which would drastically reduce, if not eliminate entirely, lending activity.
He said we need more money in circulation, was unspecific as to how it would get into circulation, and that this would lead to more jobs even though 0% interest and 100% reserve rates would drastically reduce the money in circulation.
He leaves out that actually increasing the money in circulation would lead directly to increased inflation especially if we had to print enough money to overcome the drastic reductions in money supply that would result from 0% interest and 100% reserves.
Anyone with any background in economics at all would ridicule these proposals in the way that a doctor might ridicule faith crystals as a means of healing.
So to answer your question. I actually read what people say, I understand what people say, and when people say things worth of ridicule I just go straight to ridicule.
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"If you charged interest in a full reserve system, all the money would eventually be siphoned to the banks and nobody would have any money."
Banks don't keep all the money they earn on interest, they pay it back to depositors in the form of interest on account balances. If there's no interest for debts, however, there would also be no interest for various forms of savings since there would be nowhere for it to come from. Stocks would be the only investment option that actually earned a return and they're far to volatile to guarantee a rate of return no mater what like savings accounts typically do.
"With interest out of the picture, people can take out loans."
No they can't. See above. I don't care how little risk is involved if there's literally a negative return on the investment there's no reason to invest in the loan.
"This puts more money in the hands of the majority and stimulates the economy because people have more buying power, which increases demand, which increases commercial output, which creates jobs, and so on."
So it is a magical fairy land where, somehow, only people who already have money and have had money for a while can get loans that somehow leads to... more spending? I mean what you're saying literally makes no sense at all, everything you suggest doing would severely reduce the amount of money in circulation so even if you assumption that more money in circulation would create jobs (somehow) that's not what any of the policy changes you're suggesting would actually accomplish.
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This is just ludicrous.
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"He said we needed 0% interest which would drastically reduce, if not eliminate entirely, lending activity."
That's flat-out wrong. You're grasping for straw men. 0% interest will not hinder lending. It would make interest loans impractical, but interest lending is something that we need to avoid. The whole banking system needs to go non-profit. Banks don't actually create wealth, they just stand in the middle of everything and take a cut of all the action.
"He said we need more money in circulation, was unspecific as to how it would get into circulation, and that this would lead to more jobs even though 0% interest and 100% reserve rates would drastically reduce the money in circulation."
Yes, more money in consumer hands means more demand, which means more jobs. To get that money circulating, the government needs to issue the new currency through as many channels as it can and create an incentive to use it over the old currency. This would be how we expand the money supply. It's not a turn-key process either, it will take time to transition the system. 100% reserve would not reduce the money supply, that's completely false. You're thinking too one-dimensionally. It's not necessary to charge interest to expand the money supply. It's fiat currency, you only have to issue more money to the people. It's not rocket science.
The government issues new money as tax refunds, stimulus or whatnot, people spend it, and it expands the money supply. To contract the supply, they just raise taxes and stop issuing new money. You'd have to be brain-dead to not see that. The great thing is, they can still use the dollar. The only thing that matters is that all new money is created by an act of the government for the public good and not by a bank that does it for their own enrichment.
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The difference between the Tea Party and the Koizumi Children is that Koizumi actually had laws he wanted to pass already written, he had a clear vision of what needed to be done he just lacked the people to do it and asked the people to vote for the ones he choose.
Can you see where this is going?
Create a public forum where people can debate the laws they want, reach a consensus and vote only for those laws that can be supported by a majority and put people there to pass those laws, you don't need consent from politicians to do that.
It becomes more difficult for special interests to push their interests, it becomes difficult to hide things and it becomes difficult to have politicians creating deep roots since most of them will be changed in the next elections and sure there may be problems and people could take the wrong decisions and it is scary, there is a lot of tinfoil people out there, but hey if we as a group can't create a consensus then we don't really deserve a functional government.
http://en.wikipedia.org/wiki/Koizumi_Children
http://en.wikipedia.org/wiki/Tea_Party _movement
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For example, the notions that Lessig has posted on in changing Congress met heavy resistance. If we want to make these changes, how can we?
I know that people want to abolish the FCC, Feds, and most forms of quasi government such as the FBI, CIA, etc. Could we put something else in place? Keep them there and give them more rules (which would probably be ignored) or just tear them down as undemocratic entities?
If the US government is going to break away from the Feds, what's the plan? A 5 year plan? 10 year plan? The president, at most, has 8 years. Senators have a lifetime to make ends change (look at the career of Leahy).
Personally, I would say a few increments first. Change the incentives of our Legislative, then work on slowly changing the banking structure. Gotta learn how to crawl before you can walk and taking on the banks directly is tantamount to suicide.
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Germany did get the long end of the stick doing just that recently.
http://www.spiegel.de/international/business/0,1518,707231,00.html
Also there is a city in Germany or Poland that in WWII had an economical miracle because they created their own money.
Here is the thing, eliminating the central bank it is just not viable in the short term without something to take its place as a market regulator, it would bring panic and a most probably a big shock to the economy, maybe a better solution is for people to do what Brazil did and create fake money that they could use like the URV.
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You're full of shit. You're stuck on this fool notion that someone has to be making a profit, thus necessitating interest, in order to justify loans. That's just absurd. You fail to realize that this system has been successfully in use for decades in Sweden. Muslims have been using a similar system for centuries. Don't feed me this line of bullshit that it can't and won't work. It has and it does.
"Banks don't keep all the money they earn on interest, they pay it back to depositors in the form of interest on account balances."
Yes, but they don't give depositors as much interest as they take in. So regardless, more money would be taken in by the banks than they're giving out, which would eventually result in the banks holding all of the money. That's why they use fractional reserve. The two systems support each other. It's not hard to figure out.
Banks operate to gain profit. To do that, they need to take in more money than they pay out. If a bank takes in $100,000 a day and pays out $10,000 a day on a finite money supply, who do you think will have the all money in the end? The amounts don't even matter, as long as their input is greater than their output, this will always be the result. The problem in the matter is that through this, they have to power to create and destroy the money supply. This allows them the power to create booms and busts. They must not have this power. The profit motive is completely subordinate to this issue and does not negate the validity of my argument.
"If there's no interest for debts, however, there would also be no interest for various forms of savings since there would be nowhere for it to come from."
Exactly, there should be no interest paid anywhere at all. Money should be exchanged as payment for property and labor, not the lending of money. If $5,000 is borrowed, $5,000 should be repaid and nothing more. Perhaps, one could argue that you could cover the cost of administering the loan through service charges, but only because that is payment for labor and not for providing money. The charging of interest on borrowed money is unethical and only leeches on the labor and property of others without contributing to real the wealth.
Credit defaults? What do we do about credit defaults? I don't know, maybe since the LLC bank put up real depositor money as consideration for a contract and the borrower put up collateral, the bank should seize the property to cover the cost of the loan? This would require an appraisal of the property to confirm that it's equal or greater in value of the loan. My goodness! They might have to actually investigate your financial viability to determine if you can afford the loan and have adequate property to cover the loan should you default. It would be foolish to loan money without securing the loan without collateral first. Banks have been far too loose with whom they loan to and don't take proper measures to determine if the borrower is safe to lend to. People wouldn't need quick and easy credit if they had more money to spend in the first place.
It's easy. Don't loan money to someone who can't pay it back or doesn't have any acceptable collateral. Perhaps borrowers with a proven record of being a reliable borrower might be able to forgo the requirement for collateral, but they should still have to prove they can pay the loan back.
It's not that this system can't nor won't work. It's not that it's flawed nor unrealistic. It's just radical and it goes against what you think is the "right" way to do it and how you think things work. You're determined to find any little detail, any unforeseen possibility to give you leverage to pull it apart, not because it's wrong nor impossible, but because you don't like it. You're just like all the other "free market" capitalists who foolishly think that the pursuit of profit is ethically and logically superior to all other priorities, like it's some kind of deity to worship and from it springs all of existence. Get real. When you're ready to rejoin reality, I'll be waiting there to have a rational discussion.
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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
Easy:
No interest + 100% reserve = Much much fewer loans = Less money to spend = less spending.
You suggest offsetting the reduction in the money supply that no interest and 100% reserves would create by simply printing more money and I've responded to that with a simple question any economist would ask given that proposal: What about inflation?
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Re: Re: Re: Re: Re: Re: Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
Because you declared it so?
"You're grasping for straw men."
Where have I argued against a point you didn't make? Did you not suggest 0% interest? 100% reserves?
"0% interest will not hinder lending."
This is absolutely ludicrous.
"It would make interest loans impractical, but interest lending is something that we need to avoid. The whole banking system needs to go non-profit. Banks don't actually create wealth, they just stand in the middle of everything and take a cut of all the action."
Banks provide a service that costs money to provide. You might not like the fact that interest earned on savings, inflation, and a non-zero default rate necessitates some kind of charge be assessed for borrowing but that's the reality of the situation. Even if banks were non-profit they would have to charge for loans or they would become insolvent over time because loaning money costs money.
"The government issues new money as tax refunds, stimulus or whatnot, people spend it, and it expands the money supply."
No one has argued that it would not be possible to print enough money to expand the money supply. Only that expanding the money supply, especially if it was done by printing enough money to offset 0% interest and 100% reserves, would lead to massive inflation. This is basic economics, something anyone with an undergraduate degree would know.
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Re: Re: Re: Re: Re: Re: Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
You can curse all you want but it doesn't make it any less true that a business cannot operate long term at a long term loss. 0% interest, without charging some kind of actual fee would lead to insolvency. Debtors default on loans, that cost has to be covered by someone and without a charge for a loan any lender would eventually go out of business. It's not a question of 'if' but 'when.'
Muslim banks charge interest they just call it something else.
Swedish banks don't lend at 0% interest. Furthermore they're actually famous for having a negative (read: non-zero) interest rates on specific kinds of deposits.
"Yes, but they don't give depositors as much interest as they take in."
Obviously not because lending incurs costs that have to be covered. Sure, they also extract a profit as well but even if they were, by law, non-profits they would not be able to give depositors 100% of the interest they collect from borrowers because loans cost money. All loans are not a net gain for banks even when they charge interest, even with today's interest rates they are not.
"It would be foolish to loan money without securing the loan without collateral first."
And if the value of the collateral drops over the course of the loan (like it does with houses all the time)? Even if you amend your original proposal to include 'no loans without collateral' defaults would represent a non-zero cost for lending. That's not even addressing the fact that you're suggesting we do all of these things that would obviously reduce spending by reducing the money supply while simultaneously suggesting the solution to the economic downturn is making more money available to spend. What do you think lending does, exactly, if not make money available to spend to someone that didn't have it before? That's what it does verbatim.
"Don't loan money to someone who can't pay it back"
You can't be serious. You are serious... I'm literally laughing as I type this. Are there crystal balls with which to tell the future in your magic fairly land where there is no inflation? Completely ludicrous.
"It's not that this system can't nor won't work. It's not that it's flawed nor unrealistic."
It's that the system is hopelessly idealistic.
"Get real. When you're ready to rejoin reality, I'll be waiting there to have a rational discussion."
An idealist telling me to get real, rejoin reality, and have a rational discussion? Now I have seen it all. You propose default free, interest free lending and I need to rejoin reality. How perverse.
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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
Loans need to be secured to avoid incurring costs from loan defaults.
"Swedish banks don't lend at 0% interest."
A perfect example of you making up something I didn't say. As I stated in previous comments that JAK (emphasis JAK) banks operate on a 0% interest system at full reserve. They do loan out money at 0% interest and they have been for years because they've worked out a successful system. This isn't the norm in all Swedish banks, just the JAK banks.
"Muslim banks charge interest they just call it something else."
I said similar, not a carbon copy. They don't allow interest because it violates the laws of their religion. Yes, they have to cover the costs somehow, but it's not through interest or anything like interest.
"It's that the system is hopelessly idealistic."
That's just your opinion, not a fact.
"Are there crystal balls with which to tell the future in your magic fairly land where there is no inflation?"
Non-sequitur. Inflation doesn't apply to an individual's financial stability, his income determines that. That's why banks need to make more effort to confirm that they have adequate income and assets to secure the loan. They need to do this so that the borrower is likely to pay back the loan, or if the borrower does default, there is something to cover the costs. It's called minimizing risk. It's something that banks do quite poorly in retrospect.
Quit ignoring the facts and arguing with opinions. Straw men, opinion, and non-sequitur statements don't make compelling factual arguments. I don't know why I'm wasting my time convincing you anyway. You obviously don't have the capacity nor desire to conceive any other possibilities than what conventional opinion tells you. Take your straw men, opinion, and illogical rationalizations elsewhere. I'm done with you.
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Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
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Because Gary Johnson is like Ron Paul without the *crazy*.
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Re: Jobs are a matter of the money supply and the supply is short.
That's not how money works.
So, the solution to create more jobs is to have more money in circulation.
Inflation makes the amount of money in circulation not nearly as meaningful as you claim.
But it's not enough to simply have more money, the people need to be free of debt to really be prosperous.
Not understanding debt does not make your argument very convincing. Debt has plenty of legitimate and useful purposes. Getting rid of debt would be very, very bad for the economy.
The interest makes certain that enough people owe enough debt to back the currency they create out of nothing.
Interest is merely the price of risk. It's perfectly reasonable and pretending interest doesn't exist just means it gets hidden, and there's actually much greater risk. Your economics needs a lot of work.
Sorry, Greevar, I usually find your comments insightful, but this is way out there.
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Re: Re: Jobs are a matter of the money supply and the supply is short.
Banks work on a fractional reserve system. They hold depositor money as reserve while they loan out multiples of that deposit money out without even touching the deposits. That loaned money is then deposited and divided into new deposit money that acts a reserve for new loans which is tuned into increasingly smaller loans under the same multiplier (or no multiplier at all). This cycle continues until a loan of $10,000, for example, results in $100,000 (9:1 reserve) of new money that was created simply by lending out money that didn't exist in the first place.
This money was created out of nothing. The government didn't mint the currency nor issue it. It's money backed by the borrower's promise to pay it back or risk their own real property and created solely by the bank. The bank doesn't "risk" anything because they aren't loaning money, they're creating debt that the debtor backs by repaying the loan. The debtor puts up their own property as collateral, the bank creates a hole for the debtor to fill.
The part interest plays is increasing the amount of debt that is created when one takes out a loan. Since all money is backed by a debtor's promise to pay it back, then the money supply is contingent on the total debt of borrowers being greater than the amount of money in circulation. Interest is meant to use debt as the backing of our money supply. If the debt ever became less than the amount of money in circulation, the system would crash because the debt is the money. Money represents debt, not wealth.
"That's not how money works."
Actually it does. Money in the hands of the consumers creates demand for products. Demand for products increases commercial output. With the extra revenue and increased demand, the company can afford to hire more labor to meet that demand, which employs more people whom get better pay because there is more demand for labor. Then the cycle starts all over until the demand meets the supply. If you take money away from the system, making it less accessible because it's more scarce, then demand drops and the whole thing takes a reverse course.
Debt created on the fractional reserve system takes away consumer buying power because they have to pay interest on top of that borrowed money. That leaves them with less money to buy fewer products and decreases demand. That's the reason why the money supply is so slanted to the top 1% wealthiest people.
There's nothing wrong with debt in itself. It's when debt is used to back the money supply and has interest tacked on it that makes it bad. In a interest-free, full-reserve system, debt doesn't take away money from the borrower for the profit of the lender, it makes money more accessible to the borrower. 100% of that borrowed money goes to paying for property and labor. What economists call "real wealth" (I know you're an economist, I'm not trying to talk down to you, I'm just making my point explicitly clear) instead of increasing the reserve so lenders can make more loans.
So the solution is full-reserve, zero interest loans. The government injects new money into the money supply and money becomes more accessible. It's accessibility of money to the general public that spurs on demand and therefore prosperity, not interest and profit. Inflation is no longer an ever-increasing constant because new money is added only when needed and is contracted when there is too much money (i.e. buying power is weakened by too much money). Under the current system our money's buying power gets progressively weaker and weaker because the money supply and the amount of debt continually increases.
TL;DR section:
Okay, after writing all of this I've come up with an apt analogy to explain this. The bank issues a loan. Think of this loan as a hole they dig. Your obligation, as a borrower, is to fill that hole with your money or collateral wealth. They're not loaning you actual money, they're giving you a debt to repay with actual money you earned with your labor. You buy things with the "debt money". So eventually, all money that is exchanged for goods is "debt money". So you end up paying your debts with some other persons debts. This money represents a unit of debt.
The other system gives you actual money from other depositors that you incrementally pay back. Much like when a friend gives you $50 which you promise to repay from your next paycheck. They actually give you money rather than just an obligation to repay them. You buy things with the real money. This money represents a unit of real wealth.
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Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
That makes much more sense. But the key is more accessible money for the consumers. So if the people with the most money took a pay cut and redistributed that amongst the rest of us in the form of higher wages, people could buy more stuff, increasing demand, creating more jobs, etc.
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Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
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Re: Re: Re: Re: Jobs are a matter of the money supply and the supply is short.
Personally, I think it's a false platitude meant to cover up the fact that the money changers make these events occur as per their design and historical evidence tends to support it.
The perpetual growth inherent in our current economic system is unsustainable and will eventually fail because even though fractional reserve is continually inflating currency, the amount of real wealth is finite. $1 in 1900 bought a lot more than $1 today and tomorrow, it will buy even less. This process can be delayed, but never stopped. Unfortunately, you can't sustain perpetual growth because that would only result in raping the natural resources and once depleted, the whole planet dies. We live in a mostly closed ecosystem and our money system needs to reflect that, which it currently doesn't.
So that said, what are you getting at?
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He's against the Feds, fights for less government intervention...
Granted, I like both candidates and believe neither get enough attention (considering all that Gary has done by himself), but I've never seen a really good reason to not like either.
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