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| Moderator... |
 Posted: Thu Nov 05, 2009 5:51 pm |
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Guest
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Is the basis of available credit premised on an individual or
commercial interest taking on credit and supplying goods and services
and in turn providing employment? If so, there’s something
fundamentally flawed in this thinking.
The butcher, baker or candlestick maker can take credit and expand but
only if there are enough customers. There can’t be enough customers if
there aren’t enough jobs or wages are too low. The expansions of the
proprietors can’t supply enough jobs to in themselves to provide
enough new customers. Something new has to be introduced such as a
shoe manufacturer. The new enterprise produces new jobs and for the
existing enterprises, new customers.
So we can see credit for simple expansion is futile. It is the new
enterprise that allows for any true growth. Available credit is only a
solution if it produces a new venture.
On a larger scale, this small town now consisting of three enterprises
and a new venture can’t expand unless there are enough new ventures.
Available credit is again useless to the town in the same manner as it
was useless for the first three enterprises without customers.
It should be clear that real growth is the product of something new
being introduced. The article seems only to address a downside of a
credit monopoly and suggests breaking the monopoly as a correction to
the larger issue of growth.
Even new has limitations since new can only provide growth and growth
is limited. Again, there seems to be something flawed about this
entire economic premise. It requires unlimited growth which in the
long run does not appear possible. So credit is only relevant if
growth is unlimited. Since growth is limited, credit as a solution is
a fallacy.
If we look again at the three enterprises, where is the compulsion for
growth coming from? The butcher, baker and candlestick makers have a
functioning enterprise. Why do they need to expand? If a small profit
is made after expenditures and taxes, surely this is adequate. It must
be asked where this drive for ever increasing profits is coming from.
If we look at the premise of available credit we might find that the
drive for growth is coming about from creditors who are seeking their
own customers. They don’t care about the limits of growth; rather they
would view limited growth as a problem be to overcome and a hindrance
to their success. It may be argued that available credit is itself a
new venture but unless another new venture is willing to take on that
new credit, the credit enterprise is useless.
When we look deeper into the creditor’s enterprise, we see their
product is money. Where did they get the money? Isn’t this the product
of a prior successful enterprise? And why would an individual be
accumulating so much wealth?
It’s at this point many economists and Alan Greenspan included would
have us believe the problem is human nature in the form of greed. I
would argue against this notion. Every human being does not share this
hoarding complex. I would argue greed is not as common as many experts
would have us believe. If I’m correct, the problem arises from the few
who do share this hoarding complex. Someone with an overabundance of
wealth tends to become another creditor rather than risk their wealth
in a new venture with too much risk associated with it. At a certain
level their caution in investing is understandable but at another
level, it’s also a sign of their hoarding mentality.
Is it simply a quant or naïve notion to believe that too much wealth
is a detriment to society is the need for continued growth just a
function of too much wealth resulting from a hoarding complex? If the
latter is true, the solution may be to correct or even punish the ones
who are hoarding. This is not an indictment against the free market as
would often be alleged, but an indictment of personal ethics. This is
less an argument for socialism than it is for sound human values. |
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| Michael Gordge... |
| Posted: Thu Nov 05, 2009 10:20 pm |
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On Nov 6, 12:51 pm, Moderator <meldo... at (no spam) gmail.com> wrote:
[quote]If the latter is true, the solution may be to correct or even punish the ones
who are hoarding.
[/quote]
What are they hoarding? How do they hoard it?
MG |
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| ZerkonXXXX... |
| Posted: Fri Nov 06, 2009 8:32 am |
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Guest
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On Thu, 05 Nov 2009 19:51:39 -0800, Moderator wrote:
[quote]Is the basis of available credit premised on an individual or commercial
interest taking on credit and supplying goods and services and in turn
providing employment?
[/quote]
Substitute 'credit' with 'debt' please.
1) The basis of debt is profit. Go from there.
2) Before baker and candle maker, or at least during the same time, there
was war making. The state/crown would go in debt to wage war.
3) given 1, a basis of war is profit.
Debt seen as synonymous with tangible production therefore serving a
social good is sadly out of date and has been for a while now.
[quote]When we look deeper into the creditor’s enterprise, we see their
product is money. Where did they get the money? Isn’t this the product
of a prior successful enterprise?
[/quote]
Hardly, their success is being able to borrow at a cheaper rate. The real
'successful enterprise' is getting laws passed. |
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| Demon Buddha... |
| Posted: Sun Nov 15, 2009 9:07 am |
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Guest
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Moderator wrote:
[quote]The butcher, baker or candlestick maker can take credit and expand but
only if there are enough customers. There can’t be enough customers if
there aren’t enough jobs or wages are too low. The expansions of the
proprietors can’t supply enough jobs to in themselves to provide
enough new customers. Something new has to be introduced such as a
shoe manufacturer. The new enterprise produces new jobs and for the
existing enterprises, new customers.
[/quote]
Economic entropy is analogous to that of architectural. Buildings take
a long time to build up, but a very short interval to bring crashing to
the earth when the right structural members are broken.
[quote]
So we can see credit for simple expansion is futile. It is the new
enterprise that allows for any true growth. Available credit is only a
solution if it produces a new venture.
[/quote]
Not so. Given the current standards of operations for many companies,
credit is also crucial for short term bridging of cash shortages. One
very common example is meeting payroll. Many companies will find
themselves without sufficient cash reserves on hand to meet payroll and
therefore avail themselves of short term loans. This is not a sound way
of running a business, IMO, particularly when this practice is done on a
regular and frequent basis. But in this regard I am old fashioned and
apparently not very hip.
[quote]
On a larger scale, this small town now consisting of three enterprises
and a new venture can’t expand unless there are enough new ventures.
Available credit is again useless to the town in the same manner as it
was useless for the first three enterprises without customers.
[/quote]
This example of yours is WAY too simplistic to have any reasonable
merit. Even "primitive" societies were more complex than this. A
simplistic example, in this case, fails to illustrate principles because
complexity is now an integral component of relevant contemporary economies.
[quote]
It should be clear that real growth is the product of something new
being introduced. The article seems only to address a downside of a
credit monopoly and suggests breaking the monopoly as a correction to
the larger issue of growth.
[/quote]
"Growth" is something of a phony baloney issue.
[quote]
When we look deeper into the creditor’s enterprise, we see their
product is money. Where did they get the money? Isn’t this the product
of a prior successful enterprise? And why would an individual be
accumulating so much wealth?
[/quote]
That is nobody's business but that of the creditor.
[quote]
It’s at this point many economists and Alan Greenspan included would
have us believe the problem is human nature in the form of greed. I
would argue against this notion. Every human being does not share this
hoarding complex.
[/quote]
Doesn't have to me "every". Only has to be "enough".
[quote]I would argue greed is not as common as many experts
would have us believe.
[/quote]
You should be more precise and say "morbid greed". We are all greedy.
Some more than others, and some of those are absolutely terminal with it.
[quote]If I’m correct, the problem arises from the few
who do share this hoarding complex. Someone with an overabundance of
wealth tends to become another creditor rather than risk their wealth
in a new venture with too much risk associated with it. At a certain
level their caution in investing is understandable but at another
level, it’s also a sign of their hoarding mentality.
[/quote]
All of this is irrelevant. Private property is there at the owner's
whim. He may do with it as he pleases.
[quote]
Is it simply a quant or naïve notion to believe that too much wealth
is a detriment to society is the need for continued growth just a
function of too much wealth resulting from a hoarding complex?
[/quote]
Sentence is not clear, but if I understand it correctly, you may need
to go back to basic economics. "Too much wealth"? By what standard is
any level "too much"? Who determines this? By what authority would
they presumably limit wealth? And of whom? "Society"? Given
individuals deemed too wealthy?
[quote]If the
latter is true, the solution may be to correct or even punish the ones
who are hoarding. This is not an indictment against the free market as
would often be alleged, but an indictment of personal ethics. This is
less an argument for socialism than it is for sound human values.
[/quote]
The world has been down this road many times before. What you suggest
is neither new nor particularly astute. The universal result of what
you have suggested here has been lots of death, destruction, decay, and
unbounded misery.
My suggestion would be to take these ideas, throw them into a wood
stove, light a match, toss it in, shut the door, wait for the flames to
roar so you know the ideas are meeting their just fate, turn away, and
never ever look back. Ever. |
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