[GJM] Money reform and prosperity for all [CITS Capital & Debt Watch Reply]

[W. Curtiss Priest]

John Gelles wrote:
> 
> Dear Curtiss,
> 

I'll intersperse notes.

> The logical argument that cannot be refuted goes as follows:
> 
> a. Everyone has some private property with real market value. An
> owner  can borrow "fiat money" -- (the only type in popular use today)
> -- against such "real wealth".

Yes, this is called the "Indebted Society."
> 
> b. Technically, the newly borrowed "money" dilutes the existing "money
> supply".

Not only technically but typically.
> 
> c. The new money is lent for a "credit-worthy" purpose -- evidenced by
> the lending bank officer's belief that the money (together with
> interest) will be repaid -- because the borrower will "produce real
> wealth"  enough to keep prices relatively stable. Thus the money will
> not dilute the future money supply after the newly created money is
> circulated.

There are no more such thoughtful "lending officers."  Everyone
has a score.  It is now a game to check one's score and
borrow as much as that score permits.  Ouch.
> 
> d. We know the very high pay (or loans) allowing extraordinary persons
> to save, spend or invest, is not matched by the real wealth they
> produce themselves. But, if they do not use their money to buy goods
> in short supply, (as for hoarding nylons in WW II,) their will be no
> upward pressure on price to make people fear that money is losing its
> value.

This statement goes in several directions at the same time.

The needed, non-debt consumption is by the "unwealthy" -- those
who have been gradually robbed of productivity gains.
> 
> e. In other words the effect on prices of money that is spent is all
> that constrains spending. If spent money can be captured by savings or
> investment that does not distort prices, then spending can be safely
> done by a sovereign nation from new money -- all the time. (Taxation
> is a last resort to keep too much money from chasing goods whose
> supply will not be raised to meet the higher spending. However, it is
> not a precise tool -- because we do not target price-effect when we
> tax income, sales, death or aggregate consumption. Future tax systems
> will have to be expertly aimed at intolerable inflation.)

Somehow you have combined the cost of goods with constrained,
or un-constrained spending.

You have to break this argument down.  Prices are classically
set by the intersection of the supply/demand curve.

What determines supply and determines demand is extremely
complex.

We have "cross-elasticities."  This says that not only is
a particular good or service competing with others of the
precise kind, but, all goods and services compete with
all other goods and services.  I.e., if the price of soda
goes up, I might buy a lollipop.
> 
> f. Now consider the effect of automation and robotics on the supply of
> things that people used to be paid to create. If  we could raise the
> supply of food, water, houses, education, recreation, and health care,
> etc., by taking full advantage of ultra-high production technologies,
> (not now in use because they would bring on too low a set of prices,)
> the new money government could create to pay workers directly or
> through its contractors would be enormous. The whole success of
> "Kw/oD" rests on this fact.

Point f. is independent of your points a. thru e.

Returning to whether productivity is returned to the worker,
"f." is, say, an increase in productivity, say, of 1000 times.

In "our world" almost all of those profits go to the owners of
productive capital (not to just people who might have, say,
a valuable baseball with signatures).

Now, it would take only 1 person to do the job of 1000.

So, unless I share the wealth produced by the productivity gain
with the other 999 non-workers, those non-workers will have
no income with which to purchase the goods, no matter how
cheap.  (Besides, "resource scarcity" will always be a factor.)

And our current thoughts on income still requires "nearly
full employment."  We do not have a scheme for the leisure
such productivity might produce, so, for example, Americans
work more hours (combined) than in any decade in the last
century -- we are returning to a level of work that might
be similar to "farm labor" when "everyone worked" dawn to
dusk.

Meanwhile, do we see any political candidate other than,
perhaps, Ron Paul, who makes the redistribution of wealth
possible via anything else other than increasingly regressive
taxation via S.S. and the Alternative Tax?

Clinton would provide yet more health.  How?  Already Wright,
head of the US GAO, has gone on record that there is no
way we are going to pay for the new prescription benefits,
let alone any new scheme.

So, while I believe we are mostly headed towards much
greater productivity, the combination of the "real costs of
resources" plus our inability to redistribute the wealth
causes bankruptcies, foreclosures, etc.

This is simply absurd.

WCP
> 
> g. The days when money had to be gold are over. Now any sovereign
> nation, that can raise the supply of the things that money must buy
> (for real wealth to reach all its people), can also spend money
> without first receiving tax revenues. And all that money spent will
> end up raising its standard of living -- even its minimum standard of
> living, if that is what parliament wants.
> 
> h. The only logical reason not to do all the above is -- that you fear
> that, without poverty and unemployment, working people will quit
> essential work that robots and automation can never do.
> 
> i. If between our technological  accomplishments, and the hard work
> that most people will always want to do for a lot of money, we can
> create unending supplies of necessaries, then there is no reason at
> all to starve our nation for fiat money and see it go down the toilet.
> 
> j. The ultimate system we will transition to, will replace private
> debt with private savings. Economic independence will be the rule for
> individuals. We will never be demand-constrained. We will fight supply
> constraints with jawboning urging people to save and not spend  -- and
> when they die with too much unspent money, urge them to leave it
> foundations dedicated to peace, science, education, good conduct and
> health care etc. Such foundations have an infinite need for more
> money.
> 
> John Gelles
> 
> ----- Original Message ----
> From: Curtiss Priest <bmslib at mit.edu>
> To: "List, Cyberspace Society" <cyber-soc at topica.com>; "List, Debt"
> <Debt at topica.com>; "List, Discussion Forum for Global Justice
> Movement" <Discussion at globaljusticemovement.net>; "list,
> Federal-Debts" <federal-debts at topica.com>; "List, IJCCR"
> <ijccr at yahoogroups.com>; "List, LWSIDE1" <lwside1 at yahoogroups.com>;
> "List, Social Credit" <socialcredit at ecn.net.au>; "List, Telecom Policy
> - NorthEast list" <tpr-ne at mit.edu>; "List, TOP (The Optimum Policy)"
> <TOP at topica.com>; "List, Understanding Money"
> <UnderstandingMoney at googlegroups.com>
> Sent: Thursday, July 5, 2007 8:45:57 AM
> Subject: Re: Money reform and prosperity for all [CITS Capital & Debt
> Watch Reply]
> 
> Dear John,
> 
> I've now read Morrison on "Keynes Without Debt."
> (see Gelles below)
> 
> Whether a government should spend without incurring
> debt requires a cost-benefit analysis that is difficult
> to do.
> 
> And, just arguing that WWII spending brought US prosperity
> isn't sufficient.
> 
> If a government spends any money without corresponding
> debt, the government is printing money and diluting
> the money supply.
> 
> And, any and all such spending is simply a "flat tax"
> similar to when governments raise funds by applying "fees."
> 
> Inflation will rise in direct proportion of the spending.
> 
> The costs:
> 
>     o  inflation punishes people who save
>     o  inflation disproportionately is a burden
>         on people with fixed incomes or pensions
>     o  government directed spending may, or may not
>         provide a useful economic stimulus
>     o  government spending may or may not work in
>         tandem with the market system
> 
> The benefits:
> 
>     o  such spending directly raises employment
>     o  government directed spending may, or may not
>         provide a useful economic stimulus
>     o  government spending may or may not work in
>         tandem with the market system
> 
> The reader has noted that the last two costs and the last
> two benefits are phrased identically.
> 
> Here is the heart of the problem of doing a balancing of
> costs and benefits.
> 
> If we ignore these last two "forces" -- the first two "costs"
> tells us that spending without debt is bad.
> 
> So, to do Keynesian spending -- i.e. -- providing an
> economic stimulus beyond that which markets and nonprofits
> create, we must fully convince ourselves that the overall
> stimulus is so great and wonderful that the "first two
> costs" are outweighed by the secondary benefits, a more
> robust economy, better "outputs and inputs," etc., and
> those pensioners will be better off despite lowered
> spending power -- because "their boats rise."
> 
> What plagues the US is, at the least, enormous debt
> everywhere and the gradual decimation of "heartland
> industry."  Those who argued that service jobs would
> fill the void did not anticipate:  1.  massive illegal
> immigrant labor,  2.  massive outsourcing, and 3.  massive
> trade deficits
> 
> So, what you and Morrison need to do is convince "us"
> that Keynesian spending (whether with or without debt)
> will solve today's problems.
> 
> For example, unlike 1935, we do not have 25% unemployment.
> So, WPA (Works Progess Administration), while it produced
> wonderful infrastructure, it is not a clear solution to what
> ails employment, today.
> 
> As for the trade deficit, there is a petition circulating,
> and various congressmen asking for "trade protection."
> (This is not Keynesian)
> 
> And, for what currently ails the US, trade barriers WOULD
> solve many of our problems.  In the electronics industry
> (as used by Japan in the '50s) we could then have a
> concerted program to recreate our electronic parts industry.
> 
> For, only when such parts, "Made in USA," cost less than
> such same parts made in Japan or Korea, could we restart
> our consumer electronics industry.  What is China a net
> importer of?  Electronic parts.  What are the major exports
> of Japan and Korea?  Electronic parts.  Where is the lowest
> wages for reasonably skilled workers?  China.  So, electronics,
> except for, say, speciality medical instruments, is assembled
> in China and shipped here.
> 
> To beat China, we would have to do what Sweden did, thirty
> years ago, and bet on improved automation.  In 1985 I
> visited Asea AB, and I viewed room after room of assembly
> automation with no workers in sight.  But, this requires
> a massive infusion of capital, and, this "bet" is difficult
> to wager with money going, rather, to Chinese imports.
> 
> What is more likely is, China will take the trillions of
> US dollars and invest in "robotics" and as their labor
> rates rise, they will have a steady capital flow into
> that automation.
> 
> Might the US government purchase such facilities and just
> give them away?  Only if the US changes the "industrial
> policy" of this country's federal government.  Starting
> with Reagan, any and all industrial policy was halted.  The
> arguement was:  "only free markets best know how to allocate
> such capital."
> 
> So, we are stuck with a free market that has created the
> largest wealth disparity in the history of the US, has
> destroyed better paying jobs, etc.
> 
> Regards,
> 
> Curtiss
> Editor, CITS Capital & Debt Watch
> 
> John Gelles wrote:
> >
> > Thanks Curtiss for your exchange on AMI and your own thoughts on
> > equity, supply, and "economic democracy" -- this term being
> shorthand
> > for political democracy coupled with economic security for the
> > individual and rational advantage from technology being accepted by
> > the nation-state.
> >
> > As all on this forum know (and give not a damn to hear more about) I
> > have been preaching forever on what amounts to "Keynes Without
> Debt".
> >
> > The article by that name is available at
> > http://www.paecon.net/PAEReview/issue39/Morrison39.htm
> > and at http://www.ustaxreform.us/1016.htm
> >
> > I will send any of our members $100 cash money if they will read
> these
> > articles and change the world to follow their prescriptions.
> >
> > The articles are the brainchild of Ron Morrison -- whom I understand
> > to be a Professor of Computer Science and Physics --
> >
> > (Ron Morrison - Wikipedia, the free encyclopedia
> >   Professor Ron Morrison is the head of School of the computer
> science
> > department of the
> 
> -
>  -^^---------------------------------------------------------------
> This email was sent to: bmslib at mit.edu
> 
> EASY UNSUBSCRIBE click here: http://topica.com/u/?b1dg11.b1r7uX.Ym1zbGli
> Or send an email to: cyber-soc-unsubscribe at topica.com
> 
> For Topica's complete suite of email marketing solutions visit:
> http://www.topica.com/?p=TEXFOOTER
> --^^---------------------------------------------------------------

-- 


	   W. Curtiss Priest, Director, CITS
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
   781-662-4044  BMSLIB at MIT.EDU http://Cybertrails.org