Creditors want to be paid back in good money.
Debtors want to pay back (and any old money will do).
Here in the US, the debtors far outnumber the creditors but the creditors have all the political power. This tension you speak of is slowly tearing our country apart.
It is slowly tearing the Western world apart Flig~!
So the big question is …. What side are the banksters supporting ? Creditor or debtor ?
The biblical parable of the ‘unforgiving servant’ came to mind when reading your question.
Have not viewed Nick’s vid. Will do so tonight.
That is hardly a question, let alone a big question.
They are humans and in it for themselves. They are the Money Manufactures and will take a personal profit wherever they can get it.
They support themselves and are also want the governments to help the debtors, so the debts can be repaid.
But I guess that’s what you meant…..
So is the UK government (for example) actually practicing what you’d call ‘austerity’? As far as I know they are borrowing and spending as much money as they ever did, maybe more, and Osborne’s talk of ‘cutting the deficit’ is getting nowhere.
Or does the government merely keeping borrowing levels constant (as opposed to increasing) actually count as ‘austerity’??
Dear Mr. Mystic:
As much as I hate to say it, I’m leaning towards the Steve Keen “money for all” solution. I think it sets a horrible precedent (if we do it once and it works, we will probably want to do it again), but I’m not sure I’ve heard any credible alternative for solving the “too big to payback” debt problem.
Have you heard him explain how to handle the money/debit issue outside national boarders for the [money] issuing country? It’s a bit of a brain-bender for me, and seems like it might create “confidence” problems with foreign money/debt holders.
Some sort of “controlled reset” (or partial “reset”) would go a long way in staving-off what is increasing looking like a probable deflationary crash. But how to do it without inducing crisis level “lack of confidence” in a confidence based system?
Pie in the sky.
The “too big to payback” problem will be solved by defaulting on the debt. There cannot be any inflation in the west, except in places like Greece if they leave the Euro. There is a massive deflationary force which the central banks are fighting with all the weapons they have.
If the UK, for example, went the route of a Keen’s “helicopter drop” across the whole nation, this would be instantly reflected in the exchange rate and re-evaluation of the country’s rating. The price of debt would rise, inflation would take a leap upwards as people suddenly had more cash and things would end up worse.
It is neither a viable nor practical nor legal solution. So forget it, as it is just a quaint proposal from academia.
Hmm, I seem to remember that you did not ever want to talk about inflation and deflation because of the difficulty in defining what they mean.
But in the context of my interpretation of your video I would agree that debtors want inflation because
1. the price of the asset they own will go up
2. their income will go up making it easier to pay off the debt
However the creditors want a mixed bag, but certainly NOT deflation.
1. if the price of the collateral supporting the debt rises, then all OK, there is a lesser incentive for the debtor to default. If property prices collapse this is a very bad deal, as defaults will increase.
2. deflation in wages is also clearly bad, the debtors will not be able to pay off the debts.
I would suggest that creditors would also prefer a steady rate of inflation or no inflation.
Savers, that peculiar outlying class of victims of policies, want an inflation proofed interest rate. They are the creditors who get screwed.
So what would be a reasonable outcome for all concerned?
I guess an inflation rate of 0 to 2%, preserving the currency as a “reasonable” store of value, and avoiding rapidly changing prices. We are in many places still in an asset bubble of housing, a long slow deflation is the optimal solution and that is what TPTB are trying to achieve.