You can’t give it away~!

  By Mystic | August 21, 2012 - 05:38 |

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Written by: Mystic on August 21, 2012.
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  • http://www.richnewbold.co.uk/ Richard

    If I think about the problem of all the consolidated wealth as just a math problem that needs balancing out I can think of all kinds of weird and wacky schemes to redistribute the wealth, but none of them would be workable or practical when I factor in the way humans actually behave – if such a thing is possible. When individuals act in their immediate self-interest, the collective needs of society go right out of the window, so planning for fairness or a rebalancing of the wealth is near on impossible. One might even conclude that what we see with all the consolidated wealth is just the natural outcome and not something that needs to be fixed, rather it’s something that as individuals acting in our own self-interest we need to accept, adapt to, and work around. Maybe the periodic over-throwing of kings, nobility, dictators and governments is all just part of a predictable cycle that temporarily redresses the issue and that this time / next time it will be the turn of the oligarchs and bankers to lose their heads? Which sounds drastic and scary, but like a wildfire that clears the forest of dead wood and makes way for new growth this just a part of the natural cycle? Or maybe that’s bollocks too? What if, after a lot of head scratching, the only logical / realistic conclusion one can come to is that as individuals were are powerless to shape, control, or plan a course for society or economy because there are just too many variables and competing / conflicting individual interests?

    • http://overthepeak.com/wordpress/ Mystic

       Probably all of that (and more~!).

      I’m glad I don’t particularly care one way or the other.

  • http://www.alda-architects.co.uk/ Alan

    What is real wealth? If the system implodes bonds would not be worth a farthing. Much of the accumulated wealth may be an illusion. Perhaps that is where the real bubble lies?

    On taxing property if you set the lower limit well above what Middle England would see as their expectations there would be little political fall out. We care about our property, not that of the Sheriff of Nottingham. The real problem is that the rich just move and unless their wealth is tied to something tangible in your country, like Siberian forests, then you lose.

    Inflation is a useful tool, much maligned. It corrects many imbalances.

    History seems to indicate that when wealth becomes over concentrated then the civilisation tends to go into decline. I suppose when a small group own virtually everything retaining becomes the prime objective and opportunities for others close down.

    We are currently looking at a fundamental change in the balance of power and the full reality of decline has as yet to be  fully felt? Could several families (generations) living in the same house become the norm in Europe, class sizes increase in schools? Perhaps with so many educated young with less prospects we are in for political unrest?

    • http://overthepeak.com/wordpress/ Mystic

       ”Could several families (generations) living in the same house become the norm in Europe…”

      Who would be living next door~?

      • http://www.alda-architects.co.uk/ Alan

        Mr. & Mrs Brown, their parents, children and grand children? 

        Population growing, not even building enough houses to replace those going into dereliction, Planning lagging in how to build more and zoning space needed means overall shortage helping to  uphold price of existing. So the alternatives; build more including social housing, tent cities, or higher occupancy density through sharing.

        There is talk of building more housing in the UK, but it all takes time and money and there seems an utter lack of coherent thinking and vision. Political jargon about liberalising planning laws, guaranteeing more housebuilding and boosting infrastructure projects mean little if there is no money allocated, and also no real idea of overall strategy. Political fire fighting with sound bites. Where I am there is a housing shortage, but you would be a brave person to build as you have no certain selling price. (if indeed you can sell) Making a loss is a very high probability.

        Could be that one of the consequences of the relative economic decline is that many won’t have a house of their own. Similarily we may find that the standard of many services decline.

        http://www.guardian.co.uk/money/2012/aug/22/economic-pressures-young-adults-home-to-roost

         http://www.guardian.co.uk/commentisfree/2012/aug/20/planning-housing

        • windslice

          If there is a housing shortage and nobody will build because they would make a loss, then there must be a massive imbalance in the local economy. This has to be sorted. The root cause has to be determined and fixed.

          You have hit the nail on the head. 

          Modern politicians in the UK are unable to make a decision based on the economic prosperity of the nation. Oh no, they have to pander to the minority groups, the poor families, the jobless, the aimless, the useless, the benefit collectors etc. Because all of the votes that this lot have outweigh the votes of the workers. This is democracy at work. 

          The politicians have to listen to what their voters say. Otherwise they will join the ranks of the jobless, as most of them could not hold a normal job down.

          • http://www.alda-architects.co.uk/ Alan

            We take for granted that democracy as it currently stands is a good idea, I am not so sure. It all depends on having an electorate that is both informed and responsible. I doubt if we have that. A high percentage of those voting do not know the policies of those they are voting for.

            It also depends on us having a fair system where all people can stand for election on a equal footing, we definitely don’t have that. 

            And it would seem important to have elected representatives who represent the better interests of those who elect them. Many who are elected do not do that.

            It also depends on Governments taking responsibility and setting standards for conduct and accountability. Generally not happening.

    • windslice

      I cannot define wealth. There are too many objective and subjective views placed on it.

      Government bonds will be worth their face value whatever happens.

      Inflation screws things up.

      The imbalances would not occur if the people were not led to believe that inflation is inevitable. Inflation creates the imbalances, dammit. If that quid your grandfather earned 60 years ago still had the same purchasing power today, we would be far better off with far far fewer debts. it would not be necessary for the humongous pile of debt to grow every blasted year.

      It is the illusion of increasing prosperity through inflation that is sucking us into the black hole of debt.

      “My house price is increasing”, “my wages are increasing’; “I AM becoming WEALTHY and I can BORROW MORE to get a BIGGER DEBT”.

      Whereas the grim reality is that you are becoming POORER.

      As I keep on saying, the balance of economic prosperity is moving

      1. From the West to the East.

      2. From the countries with a net current account deficit.

      The UK => DOWN

      Greece => DOWN

      Australia => UP

      Cambodia => UP

      China => UP

      Germany => UP but with issues about wealth transfer to the so-called peripheral parasites.

      It would indeed seem logical that the brats will stay longer in the parental home (as indeed we are seeing, my brother was well over thirty before he decided to leave, there were three empty bedrooms and he never left the area). For some reason the “downsizing” that the boomers were expected to make has not really materialised. I guess they have enough cash to keep on the three bedroom properties so that the brats and grandbrats can come and stay. Selfish bastards some might say.

      I doubt whether there is any gumption left in the new generations to cause unrest. They are being brought up to expect a life of slavery until they die, as the retirement age gets pushed out further and further.

      • Bigcollapso

        In a full fiat system, “wealth” is anything that is desired by someone, and traded for fiat currency.
        Ie, it is the “thing” that flows in the opposite direction of the fiat currency. In non collapse economic transactions, the fiat money flows in one direction, and the wealth in the opposite.
        Due to the way that our economy is failing, for a quick understanding of what is happening for instance with the debt, you can substitute “wealth” for labor output of humans or machines in the economy.
        That is what is in short supply (and will remain that way for the foreseeable future) and making the debt fail.

        • windslice

          You are well ahead of me on this BC.

          Please slow down and make it clear for us simple folks.

          • Bigcollapso

             Perhaps the easy way to begin to understand the monetary system, which is an accounting system to account for the wealth transfers of society, is to make a chart that includes the following for EACH financial transaction.
            1. What is the source of the number? Ie who created the original number entry?
            2. What is the first wealth transfer? Ie goods or labor (usually opposite of money flow) from first use?
            3. Who is now obligated to create and transfer the exponential increasing service wealth transfers as a result of the debt based system?
            4. What part of the ongoing transfers can be terminated?

            If you truly understand that not only are wealth and money totally different things, but they are usually flowing in opposite directions, you are off to a good start.

      • http://www.alda-architects.co.uk/ Alan

         Face value on government bonds depends on the currency holding real value.

        I {sort of} disagree regarding inflation, if you expect to be paid interest then there are several options for the borrower;

        borrower grows to repay;
        borrower  reduces his assets by selling to repay;
        devalue the real value of the loan with inflation; or
        default.

        I am increasingly of the opinion that interest is a problem. It enables the accumulation of greater wealth based only on existing wealth, and no other factor. It allows parasitic behaviour. So a system where inflation is 5% and interest is 5% would seem to me one that penalises those that do not make use of their money or make it available.

        Inflation helps reduce the accumulation of some types of wealth, but aids in other sectors.

        As for Germany, if they had their own strong currency I wonder how buoyant their industrial sector would be?

        Money that holds value would be interesting, but it would require an entirely different system to current, and from where we stand now, what we need is the economic equivalent of syrup of figs. In the short term we need a way to write of debts by fair means or foul, and at the same time set up a system that is less likely to be abused. We seem set to enter limbo for a decade and that could have dire political consequences.

        • windslice

          “Face value on government bonds depends on the currency holding real value.”

          No it doesn’t. Face value is face value. If it says GBP 1 then GBP 1 is what you’ll get, regardless if GBP 1 now only buys you half of a toilet roll sheet whereas once you could buy 10 complete rolls.

          “borrower grows to repay;”

          Yep, we’re on the growth wagon again. As long as his economic contribution grows as well, OK, I’ll agree. But if his salary has only increased through inflation then that is not real growth.

          “borrower  reduces his assets by selling to repay”

          Can’t see how that works. Why borrow if you are not going to make a profit?

          “devalue the real value of the loan with inflation”
          That is the the currency debauchery bullshit.See above.

          “default”

          Yeah, well, the bugger runs away without paying. So we all loose.
          “Inflation helps reduce the accumulation of some types of wealth, but aids in other sectors”

          I cannot think of any instance where inflation is beneficial to the accumulation of wealth.

          “As for Germany, if they had their own strong currency I wonder how buoyant their industrial sector would be?”

          Somewhat less, but they do produce very high quality stuff that even Asia wants to buy. So I am not convinced they would loose out immensely. They have the work and quality ethic that a lot of other countries simply do not have.

          “We seem set to enter limbo for a decade and that could have dire political consequences.”

          Yep, that is very true for the UK and any other country that is not “world class” and producing stuff that other countries want to fill the gap created by the importing of stuff from abroad. I am utterly amazed that the UK is still going so strong based on the accumulated wealth stolen through the years. This will surely change.

          “I am increasingly of the opinion that interest is a problem. It enables the accumulation of greater wealth based only on existing wealth, and no other factor. It allows parasitic behaviour. So a system where inflation is 5% and interest is 5% would seem to me one that penalises those that do not make use of their money or make it available.”

          This is a difficult topic.

          You are surely referring to the rentier class, the landlords, the owners of assets that derive an income solely from possession? Yes, these guys will take as much rent as possible out of the productive economy so they can expand their little empires. The banks extract as much as possible, and these bastards do not even own what they rent out. It is all created out of thin air.

          I have no answer, I find it verydifficult to believe we have a system so biased towards the creation of money through debt in the hands of private banks.

          The UK has now the Japanese disease. But without the exports and savings.

          There will have to be a lot of expectations reset.

          And I even believe the government realises this, so there will be an ever increasing amount of debt taken on by Mervyn, and a lot of propaganda slowly lowering expectations.

          The GBP in your pocket will be worth less and less and you salary will not increase to compensate.

          • http://www.alda-architects.co.uk/ Alan

              “If it says GBP 1 then GBP 1 is what you’ll get, regardless if GBP 1 now
            only buys you half of a toilet roll sheet whereas once you could buy 10
            complete rolls.”

            That is exactly the point I was clumsily trying to make, the wealth associated is dependant on the currency holding value.

            “Can’t see how that works. Why borrow if you are not going to make a profit?”

            Say I own a farm and borrow to invest in a milking. I hope to make profit, but chain store cartel forces down the price of milk, no profit, possible loss, so either less earnings or if that is not possible forced to sell a field. Can’t expand to pay interest therefore have to contract assets.

            “I cannot think of any instance where inflation is beneficial to the accumulation of wealth.”

            In the overall agree but it reduces the value of loans. So if the rate of interest is less than the rate of inflation borrower gains if he has purchased a tangible asset that does not depreciate with time. Biggest borrowers seem to be governments so we know whose interests they will have at heart when planning a way forward.

            I shall keep quiet on Landlords, amateur property developers, God help them. I see why many do it, no other avenue open, but how some get by, beyond me! There is a tragedy in all this. The person from an ordinary background, with average savings, has very few ways to invest his savings in ways that he can maintain control and some involvement.  

            “There will have to be a lot of expectations reset.”

            Agree, major readjustment coming unless someone brilliant comes up with a game changer.

            • Bigcollapso

              There is no game changer. It is simple math. It is the reason that so many religions ban usury and some require jubilees. etc.
              In a full fiat system, the debt grows exponentially until the point of collapse. But since the debt is not backed by anything, the debt holders are not “wealthy” in the physical world, but rather they have infinite political power from being owed an existence that is many times what is possible to create.
              In the end. it’s just a smoking crater of madness that a church or other paradigm begins the reboot.

              • http://www.alda-architects.co.uk/ Alan

                Question is how will they chose to collapse? Looks like slow suffocation.

                • Bigcollapso

                   I agree, it looks that way. What I don’t know is if they will change course as things play out.

            • windslice

              Mortgages only become “more affordable” if the salaries increase. This is unlikely to be the case for the next decade. 

              I also cannot see the situation returning where house prices were climbing more rapidly than the interest rate and inflation rate.

              Regarding government borrowing, this is an interesting topic. I think that it is necessary for governments to borrow in order to create an instrument such a bonds where all the cash lying around in the finance sector can be parked risk-free. But maybe they could simply issue bonds anyway and do some accounting fiddle with the money raised.

              • joebhed
                • windslice

                  404 – That Blip has sailed.

                • joebhed

                  thanks.
                  clicking the link changes the address for some reason.
                  when I revised the address back to what was in the link – it brought to proper place.
                  Sorry bout this, all.

                   http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447

                  • http://overthepeak.com/wordpress/ Mystic

                     That has got it this time.
                    Thanks Joe~!

              • http://www.alda-architects.co.uk/ Alan

                 Sorry re delay up to my eyes with work. Interesting view on bonds, never really thought of it like that.

                On wage inflation I think in the next year or two you are right. Beyond that I am not so sure.  Politically difficult to maintain current course. Mystic is right about needing someone to blame, but politicians also need to be seen to be addressing the problem and that is where it will get interesting. Prudence and sack cloth is a difficult one to sell to the electorate, declining living standards, though almost inevitable, also difficult to sell. Germany strength relies on people being able to buy their products as that declines then expect change in attitude there as well. Seems likely that they will print and print, or inject money in by whatever means. They need inflation, but need to pay lip service to prudence!

                Of course someone may come up with a more novel approach to kick start the economy and unite the nation.

        • http://www.economicstability.org/ Joebhed

           Alan,
          If you have the time.
          On the interest factor in wealth-accumulation.

          http://bli­p.tv/file/­4111596It's a learning experience.If you have the time.

          • http://www.economicstability.org/ Joebhed

             http://bli­p.tv/file/­4111596Sorry

            • joebhed

               WTF is up here.

              It joins three lines separating the text???

              • http://overthepeak.com/wordpress/ Mystic

                 No, still no joy with that link Joe~!?

        • joebhed
  • http://www.alda-architects.co.uk/ Alan

    This may be of interest and touches on some previous comments about upbringing.

     http://www.equalitytrust.org.uk/community/among-equals/august-2012

  • windslice

    But’cha gotta keep on producin’ them there brats,

    http://www.bloomberg.com/news/2012-08-21/americans-having-fewer-babies-crimping-consumer-spending.html 

    Yep, it’ll cost…

    “A middle-income family having a baby in 2011 will spend about $234,900 over 17 years for things like food, shelter, transportation and child care, the U.S. Department of Agriculture said in June.”

    But think of the poor banks, you’ve gotta keep on a borrowin’

    ““To the degree that family formation is being suppressed, we should be concerned,” said Neal Soss, chief economist at Credit Suisse in New York. “That holds back housing. It holds back all the spending associated with housing. Family formation is a very important motivator of economic growth.””

    So it’s either YOU or the BRATS and the ECONOMY.

    “Debra Mollen, 41, a psychology professor in Denton, Texas, said she and her husband don’t plan to have children as they strive to pay down their mortgage and save for retirement.”

    I choose the PLANET. Fewer brats, fewer humans and just maybe we can get out of the growth bullshit and stabilise somewhere.