- National income from wages / labour is decreasing in developed nations. So, what is the rest of national income made up of? Income from ownership - recorded how and by whom? the tax man?; Income from trade - manifested where? Company sales of domestically produced goods and services; company profits from foreign production under its leadership - traced to where?
(Source: TUAC John Evans presentation (2008) / OECD orig - expand image for details)
Cost of mortgage repayments in the UK have risen 78% in the last 8 years (source?)
what do the ecological and green economists say?
http://www.elsevier.com/wps/find/journaldescription.cws_home/503305/description#description
- what are the issues around how frequently stocks are traded?
57. At 7:45pm on 04 Oct 2008, NorrieC wrote:
(interesting claims to investigate but beware of trusting NorrieC directly)
The purpose of a money system is to provide a means for exchange of materials and labour between one person and another. Since the labour and materials are indivisible then 'money' in small denominations allows labour and materials to be traded between two people in fractional amounts.
In that sense it is much more flexible than a simple barter system.
Unfortunately that relatively simple requirement has been hijacked by the current, fraudulent system called Fractional Reserve Banking.
(Wikipedia says:
Fractional-reserve banking is the banking practice in which banks are required by governments to keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) with the choice of lending out the remainder, while maintaining the simultaneous obligation to redeem all deposits immediately upon demand. This practice is universal in modern banking. http://en.wikipedia.org/wiki/Fractional-reserve_banking.
(So, if you're a bank, you can't hold onto it, but you've got to be able to give it back at a moment's notice. This is probably why they lend to each other all the time.)
from another blog of hers/his:
the Federal Reserve. And where did they learn their tricks from....you've guessed it...the good old Bank of England. In fact nearly every country in the world operates this deathly system on the BofE's model
In a debt-based, fiat,
fiat?
The terms fiat currency and fiat money relate to types of currency or money whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another currency, but instead from a government's order (fiat) that it must be accepted as a means of payment.[1] [2]
also interesting is...
Fiat (Latin for "let it be done") is a theoretical construct in policy debate—derived from the word should in the resolution—whereby the desirability rather than the probability of enactment and enforcement of a given plan is debated, allowing an affirmative team to "imagine" a plan into being.
In a debt-based, fiat, Fractional Reserve Banking system the majority of the 'money' in the system is fictional. It is an illusion of immense proportions. The 'money' is printed on a printing machine on a whim and bears no resemblance to any tangible asset or labour of any worth or value.
To work[sic], the mathematical model behind the system requires a geometric growth in debt, population, energy consumption, raw material consumption, waste production and pollution (and a complementary geometric decrease in our co-inhabitants of this planet !).
(so, what is this mathematical model and how can i find out more about it?)
The word geometric means non-linear. i.e the previously mentioned list doesn't just grow linearly, it grows exponentially, 1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024 etc etc. The earth CANNOT sustain geometric growth of any of the above list INDEFINITELY. That is NOT an opinion. That is NOT a political statement. That is NOT the viewpoint of a religious crank. That is NOT pathetic wish of a tree-hugger. It is a physical, mathematical, practical, undeniable FACT.
The model behind the current system is utterly flawed. Any talk of patching it up so that it can continue is unbelievably futile. The only reason it has managed to work at all until now is that a source of (almost) free energy has fuelled the previously described exponential expansion. That free source of energy (oil) is peaking out. Note: I did not say running out. I said PEAKING out. That means that since June 2006 the world's daily oil output has been in decline. i.e every day since June 2006 the worlds daily output has never been higher than in June 2006 and has been falling consistently since. It doesn't matter whether you believe in the Peak Oil theory or if you think anyone who believes in it is a nutter. The figures speak for themselves. The worlds daily oil output since June '06 has been decreasing. It is an absolute fact.
In order to satisfy the base requirements of a debt-based, fiat, Fractional Reserve monetary system the consumption of energy must increase to fuel the increase in manufacture of goods and general industrial activity which in turn increases the consumption of those goods by ever increasing numbers of people taking out more and more loans to buy those goods which in turn results in more and more fiat money being printed. If the increase in energy consumption is strangled because of a decrease in the supply (which it has been) then the bedrock of that geometric system is undermined and the financial system collapses with it.
Without the creation of new loans/debt/credit (call it whatever you will) the rate at which the money pot is being filled with new money is lower than the rate at which the loans are being repaid or written off, which destroys the quantity of money in the money pot (when its repaid or written off as a bad debt the original loan amount is destroyed but so is the leveraged amount - 40x in the case of Northern Rock). Therefore, if the rate of money destruction is greater than the rate of new money creation then the money pot shrinks. When the money pot shrinks it is called a DEPRESSION.
The cretins in Number 10/11 may understand the explanation thus far ( but I have my doubts) and therefore they look around for 'solutions' to the problem. The 'solution' they seek, however, is to find ways of printing even more new money to keep the money pot topped up. That's the limit of the 'fix'. But new money can only be printed as a result of new debt. New debt begins as government debt which is then spent into the economy through the commercial banks or the corrupt PFI schemes or their cronies in the Defense Contractors camp. All of the proposals outlined by Robert above are ways to print more new money in an effort to prop up the exisiting, failing system. e.g.
"public sector would inject new capital into our battered banks" That means printing new pound notes. Don't be fooled by the deliberately obfuscating vocabulary.
"[to] provide them with the muscle to start lending in a sensible way again." So the 'public' lend the banks 10 newly printed pound notes for them to use Fractional Reserve Banking to lend �100 (�90 of which is fictional) back out to the 'public' (at a 10:1 lending ratio, most banks are much higher). Well that seems like a plan, not.
"decided to inject billions of our cash into banks. " printing more new money again.
"savers would receive an automatic and instant uplift in the value of what they put in." They may receive an increase in the numerical amount of pounds but not the 'value'. The purchasing power (value) of those pounds will be diluted in exactly the same proportion to number of new pounds printed. It is a pyramid selling (Ponzi) scheme.
(A Ponzi scheme is a fraudulent investment operation that involves promising or paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. It is named after Charles Ponzi.[1] A Ponzi scheme has similarities with a pyramid scheme though the two types of fraud are different. - http://en.wikipedia.org/wiki/Ponzi_scheme )
"but the risk of capital losses would, I think, be quite small." thats an incredulous statement to make given the example offered by the current circumstances. In a Fractional Reserve System with, say, a 10:1 lending ratio the loss of �10 from the system results in the destruction of (10x10) �100. Destructive losses are magnified by the Fractional Reserve Banking system. Thats why it is so destructive.
"This will be a semi-compulsory, contributory pensions scheme" You must be joking. The last place I want my retirement nest egg is in the hands of financial incompetents who want to make me better off by printing new, valueless pound notes. And then prevent access to it until you are forced to buy an annuity worth nothing in real terms. I'll invest mine in real, tangible assets accessible at all times thank you very much.
(ELC pension scheme...)
"there should perhaps be a dividend for those in low paid jobs and insecure employment, who are hurt most by the economic slowdown precipitated by this crisis." It is pathetic and devious to use the low paid as a crutch to support this repugnant viewpoint. The low paid (and those on fixed incomes ie pensioners) are hurt far more by the destruction of the spending power of the little money they do have by your beloved inflation (wholesale printing of new money), a cornerstone of your proposal.
"Personal Accounts Delivery Authority (PADA), which is setting up a new national pensions savings scheme for launch in 2012." Another quango to swell the ranks of the civil servants who represent 50% of the working population and 20% of the entire population.
"only governments, through the deployment of taxpayers' money" Don't lose sight of the fact that the government has no money of its own, it is not a revenue generator. Every pound spent by the government must first be forcefully taken from someone else.
If the problem could be solved and everyone made rich by the wholesale printing and distribution of new money then Zimbabwe would be the richest country in the world right now.
Inflation is the printing of new pound notes which has the effect of increasing prices because of the reduction in spending power of the pound notes already in existence resulting in the rise in prices.
The government pension system is a scam. You are led to believe that pension contributions are somehow invested in some trust fund and ring fenced for future payout to the people who paid them in. In reality the government takes your pension payments and squanders them immediately upon receipt and your future pension payments, if you get one, are paid out of the taxes of the people who are still working throughout the period of your retirement. The system is completely insolvent because the forecasted future withdrawals are greater than the future predictions for contributions.
_____
I think there's a whole other area of questions and discussion around the financial system - I think the question is around sustainable models of business ownership and finance.
___
http://en.wikipedia.org/wiki/Sovereign_wealth_fund
A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds have gained world-wide exposure by investing in several Wall Street financial firms including Citigroup, Morgan Stanley, and Merrill Lynch. These firms needed a cash infusion due to losses resulting from the subprime mortgage crisis.
Some sovereign wealth funds are held solely by central banks, who accumulate the funds in the course of their management of a nation's banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings which are invested by various entities for the purposes of investment return, and which may not have significant role in fiscal management.
The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, SDRs and IMF reserve positions held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings. These are assets of the sovereign nations which are typically held in domestic and different reserve currencies such as the dollar, euro and yen. Such investment management entities may be set up as official investment companies, state pension funds, or sovereign oil funds, among others.
There have been attempts to distinguish funds held by sovereign entities from foreign exchange reserves held by central banks. The former can be characterized as maximizing long term return, with the latter serving short term currency stabilization and liquidity management. Many central banks in recent years possess reserves massively in excess of needs for liquidity or foreign exchange management. Moreover it is widely believed most have diversified hugely into assets other than short term, highly liquid monetary ones, though almost no data is available to back up this assertion. Some central banks have even begun buying equities, or derivatives of differing ilk (even if fairly safe ones, like Overnight Interest rate swaps____
http://en.wikipedia.org/wiki/Market_capitalization
Market capitalization/capitalisation (aka market cap, mkt cap or capitalized/capitalised value) is a measurement of corporate or economic size equal to the share price times the number of shares outstanding of a public company. As owning stock represents owning the company, including all its assets, capitalization could represent the public opinion of a company's net worth and is a determining factor in stock valuation. Likewise, the capitalization of stock markets or economic regions may be compared to other economic indicators. The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007[1] and rose as high as US$57.5 trillion in May 2008[2] before dropping below US$50 trillion in August 2008 and slightly above US$40 trillion in September 2008.[3]
____I think there's another macroeconomic discussion about the balance of size and types of company within an economy
___
From
October 28, 2008
After financial meltdown, now it's smeltdown
Bjork(Icelandic economy was predominantly fishing): Now we have three aluminium smelters, which are the biggest in Europe. (there are plans to build 2 more).
A lot of Icelanders are against the building of these smelters. They would rather continue to develop smaller companies that they own themselves and keep the money they earn.
The six biggest venture capitalists in Iceland are being booed in public places and on TV and radio shows; furious voices insist that they sell all their belongings and give the proceeds to the nation.
Iceland is a small country. We missed out on an industrial revolution and my hope was that we would skip it completely and go straight to sustainable hi-tech options.
There is a wonderful characteristic in the Icelandic mentality - fearlessness, with an addiction to risk-taking to the point of being foolhardy. In music-making, storytelling and creative thought, this risk-taking is a great thing. And after my introduction to a lot of Iceland's small, growing companies, I realise how many of them have shown this fearless approach either in biotechnology or high technology.
In the past, having all our eggs in the same basket has proven far too risky, as we discovered in the days when we got 70 per cent of our income from fish. Now we are facing a disaster from betting everything on finance.
Iceland can be more self-sufficient and more creative - and still have an approach that is more 21st than 19th century.
(really inspiring to see / hear the yin voice in politics, poetics in politics)
http://www.guardian.co.uk/business/2008/oct/16/europe-economy
European leaders are to go to Camp David on Saturday to press the US president, George Bush, to cap his eight years in power with a major international conference devoted to redesigning global capitalism.
___
fiduciary duty
http://en.wikipedia.org/wiki/Fiduciary_duty
The word itself comes originally from the Latin fides, meaning faith, and fiducia, trust.
duty is a legal relationship of confidence or trust between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment.
A fiduciary duty [1] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.
(so it sounds like this legal relationship to one stakeholder makes that stakeholder's interests out of balance with those of other stakeholders; the CEO does not have a formal fiduciary relationship to people and planet, so clearly that interest is out of balance. So what would an ideal structure for managing a set of stakeholder relationships look like? Bet there's lots of work on that. But need to discuss in relation to bigger systemic design questions about wealth creation and distribution.)
____
John Bunzi claims that 97% of all money in circulation was created by banks as loans
Quotes from Email from John Bunzi – 6th November 2008
But here’s the rub: if virtually all money is created out of nothing as debt, where does the extra money needed to pay all the interest on that debt come from? Either someone somewhere has to go bust to pay it or the banks must lend even more money to keep the pyramid growing (or both).
Why is there government borrowing and government debt? And why should we have to pay high taxes to cover the interest the government has to pay?
Well, because governments only create about 3% of our money leaving the banks to create the rest.
If governments created all new money they wouldn’t need to borrow or pay interest and we could all have lower taxes.
our governments are caught in the pyramid scheme having historically allowed the private banks to take over the vital right of money creation – a right which should always have been the government’s alone, on behalf of the people.
debt-based growth becomes an imperative because if the pyramid doesn’t keep growing, it collapses
The simple solution, as I’ve suggested, would be for the government to create all of our money – the whole 100% - instead of allowing the banks to create 97% of it. That, after all, is only what most people think the government does anyway! If the 97% were created by the government too, on behalf of the people, interest could be eliminated, public works paid for without incurring debt, and taxes dramatically reduced. And the banks would be put back in their proper place as handlers – and not as creators - of money.
if the UK government were the only nation to forbid the banks from creating money and instead created it itself, the banks, like the hedge-funds, non-doms and many corporations, would retaliate by threatening to move their operations elsewhere.
As Michael Portillo, then Conservative Shadow Chancellor, said in a letter to a constituent, “Legislating against the credit multiplier would lead to the migration from the City of London of the largest collection of banks in the world. It would be a disaster for the British economy".[i]
I - Letters to Margaret Harvey and Barbara Panvel dated 28 September 2000 and 13 February 2001 respectively.
the then Labour Treasury Minister, Ruth Kelly, in a letter of 20 August 2001 to Robert Jackson MP.[ii] She said, "It is evident that this proposal would cause a dramatic loss in profits to the banks… . In this case it is highly likely that banks will attempt to maintain their profitability by re-locating to avoid the restriction on their operations that the proposed reform involves. Given the desirability of an internationally competitive market in financial (and other) services, it would not be in the UK's interests to insulate itself from such a market".
[ii] Monetary Reform – Making it Happen!, by James Robertson and John Bunzl, ISPO, 2003.
The transition “would quite possibly cause untold economic harm to any nation trying to move first.”
Unless we had a viable, local, sustainable alternative system in place beforehand.
But what if all or sufficient nations acted together, simultaneously, “all together, now!” That way, the banks would have nowhere else to run and the simple solution could be implemented without fear or risk.
(totally unpheasable politically without a global government)
http://www.islamic-world.net/economics/prohibition_of_interest.htm
the prohibition of interest and its affect on the distribution of wealth
one of the basic differences between the Islâmic system and the Capitalist system with regard to the distribution of wealth is that Capitalism allows interest, while Islâm forbids it.
A very simple consequence of the prohibition of interest is that it produces a balance and uniformity in the distribution of wealth.
since Islâm prohibits interest, it would in practice allow only two forms of investing capital in the modern world- "Partnership" and "Cooperation". Both these forms are completely free from this injustice and imbalance in the distribution of wealth. Under these two forms of investment, if there is a loss, it has to be borne by both the parties, and if there is a profit, both have a proportionate share in it.
Under the Islâmic system, every one who invests his money has a share in the enterprise and its policy, bears the responsibility of profit and loss both, and thus he is no longer allowed to have his own way in business.
“…Allâh has permitted trade, and forbidden interest." (2:275)
where is the economic theory, the evidence, the methodology, the counter arguments, the other possibilities, and so on? I would like to read more about this.
Margrit advocates charging a fee instead of interest – after silvio gesell. That money is a ‘government service’ – but this is really problematic, money is like language. Money is as much a government service as language is: as a system it dwarfs national government in both space and time.
Money Flows
... in search of the meaning...
Money flows are calculated as the dollar value of composite uptick trades minus the dollar value of downtick trades
http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html
the Chaikin Money Flow oscillator is calculated from the daily readings of the Accumulation/Distribution Line.
Money Flows/Methodology
Philosophically, money flow analysis takes its lead from the market. Instead of relying on fundamental ratios to assess value, money flow analysis looks to what the market itself is signaling about a stock, sector or market. This signal may be about interest rates, commodity prices, earnings expectations, future sales or takeover activity. Money flow analysis rests on the classic economic principles of how supply and demand imbalances affect prices. The complication is that the stock market is a market in which there is not normally an outside supply of stock (company issuance of new stock or repurchase of stock for cancellation are the exceptions to this). Therefore, the stock market operates as a closed system with all investors playing a zero-sum game: one group of investors supply the stock to fulfill demand from another group of investors.Constructing and interpreting money flows is done by monitoring every single trade in a stock. Although for every trade there is always a buyer and a seller, it is very important which comes first - the buy order or the sell order. For example, many buy orders cumulating up one after the other will eventually lead to upwards share-price performance as sellers of the stock require higher and higher price to sell their positions. Birinyi Associates monitors every trade for the major stocks not only in the US, but also in 36 markets worldwide to determine money flow.
http://www.birinyi.com/tour.1.php
Our approach is to understand the psychology and history of the market, and most importantly the actions of investors. Much of our effort involves money flows, or what has traditionally been called ticker tape analysis. We follow the ideology of Charles Dow in our methods. As he stated years ago, start with the market's input:
"The market reflects all that the jobber knows about the condition of the textile trade; all that the banker knows about the money market; all that the best-informed president knows of his own business, together with his knowledge of all other businesses; it sees the general condition of transportation in a way that the president of no single railroad can ever see; it is better informed on crops than the farmer or even the Department of Agriculture. In fact, the market reduces to a bloodless verdict all knowledge bearing on finance, both domestic and foreign.
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:chaikin_money_flowHoogvelt
FDI
"'Direct' flows were made up of foreign direct investment... companies investing in wholly- (or majority-) owned subsidiaries abroad, making profits that were returned in the form of dividends. The defining criterion here was 'equity' ownership, which carried managerial control over the foreign operations. Indirect investments were, by contrast, interest-bearing debt intstruments, as in bank lending, whether to governments or private firms. At the time of writing, that distinction is becoming meaningless, as the development of stock markets in many so-called 'emerging' markets, as well as the general opening up of all the world's stock markets, means that non-residents can buy shares in any domestic markets. " p80-1
Totally embedded in the system:
"it has become common for governments... and indeed private companies, to issue bonds and 'treasury' bills (in the case of governments), certificates of deposit, or other forms of of 'commercial paper' in the world's credit markets, instead of borrowing from banks. (...) Public finances are raised from international private credit markets." p81
"the trade in currencies has become the fastest growing market ever, now reaching sixty times the value of international trade in goods and services." p82
"The Economist summed it up: 'The truth is that there is no longer any such thing as money. At least not in the sense required by monetarism and its siblings." The Economist 19 Steptember 1992 p30
"the 'core' today uses 70 per cent of the world's energy, 75 per cent of its metals, 85 per cent of its wood, and consumes 60 per cent of its food." UN Human Development Report 1992 p35
3 richest people have more wealth than the 48 poorest countries - from UNDP human development report 1999 p3. Same ref, p38: distance between income of 'richest' and 'poorest' countries: 3:1 in 1820, 11:1 in 1913, 35:1 in 1950, 44:1 in 1973, and 72:1 in 1992.
___
John Kay
p26
Table 3.4 What the United Kingdom Earns (£bn)
29m workers earn on average £19,200 559
Profits of business 302
Taxes (less subsidies) on business 132
GDP 993
(Annual national accounts; OECD)
Table 3.5 Redistribution of United Kingdom income among households, 2001 (£bn)
Earnings o workers 573
investment income (net) 80
benefits and pensions 246
Total resources 899
Taxes -131
Other social contributions (?) -101
Left for households to spend 668
(UK National Statistics)
p27
What the United Kingdom produces: 2001 (£billion) - Total output column only. Two other columns I've not recorded here - 'sold to other businesses' and 'sold directly'
Agriculture 18
Mining 32
Manufacturing 376
Electricity, gas and water sply 46
Construction 127
Trade (?) 294
Transport & Communication 153
Finance intermediation 485
PUblic administration 85
Education, health & social wk 219
Other 80
GDP 993
(UK National Statistics)
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