Archive for December 13, 2009

Linkfest (December 13, 2009)

December 13, 2009 2 comments

Are Americans a Broken People? Why We’ve Stopped Fighting Back Against the Forces of Oppression. Good and timely article!

Small Business Confidence Plunges — Where Will Jobs Come From? In our current status quo, jobs come from outright fraud, not real products or services. So invest in fraud based small businesses such as ‘green’ businesses.

Drug money saved banks in global crisis, claims UN advisor. Legalization of drugs would eliminate a major source of bank liquidity.. surprised?

Poor Children Likelier to Get Antipsychotics. But pharma has to sell newer but crappy drugs, in the best interests of their shareholders.

Goldman Fueled AIG Gambles. What can GS not do.. behold their omnipotence!

AP’s Seth Borenstein is just too damn cozy with the people he covers – time for AP to do something about it. Conflict of Interest!

Historical video perspective: our current “unprecedented” global warming in the context of scale. AGW is a scam- exhibit one million

IRS Studying ‘Protocols’ for Joint Audits With Other Countries. Need I say more..

I will try to post a new linkfest everyday, so please check for updates.

Categories: Economy, Linkfest

Alternative View on Money- II

December 13, 2009 2 comments

I believe that we should start asking ourselves questions about the nature of money and economic activity.

1. What is money? Why should it retain its value? What is the use of money if it cannot buy or help you create new wealth. What use is your 1913 pre-fed dollar if it cannot buy you a circa 2008 – 4 dollar antibiotic prescription from walmart for your kids strepthroat. Many kids developed rheumatoid arthritis or worse from a bad case of strepthroat in the pre-antibiotic age. I should also point out that most deaths in the 1918 flu epidemic were due to seconday bacterial pneumonia, not the virus. What about a 200$ iphone/ipod touch, 40 $ clothes, 150$ leather jackets or 600$ telescope systems? Isn’t reduction in the relative cost of consumer products and innovation in that area great for almost everyone? Can you say the same thing about financial innovation?

Gold based or strict credit economies cannot create the infrastructure, technological breakthroughs and speed of technology diffusion that we are accustomed to. We are quite pathetic at predicting the effects and potential of any any new innovation/ product or service,  notwithstanding the beliefs of of famous and clever white (and asian) men who have proved so wrong about the future of areas in which they were considered to be experts. Rationing money for innovation would be rather similar to the soviet practise of command economics. In any case it is possible to employ 30-60 people for the total yearly income of an average mid-level investment banker who plays paper games, misjudges opportunities, screws over innovators and also loses your investments.

2.   Do banks have any “real” money in a fiat currency based world. Given that the vast majority of banks are either insolvent, propped up zombies or the walking dead- why do we need them in their current form?

I believe that banks in a fiat currency world are best operated as utilities, not as the fiefdoms and the extortion rackets they have been to date. The biggest problem with this alternative model is that bankers cannot make obscene amounts of money by shuffling contracts and sucking money from the consumer economy.

I propose that we pay for sending the current crop of bankers on a one way trip to the sun. It would be cheaper to put bankers and their families in launch vehicles directed towards the sun, than bail them out of their fictional mathematical games. The ‘Zenit’ rocket system can put one kg of stuff in orbit for less than three thousand dollars- You could put a family of bankers in orbit for less than a million. Building the launchers for putting bankers in orbit would create more real jobs than the trillions wasted in the futile efforts to make banks lend to consumers.

3. Large misguided credit expansions, abuses and bankruptcies are inevitable in a species like ours. We like to screw our fellow human for a quick buck. The real question then is how we mitigate the negative effects of such abuses.

Abuses which do not exceed a certain % of GDP should be watched but not intervened in – the dotcom boom created a very good high speed network that we are only now using to it’s full potential. The factors that should prompt intervention are high relative size of the bubble to the GDP and a low potential to create jobs or useful capabilities (in housing- we already had a surplus).

A bubble in space exploration, engineering, chemistry, biotechnology or anything else that produces lots of jobs with the small prospect of big unexpected breakthroughs is better than a bubble in housing or commodities.

4.  In a system where the future is unpredictable, can credit be repayed completely or even partially? Given the factors listed in 3, periodic widespread debt forgiveness might be necesary to keep the system from collapsing. What do bakers lose anyway? Paper, ink, electrons? They certainly do not lose their previous paychecks, commisions, fees and other assorted loot made from the issuance of bad credit.

Would 1.2 Trillion to repay credit cards + 1 Trillion to repay student loans + 1.5 trillion to pay other personal debt have stimulated economic growth better than pissing the money in a black hole to honor CDS bets (and keep apperances in this nonsensical paper game). Hell, yes!!

5.  Maybe we should accept that the two major roles of money are keep people employed / civilized and create new wealth through innovation in the non-financial world. It might be time to give up on ideas such as full repayment of debt, money having a constant value and paying sociopaths to manage your wealth. Honestly, how many people who invested in the financial world are gonna make more money (inflation adjusted) than they put in ( any guesses on gross percentages?).