| Ignorant question about the end of capitalism 13:51 - Aug 6 with 3648 views | giant_stow |
Just read this about negative interest rates: https://www.theguardian.com/business/2020/aug/06/negative-uk-interest-rates-were and it got me thinking. What if there's no financial way out of the impending global economic strife? What if all the debt (and therefore all ownership of property?) just has to be wiped from the books? If that happens, society basically resets and starts again, with every old rule and structure up for grabs, with untold consequences?
I realise this is ultra simplistic, alarmist/optimistic (depending on your view) and probably very unlikely, but what if we end up with no choice?
|  |
| |  |
| Ignorant question about the end of capitalism on 13:58 - Aug 6 with 3614 views | J2BLUE |
Why would ownership of property need to be reset? |  |
| |
| Ignorant question about the end of capitalism on 14:04 - Aug 6 with 3601 views | giant_stow |
| Ignorant question about the end of capitalism on 13:58 - Aug 6 by J2BLUE |
Why would ownership of property need to be reset? |
I'm just thinking that if enough money couldn;t be printed to inflate away the debt, then that debt is owned by someone. If you're saying no more debt which is owned, there's no more ownership of anything.
masisve disclaimer: i know I'm almost certainly wrong, ill-informed and chatitng plop. Just thinking aloud. | |
| |
| Ignorant question about the end of capitalism on 14:07 - Aug 6 with 3591 views | StokieBlue |
| Ignorant question about the end of capitalism on 14:04 - Aug 6 by giant_stow |
I'm just thinking that if enough money couldn;t be printed to inflate away the debt, then that debt is owned by someone. If you're saying no more debt which is owned, there's no more ownership of anything.
masisve disclaimer: i know I'm almost certainly wrong, ill-informed and chatitng plop. Just thinking aloud. |
That really doesn't make much sense.
The debt is just a contract which states someone will pay you back money with interest if you give them money now. It doesn't really affect the ownership of anything.
For instance, if someone has no mortgage on their house you are implying they don't own it.
SB |  |
| Avatar - IC410 - Tadpoles Nebula |
| |
| Ignorant question about the end of capitalism on 14:08 - Aug 6 with 3578 views | J2BLUE |
| Ignorant question about the end of capitalism on 14:04 - Aug 6 by giant_stow |
I'm just thinking that if enough money couldn;t be printed to inflate away the debt, then that debt is owned by someone. If you're saying no more debt which is owned, there's no more ownership of anything.
masisve disclaimer: i know I'm almost certainly wrong, ill-informed and chatitng plop. Just thinking aloud. |
I have no idea if you're wrong or not to be honest. They can definitely inflate the debt away though. It's as easy as entering numbers on a keyboard for the BofE, Fed etc. Another thing they could do but seems quite unlikely is to revalue gold. America have done it before. They could reset the gold price to something ridiculous and peg the currency to it. Seems unlikely though as it would take away too much of their control and hand too much power to Russia/China/India who are all increasing their gold reserves. | |
| |
| Ignorant question about the end of capitalism on 14:12 - Aug 6 with 3561 views | giant_stow |
| Ignorant question about the end of capitalism on 14:07 - Aug 6 by StokieBlue |
That really doesn't make much sense.
The debt is just a contract which states someone will pay you back money with interest if you give them money now. It doesn't really affect the ownership of anything.
For instance, if someone has no mortgage on their house you are implying they don't own it.
SB |
Fair enough, I probably am making no sense at all, but what if no one can pay back their mortgage / corporate bond / govt bond?
Then those contracts become worthless and if they become worthless, doesn;t that destroy everything about the current financial (and therefore ownership) system?
Get what you mean about people owning houses outright, but if everything else becomes worthless or impossible to value, doesn;t that apply to houses too, especially in the esnueing chaos of a society broken apart? | |
| |
| Ignorant question about the end of capitalism on 14:14 - Aug 6 with 3557 views | giant_stow |
| Ignorant question about the end of capitalism on 14:08 - Aug 6 by J2BLUE |
I have no idea if you're wrong or not to be honest. They can definitely inflate the debt away though. It's as easy as entering numbers on a keyboard for the BofE, Fed etc. Another thing they could do but seems quite unlikely is to revalue gold. America have done it before. They could reset the gold price to something ridiculous and peg the currency to it. Seems unlikely though as it would take away too much of their control and hand too much power to Russia/China/India who are all increasing their gold reserves. |
What if debt is inflated away to the point that no one will ever issue new debt?
I have to get back to work! Sorry for the red-herring - just thinking. | |
| |
| Ignorant question about the end of capitalism on 14:19 - Aug 6 with 3527 views | Marshalls_Mullet |
Anarchy. |  |
| |
| Ignorant question about the end of capitalism on 14:22 - Aug 6 with 3514 views | giant_stow |
| Ignorant question about the end of capitalism on 14:19 - Aug 6 by Marshalls_Mullet |
Anarchy. |
(thanks for playing along)
Or maybe not if there was some secret state-everything backup plan to switch over to in an emergency?
Rabit hole time - I'll leave the adults to it. | |
| |
Login to get fewer ads
| Ignorant question about the end of capitalism on 14:28 - Aug 6 with 3497 views | StokieBlue |
| Ignorant question about the end of capitalism on 14:12 - Aug 6 by giant_stow |
Fair enough, I probably am making no sense at all, but what if no one can pay back their mortgage / corporate bond / govt bond?
Then those contracts become worthless and if they become worthless, doesn;t that destroy everything about the current financial (and therefore ownership) system?
Get what you mean about people owning houses outright, but if everything else becomes worthless or impossible to value, doesn;t that apply to houses too, especially in the esnueing chaos of a society broken apart? |
If someone doesn't pay back their debt then they default and the collateral becomes the property of the other party. In the case of bonds then they get the recovery value but even if that's 0 then that just means they have lost their investment.
Debt and ownership are not the same thing.
If you own your house does it matter what value it is? You still own it regardless of the valuation.
Why are things becoming worthless or impossible to value?
In the end it sounds like you're implying an anarchist system which would appeal to some on here.
SB | |
| Avatar - IC410 - Tadpoles Nebula |
| |
| Ignorant question about the end of capitalism on 14:31 - Aug 6 with 3486 views | giant_stow |
| Ignorant question about the end of capitalism on 14:28 - Aug 6 by StokieBlue |
If someone doesn't pay back their debt then they default and the collateral becomes the property of the other party. In the case of bonds then they get the recovery value but even if that's 0 then that just means they have lost their investment.
Debt and ownership are not the same thing.
If you own your house does it matter what value it is? You still own it regardless of the valuation.
Why are things becoming worthless or impossible to value?
In the end it sounds like you're implying an anarchist system which would appeal to some on here.
SB |
(does anyone ever regret posting silly head thoughts?!)
Thanks stokie - I now see at least one problem with my gubbins (edit: bobbins!)
I'm off for a lie down. [Post edited 6 Aug 2020 14:34]
| |
| |
| Ignorant question about the end of capitalism on 14:36 - Aug 6 with 3472 views | StokieBlue |
| Ignorant question about the end of capitalism on 14:31 - Aug 6 by giant_stow |
(does anyone ever regret posting silly head thoughts?!)
Thanks stokie - I now see at least one problem with my gubbins (edit: bobbins!)
I'm off for a lie down. [Post edited 6 Aug 2020 14:34]
|
Nobody should ever regret posting their thoughts. Open discussion is excellent as are thought experiments.
I think what you wanted to imply was that money becomes worthless rather than debt and in that scenario what would happen? Or did you want to discuss what would happen if there was no debt at all?
Both are interesting discussions, probably quite a polarising as well.
SB | |
| Avatar - IC410 - Tadpoles Nebula |
| |
| Ignorant question about the end of capitalism on 14:48 - Aug 6 with 3431 views | Ewan_Oozami |
| Ignorant question about the end of capitalism on 14:28 - Aug 6 by StokieBlue |
If someone doesn't pay back their debt then they default and the collateral becomes the property of the other party. In the case of bonds then they get the recovery value but even if that's 0 then that just means they have lost their investment.
Debt and ownership are not the same thing.
If you own your house does it matter what value it is? You still own it regardless of the valuation.
Why are things becoming worthless or impossible to value?
In the end it sounds like you're implying an anarchist system which would appeal to some on here.
SB |
What does "own" mean when there is no abstract monetary value? Ownership means that any such owned asset can be used to create/extract value from it (eg, rent, mineral extraction, etc, etc) and that value belongs to the person who owns the asset and not, for example, the King or Govt. Therefore does "ownership" create the dividing line between the common and the personal and humans have ascribed value to that dividing lline?
Using a cosmological analogy, we would have reached maximum financial entropy at that point and no further value could be created. :-) |  |
| |
| Ignorant question about the end of capitalism on 14:52 - Aug 6 with 3427 views | jaykay |
what i wondered is before covid , was every country in debt. if so who do they owe that money to. |  |
| forensic experts say footers and spruces fingerprints were not found at the scene after the weekends rows |
| |
| Ignorant question about the end of capitalism on 15:00 - Aug 6 with 3408 views | StokieBlue |
| Ignorant question about the end of capitalism on 14:48 - Aug 6 by Ewan_Oozami |
What does "own" mean when there is no abstract monetary value? Ownership means that any such owned asset can be used to create/extract value from it (eg, rent, mineral extraction, etc, etc) and that value belongs to the person who owns the asset and not, for example, the King or Govt. Therefore does "ownership" create the dividing line between the common and the personal and humans have ascribed value to that dividing lline?
Using a cosmological analogy, we would have reached maximum financial entropy at that point and no further value could be created. :-) |
Ownership doesn't have to mean wealth extraction.
For instance a home can simply be somewhere to live, the fact you own it means that someone can't arbitrarily take it away from you. Without that form of ownership you are left to might is right and a bigger boy comes and takes your house.
Very nice analogy, it's certainly a point that could be reached.
SB | |
| Avatar - IC410 - Tadpoles Nebula |
| |
| Ignorant question about the end of capitalism on 15:22 - Aug 6 with 3358 views | lowhouseblue |
moderate inflation is our friend. it allows things to adjust and for resources to be redeployed. we have needed higher inflation since 2008. |  |
| And so as the loose-bowelled pigeon of time swoops low over the unsuspecting tourist of destiny, and the flatulent skunk of fate wanders into the air-conditioning system of eternity, I notice it's the end of the show |
| |
| Ignorant question about the end of capitalism on 15:34 - Aug 6 with 3337 views | J2BLUE |
| Ignorant question about the end of capitalism on 15:22 - Aug 6 by lowhouseblue |
moderate inflation is our friend. it allows things to adjust and for resources to be redeployed. we have needed higher inflation since 2008. |
The banks seem to be execting a long period of low/non-existent inflation judging by the mortgage deals available right now.
Mike Maloney vs Harry Dent is pretty much down to how much success governments will have when trying to deal with deflation. Maloney thinks they will keep creating money to throw at it until the tide turns and it will be irreversible with people losing confidence in currencies and therefore hyperinflation. Dent thinks they'll do the same but it won't have any effect and we're heading for Great Depression 2.0 | |
| |
| Ignorant question about the end of capitalism on 16:22 - Aug 6 with 3274 views | leitrimblue |
| Ignorant question about the end of capitalism on 14:12 - Aug 6 by giant_stow |
Fair enough, I probably am making no sense at all, but what if no one can pay back their mortgage / corporate bond / govt bond?
Then those contracts become worthless and if they become worthless, doesn;t that destroy everything about the current financial (and therefore ownership) system?
Get what you mean about people owning houses outright, but if everything else becomes worthless or impossible to value, doesn;t that apply to houses too, especially in the esnueing chaos of a society broken apart? |
Hi there, if you have a little bit of spare time an a good sized bag of green, you might enjoy reading Marshall Sahlins book Stone Age Economics(1972). The chapter/ essay called original affluent society is Anthropological genius |  | | |
| Ignorant question about the end of capitalism on 16:26 - Aug 6 with 3263 views | factual_blue |
| Ignorant question about the end of capitalism on 14:52 - Aug 6 by jaykay |
what i wondered is before covid , was every country in debt. if so who do they owe that money to. |
Well, our national debt includes money owed to us by the Austro-Hungarian Empire, amongst other now defunct regimes. |  |
| |
| Ignorant question about the end of capitalism on 16:38 - Aug 6 with 3245 views | Andrew4445 |
| Ignorant question about the end of capitalism on 14:52 - Aug 6 by jaykay |
what i wondered is before covid , was every country in debt. if so who do they owe that money to. |
The all of government accounts hold a clue in that 30%+ of the total gilt issuance is held by the Bank of England. This is a by product of the way that QE works. The original plan was to sell the debt back into the market in due course but that isn't happening and the debt is just maturing as per normal and the funds going to the BoE. The fact that UK Gov are financing the current debt spending by creating additional money and using it for (basically) more QE probably means that the BoE is holding 40%+ of the UK debt.
The rest of the gilts are held by a mix - some institutional investors, other governments and insurance companies and pension providers. UK gilts are a good hedge for retirement savings so the insurers and pension providers like them. Index-linked gilts were created for this function - it allowed pension providers to completely hedge away the inflation risk on pensions.
In terms of inflation - the government and central banks generally have struggled to get genuine inflation going for years. The only inflation we really see is currency inflation (after the brexit vote when they raised interest rates slightly) and that is just a function of forex washing through the inflation statistics. There was not and has been no real demand side inflation for ages - the salary information shows that people are still no better off than they were in 2008.
So, the current national debts aren't really a problem, especially when you look at who the asset holders are on the other side of the transactions. Also, Japan seems to be the destination for developed countries and their debt to GDP ratio is far higher than ours due to the fact they had to address the issues of an aging population - something we are going to have to deal with in the coming years. |  | | |
| Ignorant question about the end of capitalism on 16:40 - Aug 6 with 3239 views | Andrew4445 |
| Ignorant question about the end of capitalism on 16:38 - Aug 6 by Andrew4445 |
The all of government accounts hold a clue in that 30%+ of the total gilt issuance is held by the Bank of England. This is a by product of the way that QE works. The original plan was to sell the debt back into the market in due course but that isn't happening and the debt is just maturing as per normal and the funds going to the BoE. The fact that UK Gov are financing the current debt spending by creating additional money and using it for (basically) more QE probably means that the BoE is holding 40%+ of the UK debt.
The rest of the gilts are held by a mix - some institutional investors, other governments and insurance companies and pension providers. UK gilts are a good hedge for retirement savings so the insurers and pension providers like them. Index-linked gilts were created for this function - it allowed pension providers to completely hedge away the inflation risk on pensions.
In terms of inflation - the government and central banks generally have struggled to get genuine inflation going for years. The only inflation we really see is currency inflation (after the brexit vote when they raised interest rates slightly) and that is just a function of forex washing through the inflation statistics. There was not and has been no real demand side inflation for ages - the salary information shows that people are still no better off than they were in 2008.
So, the current national debts aren't really a problem, especially when you look at who the asset holders are on the other side of the transactions. Also, Japan seems to be the destination for developed countries and their debt to GDP ratio is far higher than ours due to the fact they had to address the issues of an aging population - something we are going to have to deal with in the coming years. |
Also, there is a good discussion about whether or not monetary policy actually influences inflation anymore. With rates being so low the small changes to the base rate seem to be separate from the economic movements. In effect the central banks shot their bolt in 2008 and it is sort of irrelevant what they do now, they are just tinkering. | | | |
| Ignorant question about the end of capitalism on 16:47 - Aug 6 with 3226 views | Ewan_Oozami |
| Ignorant question about the end of capitalism on 16:22 - Aug 6 by leitrimblue |
Hi there, if you have a little bit of spare time an a good sized bag of green, you might enjoy reading Marshall Sahlins book Stone Age Economics(1972). The chapter/ essay called original affluent society is Anthropological genius |
https://libcom.org/files/Sahlins%20-%20Stone%20Age%20Economics.pdf | |
| |
| Ignorant question about the end of capitalism on 16:55 - Aug 6 with 3209 views | leitrimblue |
Thanks | | | |
| Ignorant question about the end of capitalism on 17:59 - Aug 6 with 3143 views | giant_stow |
| Ignorant question about the end of capitalism on 16:22 - Aug 6 by leitrimblue |
Hi there, if you have a little bit of spare time an a good sized bag of green, you might enjoy reading Marshall Sahlins book Stone Age Economics(1972). The chapter/ essay called original affluent society is Anthropological genius |
Cheers mr, sounds good. | |
| |
| |
By continuing to use the site, you agree to our use of cookies and to abide by our Terms and Conditions.
