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posted by janrinok on Saturday February 21 2015, @08:30AM   Printer-friendly
from the what-me-worry? dept.

Some time ago we discussed negative interest rates here on Soylent News. At that time there was some discussion of deflation and why it is such a mixed bag for consumers, companies, and countries.

The Economist has an article that explains deflation rather succinctly.

It turns out that deflation is bad because we are all so burdened with Debt. Not only personal debt, but corporate debt, and national debts. You end up paying debts with money that is more and more dear as time goes on.

Deflation poses several risks, some well-understood, one not. One familiar danger is that consumers will put off spending in the expectation that things will get even cheaper, further muting demand. Likewise, if prices fall across an economy but wages do not, then firms’ margins will be squeezed and employment will stagnate or decline. (Neither of these dangers is yet visible; indeed, America and Britain are seeing strong employment growth.) A third, well-known risk is debt deflation: debts become more onerous because the amount that is owed does not fall, even as earnings do. This is a big worry in the euro zone, where many banks are already stuffed with dud loans.

But in addition, all tools of Monetary Policy become useless.

The least-understood danger is also the most serious, because it is already here. Deflation makes it harder to loosen monetary policy. All of which means that policymakers risk having precious little room for manoeuvre when the next recession hits.

While some have been eager to see monetary policy reigned in, we did see the effects of this during the height of the recent depression, (which some claim we are still suffering from).

The US Federal Reserve had run out points it could cut when lending money to large banks. There were periods in 2010 where the Fed was lending money to banks at Zero Interest Rate. The link explains a number of serious risks with this policy.

Related Stories

Interest Rates Have Gone Negative in Europe 50 comments

Matthew Yglesias writes at Vox that something really weird that economists thought was impossible is happening now in Europe where interest rates have gone negative on a range of debt — mostly government bonds from countries like Denmark, Switzerland, and Germany but also corporate bonds from Nestlé and, briefly, Shell. As in you give the owner of a Nestlé bond 100 euros, and four years later Nestlé gives you back less than that. "In the most literal sense, negative interest rates are a simple case of supply and demand. A bond is a kind of tradable loan," says Yglesias. "If there isn't much demand for buying the bonds, the interest rate has to go up to make customers more willing to buy. If there's a lot of demand, the interest rate will fall."

But why would you want to buy a negative interest rate loan? The question itself seems absurd – the very idea that anyone should have to pay someone to keep their money safe rather than demand an interest payment for the use of their money is counter-intuitive. But according to Yglesias, very rich people and big companies need to do something with their money and most European banks only guarantee 100,000 euros.Plowing the money into negative-yielding government bonds can appeal to banks when the alternative is to pay even more to store cash on deposit. J.P. Morgan calculates there is currently 220 billion euros of bank reserves subject to negative interest rates, which looks set to grow exponentially because of the European Central Bank’s forthcoming colossal bond-buying program. "It may be the case that if governments push the negative interest rates thing too far the entire economy would become a cash based system," says Merryn Somerset Webb. "But that might take a while to get to."

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  • (Score: 5, Interesting) by aristarchus on Saturday February 21 2015, @08:47AM

    by aristarchus (2645) on Saturday February 21 2015, @08:47AM (#147708) Journal

    First off, I am not an expert in monetary policy, and only mildly competent in economics.

    But it seems to me that the speculative nature of inflation allows for the manipulation of markets by the central banks.
    Deflation does not. And I have to wonder, why is this a bad thing? Greece may be leading the way once again, as it did before the Fiscally conservative Romans took over.

    Real economies are based on productive capability, that is certain. But that capability is only tenuously connected to monetary and capital markets. Why should those of us with no real capital moan about how we are not making returns that allow compound interest to make us millionaires in a couple of years, a la Reagan? Was not true then, is not true now.

    Debt. I am not going to pay off my debt. Ever I am just going to let it ride until my creditors are all dead. Debt, inflation, money, these are all illusions, rather crude attempts to measure actual human value, or productivity. The problem with interest is that it actually produces no productivity, it only produces debt, and once the return on capital reaches zero, capitalists have no control over the means of production? Wait, did some Marxism just come out of my mouth? Well, at least it is not a White Horse for when the Constitution Hangs by a Thread. Could be a badger. I like a bull market with badgers. Makes things interesting.

    • (Score: 1, Informative) by The Mighty Buzzard on Saturday February 21 2015, @12:31PM

      The difference here is under capitalism, the more you contribute to society the more you have. Under marxism the more you contribute to society, the more is taken from you by force.

      --
      My rights don't end where your fear begins.
      • (Score: 3, Interesting) by c0lo on Saturday February 21 2015, @12:39PM

        by c0lo (156) on Saturday February 21 2015, @12:39PM (#147746) Journal
        Not quite [theguardian.com] (makes and interesting albeit long reading)
        --
        https://www.youtube.com/watch?v=aoFiw2jMy-0
        • (Score: 3, Offtopic) by The Mighty Buzzard on Saturday February 21 2015, @12:52PM

          Entirely founded on a mistaken premise though. Capitalism is not what caused Europe's, and Greece in particular's, woes. Socialism is. Doubt me? Show me one, any single one, nation throughout the entire history of the world that has had a socialist system (it need not be called such, just work by those means) for 100 years and prospered under it. For a contrary example, every single example of long term growth throughout history had capitalism at its core.

          --
          My rights don't end where your fear begins.
          • (Score: 1, Interesting) by Anonymous Coward on Saturday February 21 2015, @03:14PM

            by Anonymous Coward on Saturday February 21 2015, @03:14PM (#147775)

            had capitalism at its core

            I'm pretty sure every single example of long term growth had war at it's core.

            • (Score: 3, Interesting) by The Mighty Buzzard on Saturday February 21 2015, @03:28PM

              Yeah, no. I'll give you a chance to rethink that before I rip into it though. War has been with us all throughout history but it does not drive sustained economic growth, it can only temporarily prop up a failing nation.

              --
              My rights don't end where your fear begins.
          • (Score: 5, Insightful) by bzipitidoo on Saturday February 21 2015, @03:23PM

            by bzipitidoo (4388) on Saturday February 21 2015, @03:23PM (#147778) Journal

            I think your diagnosis is incorrect. What do you mean by socialist? And why do you pick 100 years as the magic length of time? Europe has not had 100 years of peace since the Pax Romana.

            A particular variety of capitalism caused the woes: unbridled capitalism. (And speaking of "unbridled", editors, in this case the word you want is "rein", not "reign".) Capitalism is all about competition. But for it to work, it has to be mostly fair competition. We want it as fair as we can make it. When there are no referees, or the referees have all been bought, there's nothing to stop the powerful from taking unfair advantage. Or from engaging in damaging competition. We don't want rivals destroying each others' products or murdering the others' employees or customers. Imagine if a retail store tried to gain an advantage by blowing up a bridge just as its competitor's truck was crossing. In the month it takes to repair the bridge, the entire city suffers traffic congestion from its absence. Everyone lives a little more nervously, wondering what bridge will be blown up next. We have laws and enforcement against that kind of crap. Without that, they certainly won't restrain themselves, and may feel they have no choice but to do what everyone else can do. Ultimately, a few successful ones grow into monopolies. (The only good rival is a dead rival?) I hope no explanation is needed of why that's bad for everyone. Too big to fail, yes? Damaged us all.

            Speaking of Greece, do you understand what is really happening there? It has little to do with capitalism or socialism. It's austerity. Misguided, wrongheaded austerity. Some have ulterior motives for pushing austerity. Creditors want the debt owed to them to be more valuable, and so are opposed to inflation. Deflation is bad, but that's what they want. Rather than generate wealth, they seem bent on taking what existing wealth Greece still has.

            • (Score: 3, Informative) by The Mighty Buzzard on Saturday February 21 2015, @03:59PM

              Just an arbitrary number that's long enough to show long-term growth as opposed to the short-term prosperity that can be shown by any number of unsustainable things. Pick any number you like that fits that bill.

              Unbridled? Yes that would be bad but we haven't had anything approaching it in a long time. What we have had lately is essentially socialism. Over 60% of our spending each year goes to wealth redistribution, so very much socialism. Our corporate taxes are the highest in the developed world, so again, socialism. Collusion between enterprise and the state to stifle competition, so very much socialism as it has been practiced if not as in its ideal form. Like it or not, we have been socialists rather than capitalists since FDR's New Deal.

              --
              My rights don't end where your fear begins.
              • (Score: 2, Insightful) by Anonymous Coward on Saturday February 21 2015, @04:08PM

                by Anonymous Coward on Saturday February 21 2015, @04:08PM (#147786)

                Over 60% of our spending each year goes to wealth redistribution, so very much socialism.

                I'm pretty sure redistributing wealth from the poor to the rich (corporate subsidies) doesn't count as socialism.

                • (Score: 2) by The Mighty Buzzard on Saturday February 21 2015, @04:14PM

                  Check again, slappy. That is 60% of all taxes going to the poor from the rich. Feel free to check my math. The actual percentage is 62 or 63 of what we spend and something in the neighborhood of 75% of what we actually take in in taxes.

                  --
                  My rights don't end where your fear begins.
                  • (Score: 4, Interesting) by bzipitidoo on Saturday February 21 2015, @06:33PM

                    by bzipitidoo (4388) on Saturday February 21 2015, @06:33PM (#147835) Journal

                    That's the central problem with Republicans these days. Can't be bothered with facts, won't agree on what the facts are.

                    The US has the highest corporate tax rate in the world, you say? Nominally, perhaps. In reality, no. Corporations get so many tax breaks that the effective tax rate is one of the lowest in the world. They pay a max of 35% before tax breaks. What they really pay, after tax breaks, is 12.1%. A few corporations have sometimes managed a negative tax rate, taking in more money in subsidies than they pay out in taxes.

                    One argument I've heard is that the rich pay more than their fair share in income tax. The poor pay practically no income tax It's a disingenuous argument. The key word is "income". Before anyone starts muttering about mooching and the 47%, look at all taxes paid, most especially sales tax, not just income tax.

                    Those wealth redistribution numbers are also cooked.

                    However, I would prefer to approach the inequality problem from the other end. Middle class wages have been stagnant since the 1970s. Meanwhile, executives receive absurd levels of compensation. What can be done about this? Strengthen the board's desire and ability to say no to golden parachutes for one thing. Prosecute and imprison the perpetrators of the fraud that caused the financial collapse in 2008. Why has this not been done? There are many other little steps that can and should be taken to level the playing field.

                    • (Score: 3, Disagree) by The Mighty Buzzard on Saturday February 21 2015, @07:16PM

                      Why would you assume I'm a Republican? I've nothing but disdain for their anti-capitalist and oppressive goals the same as I have nothing but disdain for the anti-capitalistic and oppressive goals of the Democrats. Both parties are misguided at best and scum at worst, the Democrats are just somewhat worse in my opinion for their socialist leanings. Corruption is preferable to insanity.

                      However, I would prefer to approach the inequality problem from the other end. Middle class wages have been stagnant since the 1970s.

                      A) Inequality is only a problem if you are covetous. I prefer to only feel entitled to what I have earned.
                      B) Bullshit. There is no sane math that bears that out.

                      Meanwhile, executives receive absurd levels of compensation. What can be done about this? Strengthen the board's desire and ability to say no to golden parachutes for one thing. Prosecute and imprison the perpetrators of the fraud that caused the financial collapse in 2008. Why has this not been done? There are many other little steps that can and should be taken to level the playing field.

                      Personally, I see those as problems as well but in the case of executive compensation that is the business of the board and the investors, not mine. If they want to throw insane amounts of money at someone undeserving, let them and let them fall because of it. As for the rest, I'm right there with you.

                      Except for the playing field. When you feel the universe doesn't give two shits about you, smile; that's it being utterly fair.

                      Those wealth redistribution numbers are also cooked.

                      Bullshit. That is basic, first grade math to tally up yourself, which is exactly what I did. Check the federal budget [usgovernmentspending.com] yourself if you don't believe me. Healthcare: 27%, Age and Disability Pensions: 26%, Welfare: 10%. 27%+26%+10%=63% of spending. I even left out education which is very much "progressive" in its taxation form because it's debatable.

                      --
                      My rights don't end where your fear begins.
              • (Score: 1) by speederaser on Sunday February 22 2015, @01:32AM

                by speederaser (4049) on Sunday February 22 2015, @01:32AM (#147948)

                What we have had lately is essentially socialism

                Lately? How old are you? Social Security [wikipedia.org] has been around since 1935. Besides, a social safety net is not "socialism". "Socialism [wikipedia.org] is a social and economic system characterised by social ownership of the means of production...".

                Our corporate taxes are the highest in the developed world, so again, socialism.

                Our corporate tax rates [taxpolicycenter.org] are at about the lowest they've been since the 1940's. As others have pointed out, the effective rate is dramatically lower, less than 15%. Go back and read the Wikipedia article on socialism - corporate tax rates have nothing to do with whether a country is socialist or not.

      • (Score: 5, Insightful) by c0lo on Saturday February 21 2015, @12:52PM

        by c0lo (156) on Saturday February 21 2015, @12:52PM (#147749) Journal

        The difference here is under capitalism, the more you contribute to society the more you have.

        Oh, fuck off, don't regurgitate the stupidity you've been fed with; digest and shit it the way nature intended when it gave you a brain. How much that HFT is contributing to society? What about these banksters too big to fail?
        If this was true, the middle class in US would still be strong instead of being almost extinct.

        --
        https://www.youtube.com/watch?v=aoFiw2jMy-0
        • (Score: 2, Troll) by The Mighty Buzzard on Saturday February 21 2015, @12:58PM

          That you dislike the fringe cases where a few game the system is your problem. It harms you not at all, it is simple envy on your part that you don't get to do the same.

          As for the middle class, what makes you think the US has anything like capitalism? We are second place in spending on social programs as a percent of GDP on the entire planet. We routinely sell favors and protection to businesses specifically so they will not have to compete. That is not capitalism.

          --
          My rights don't end where your fear begins.
          • (Score: 5, Informative) by c0lo on Saturday February 21 2015, @01:26PM

            by c0lo (156) on Saturday February 21 2015, @01:26PM (#147755) Journal

            That you dislike the fringe cases where a few game the system is your problem.

            Fringe cases you say... too bad those fringe cases control the entire American society: if they get in trouble, the society must jump through hoops to save their ass and take a hit on their pocket; if they make profits, tax avoidance is a moral duty, n'est pas?

            As for the middle class, what makes you think the US has anything like capitalism?

            Yeah, I know... true Scotsman and all that. By this measure, neither USSR had anything like communism.
            If you truly want to go this way, I'll say that both pure communism and pure capitalism are both utopia that won't ever function in their pure form. So, stop whinging, get over it: we are going to live this life the way it falls on us, forget the angelic purity of social philosophies.

            We are second place in spending on social programs as a percent of GDP on the entire planet.

            Really now... are you? I'm afraid 2014 stats show US on 25th place (of 34 considered) expenditure in social and welfare as percent of GDP [oecd.org].

            --
            https://www.youtube.com/watch?v=aoFiw2jMy-0
            • (Score: 4, Informative) by The Mighty Buzzard on Saturday February 21 2015, @01:33PM

              Fringe cases you say... too bad those fringe cases control the entire American society: if they get in trouble, the society must jump through hoops to save their ass and take a hit on their pocket; if they make profits, tax avoidance is a moral duty, n'est pas?

              Hell no we don't have to, and absolutely shouldn't. Failure is an essential part of the capitalism I would like to see us living under again.

              true Scotsman and all that.

              True Scotsman my ass. Again, we are second in the world [theregister.co.uk] in social spending as a percent of GDP, first if you want to go straight dollars. We have all the corruption and protection the former soviets had as well. Face it, we are socialist and that is precisely why we are failing.

              --
              My rights don't end where your fear begins.
              • (Score: 4, Insightful) by c0lo on Saturday February 21 2015, @02:10PM

                by c0lo (156) on Saturday February 21 2015, @02:10PM (#147764) Journal

                Hell no we don't have to, and absolutely shouldn't. Failure is an essential part of the capitalism I would like to see us living under again.

                Not going to happen. The pure capitalism as you'd like it would have absolute respect for private property. That's both pure capitalism and communism problem: both of them can't coexist with appropriation by force or cheating. For the time being, humanity is too close to apes, so you'll have theft and you'll have wars, you'll need both police and army. Which... require the socialization of cost, someone/something that will need to manage it, thus have power over it, something which in time will be corrupted by this power.
                You get it now why pure capitalism is as utopian as pure communism?

                --
                https://www.youtube.com/watch?v=aoFiw2jMy-0
                • (Score: 2) by The Mighty Buzzard on Saturday February 21 2015, @02:26PM

                  I never said pure. I'd settle for something resembling capitalism in a good light. What we currently have resembles the former Soviet Union more closely than the US when it could pass for capitalistic though.

                  --
                  My rights don't end where your fear begins.
                  • (Score: 3, Interesting) by c0lo on Saturday February 21 2015, @03:05PM

                    by c0lo (156) on Saturday February 21 2015, @03:05PM (#147772) Journal

                    I'd settle for something resembling capitalism in a good light.

                    Where do you draw the line between the good and the bad light? (you know, you'll need that line, just to make sure you aren't chasing an utopia)

                    the US when it could pass for capitalistic

                    When was that? (it also depends on the position of that line I mentioned above)
                    I remember stories (maybe for you is history, for me not being American is just-story; as such I may not know/remember it well enough, my apologies) - with the choice of republic and representative democracy motivated by the avoidance of the "mob rule". Do I remember correctly? If so, just from the beginning as a nation, you had the idea of "the elite know better than the mob" Even if that "elite" can be theoretically changed over time, practically, you reached a political duopoly (vague traces of competition, in spite of the appearances); who exactly makes it up to the "elite" level doesn't matter, the respect for the rights/individual citizens is all time low (NSA, militarized police, etc) no matter who's winning the election

                    What do you expect in regards with the individual property when the respect for the citizens is low?

                    --
                    https://www.youtube.com/watch?v=aoFiw2jMy-0
                    • (Score: 2) by The Mighty Buzzard on Saturday February 21 2015, @03:34PM

                      Right about where we were after Teddy Roosevelt did his trust busting, personally. You'd probably think I'd be opposed to that but no, trusts lead to a lack of competition and competition is absolutely required for capitalism to thrive. Teddy, I dug. Franklin, not so much. His New Deal was pure, unvarnished socialism.

                      --
                      My rights don't end where your fear begins.
                      • (Score: 0) by Anonymous Coward on Monday February 23 2015, @07:54AM

                        by Anonymous Coward on Monday February 23 2015, @07:54AM (#148337)

                        Teddy, I dug. Franklin, not so much. His New Deal was pure, unvarnished socialism.

                        So, by your own standard, a majority of US people wanted to stablish socialism in the USA. How's that 'democracy' thing you say you have going on?

              • (Score: 4, Informative) by shortscreen on Saturday February 21 2015, @07:27PM

                by shortscreen (2252) on Saturday February 21 2015, @07:27PM (#147860) Journal

                In the article you linked they are counting private insurance as social spending. By that logic I'm surprised they didn't count the entire military as well, then we would be the undisputed king of social spending (a.k.a. corporate welfare)

          • (Score: 3, Insightful) by Anonymous Coward on Saturday February 21 2015, @04:12PM

            by Anonymous Coward on Saturday February 21 2015, @04:12PM (#147788)

            That is not capitalism.

            Crony capitalism is still capitalism, and its the only form of capitalism that exists in the real world. Claiming otherwise is stating that capitalism is more of a religion for you than anything, believing dogma and putting faith over of facts.

          • (Score: 3, Insightful) by Fauxlosopher on Saturday February 21 2015, @08:31PM

            by Fauxlosopher (4804) on Saturday February 21 2015, @08:31PM (#147881) Journal

            It is broadly illegal to place into the market an order that one does not intend to execute

            HFT involves fraud and frontrunning. Fraud, because orders are placed into the system that the owner does not intend to execute. Front-running, because HFT outfits spend a fortune to set their gear physically closer to exchanges' computers so their money-making orders can beat traditionally-placed orders to the punch to take advantage of the price information sussed out by their fraudulent bulk "trades".

            Markets are a zero-sum game. For every winner, there is a loser. The money HFT outfits are raking in is coming out of someone else's pocket. Do you have a 401k account? Perhaps your parents have a pension? Those are the people who are losing to HFTs' winnings.

            More commentary by someone heavily involved on this topic for years: http://www.financialsense.com/contributors/karl-denninger/hft-still-dancing-around-the-issue [financialsense.com]

            • (Score: 1) by khallow on Sunday February 22 2015, @02:06PM

              by khallow (3766) Subscriber Badge on Sunday February 22 2015, @02:06PM (#148085) Journal

              HFT involves fraud and frontrunning.

              Actually, no it doesn't. It involves high frequency trading, hence the name.

              Fraud, because orders are placed into the system that the owner does not intend to execute.

              But the owner will honor those orders, if they do execute. So not fraud. If a greasy spoon has a challenge that they'll give you a 96 ounce steak for free, if you eat it all, they expect most such people will not be able to finish the challenge. That doesn't mean the challenge is fraudulent as long as they do provide the meal for free in the rare cases where someone does complete the conditions of the challenge.

              Front-running, because HFT outfits spend a fortune to set their gear physically closer to exchanges' computers so their money-making orders can beat traditionally-placed orders to the punch to take advantage of the price information sussed out by their fraudulent bulk "trades".

              Merely being first to take advantage of new information, knowledge of the market, or of traders on the market is not front running. It has a specific meaning [wikipedia.org].

              Front running is the illegal practice of a stockbroker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers.

              Markets are a zero-sum game. For every winner, there is a loser. The money HFT outfits are raking in is coming out of someone else's pocket. Do you have a 401k account? Perhaps your parents have a pension? Those are the people who are losing to HFTs' winnings.

              Markets are by their nature a positive-sum game. Every trade is or was willingly agreed to by the participants. Even forced trades are due to contracts that the trader agreed to earlier.

              If your pension or 401k account is losing measurable money to HFT then they're trading wrong. It's too bad you can't tell from looking at the prospectus that your fund managers have such problems, but that's not the fault of HFT.

        • (Score: 3, Insightful) by Justin Case on Saturday February 21 2015, @01:04PM

          by Justin Case (4239) on Saturday February 21 2015, @01:04PM (#147754) Journal

          > What about these banksters too big to fail?

          Not capitalism. Government intervention, the exact thing free market people despise. The banksters absolutely should have failed, and failed so hard the pain would reverberate for a century and nobody would ever come close to considering such a stupid stunt again.

          Instead what we got is the taxpayer-backed guarantee that "you gamble, you win, you keep; you lose, everyone else pays". So of course they're going to keep gambling.

          • (Score: 3, Insightful) by c0lo on Saturday February 21 2015, @01:28PM

            by c0lo (156) on Saturday February 21 2015, @01:28PM (#147756) Journal

            Not capitalism.

            You'll never get a pure capitalism, the same way you'll never get a pure communism.

            --
            https://www.youtube.com/watch?v=aoFiw2jMy-0
            • (Score: 3, Insightful) by Justin Case on Saturday February 21 2015, @01:43PM

              by Justin Case (4239) on Saturday February 21 2015, @01:43PM (#147760) Journal

              >> (big bailouts) Not capitalism.
              > You'll never get a pure capitalism

              Well that's kinda like saying murder is not pure pacifism. Indeed, it is the polar opposite. Huge government bailouts -- huge government anything -- is what we've been fighting so hard against since forever. But the socialists in whatever-today's-disguise-is think central control can still work if we can only find an honest controller. How's that search coming along BTW?

            • (Score: 1) by khallow on Saturday February 21 2015, @09:04PM

              by khallow (3766) Subscriber Badge on Saturday February 21 2015, @09:04PM (#147892) Journal

              You'll never get a pure capitalism

              Enlighten us on why using public funds to socialize risk is anywhere near pure capitalism.

              • (Score: 2) by c0lo on Saturday February 21 2015, @10:20PM

                by c0lo (156) on Saturday February 21 2015, @10:20PM (#147909) Journal

                Enlighten us on why using public funds to socialize risk is anywhere near pure capitalism.

                ??? Please rephrase ('cause I can't remember to have said that "using public funds to socialize risk is anywhere near pure capitalism").

                --
                https://www.youtube.com/watch?v=aoFiw2jMy-0
                • (Score: 1) by khallow on Sunday February 22 2015, @07:02AM

                  by khallow (3766) Subscriber Badge on Sunday February 22 2015, @07:02AM (#148013) Journal
                  Here's the full chain:

                  [c0lo]What about these banksters too big to fail?

                  [Justin Case]Not capitalism.

                  [c0lo]You'll never get a pure capitalism, the same way you'll never get a pure communism.

                  [khallow]Enlighten us on why using public funds to socialize risk is anywhere near pure capitalism.

                  "Too big to fail" means using public funds to bail out banks when they take really bad risks and fail. That's not even remotely close to pure capitalism.

                  • (Score: 2) by c0lo on Sunday February 22 2015, @07:27AM

                    by c0lo (156) on Sunday February 22 2015, @07:27AM (#148018) Journal

                    I didn't say it's pure capitalism. I only underlined that it happened in a country which proud itself to be closest to capitalism (certainly closer than the "socialist Europe" or Australia).
                    If this was possible, it means even the most capitalistic country doesn't run a pure capitalism, an evidence that supports the idea that pure capitalism is an utopia (thus we better get use with the idea and play the best we can the cards dealt to us by life).

                    Elsewhere [soylentnews.org], my argumentation on why pure capitalism is as utopic as communism.

                    --
                    https://www.youtube.com/watch?v=aoFiw2jMy-0
                    • (Score: 1) by khallow on Sunday February 22 2015, @02:52PM

                      by khallow (3766) Subscriber Badge on Sunday February 22 2015, @02:52PM (#148097) Journal

                      I didn't say it's pure capitalism.

                      You implied the US economic system was close. Now, you merely say it is "closest". One does not merely bring up "pure capitalism".

                      If this was possible, it means even the most capitalistic country doesn't run a pure capitalism, an evidence that supports the idea that pure capitalism is an utopia (thus we better get use with the idea and play the best we can the cards dealt to us by life).

                      If anyone paid attention to evidence or reason at the nation level, we wouldn't have too big to fail either through socialist fixes such as higher reserve requirements (which I understand is a thing Australia did) or through capitalist fixes such as let them burn (which was part of the Iceland solution).

                      Elsewhere, my argumentation on why pure capitalism is as utopic as communism.

                      Socialization of some costs does not preclude private ownership of capital. Socialization of risk is the problem here and that is just not a capitalist feature.

                      And make arguments not argumentations! The fluffy baby seals will thank you.

                      • (Score: 2) by c0lo on Sunday February 22 2015, @09:43PM

                        by c0lo (156) on Sunday February 22 2015, @09:43PM (#148222) Journal

                        Elsewhere, my argumentation on why pure capitalism is as utopic as communism.

                        Socialization of some costs does not preclude private ownership of capital. Socialization of risk is the problem here and that is just not a capitalist feature.

                        Not being a native English speaker, I want to be sure I got you right in regards with "just not a capitalist feature" ("just not" vs "not just") what exactly do you mean:

                        1. "just not" - not admissible in capitalism (i.e. incompatible with capitalism)
                        2. "not just" - not specific to capitalism but not in (full) contradiction with capitalism either (i.e. socialization of - at least some types of - risks may be allowed in capitalism)

                        If 2, then I rest my case: socialization of some risks is allowed by capitalism and my argument flows as linked in my prev post.

                        If 1, does capitalism preclude the existence of an army as a countermeasure against the risk of attack by force?
                        If positive (the army existence is allowed), since socialization of risk is not allowed, should there be a private army (or many armies)?

                        (thanks for the correction in argument/argumentation. The French language - from whom argument/argumentation was borrowed - have the "chain of arguments" as a valid meaning for the "argumentation"; I see English admits only the "act or process" meaning, not also the result of it)

                        --
                        https://www.youtube.com/watch?v=aoFiw2jMy-0
                        • (Score: 1) by khallow on Monday February 23 2015, @08:56AM

                          by khallow (3766) Subscriber Badge on Monday February 23 2015, @08:56AM (#148343) Journal
                          I meant meaning 1. Sure, group-based assumption of risk, such as can be found in some sorts of escrow-based insurance (post a bond with a reliable third party against a certain harmful event happening) or charities, can be present in capitalism. But notice I did not specify the type of risk that was being so distributed. Distributing arbitrary risk to others via government or public policy mechanisms merely because you are particularly large, valuable, and/or politically connected is not capitalist.
                          • (Score: 2) by c0lo on Monday February 23 2015, @10:25AM

                            by c0lo (156) on Monday February 23 2015, @10:25AM (#148355) Journal

                            Sure, group-based assumption of risk, such as can be found in some sorts of escrow-based insurance (post a bond with a reliable third party against a certain harmful event happening) or charities, can be present in capitalism. But notice I did not specify the type of risk that was being so distributed.

                            Actually, I did specify the type of risk: force/military attack by a factor external to the society.
                            What strategy do you propose a capitalist society should take against this risk:

                            1. ignore it; humans are rational and war doesn't benefit anyone (the risk incidence is minimal)
                            2. ignore it: a capitalist society is so efficient no attacker can destroy or steal at the rate the goods are created (the risk impact is minimal)
                            3. socialize the cost of maintaining a collective defensive structure - army or militia+central command (reactive risk prevention)
                            4. socialize the cost of eliminating the risk factor - e.g. preemptive attacks (proactive risk prevention)
                            5. let the individuals deal themselves, is not the society job to protect them. At most, establish an insurance fund to deal with the effects of risk manifestation - insurance against the effect of war (risk mitigation)
                            6. other, please specify
                            --
                            https://www.youtube.com/watch?v=aoFiw2jMy-0
                            • (Score: 1) by khallow on Monday February 23 2015, @11:10AM

                              by khallow (3766) Subscriber Badge on Monday February 23 2015, @11:10AM (#148367) Journal

                              Actually, I did specify the type of risk: force/military attack by a factor external to the society.

                              And that has nothing to do with too big to fail, the subject of this subthread.

                              • (Score: 2) by c0lo on Monday February 23 2015, @11:20AM

                                by c0lo (156) on Monday February 23 2015, @11:20AM (#148374) Journal
                                Mmmm... I see... well, let's narrow down the topic of "risk socialization in capitalism" to "too big to fail".
                                The discussion with its plethora of arguments between the next two dots ..
                                --
                                https://www.youtube.com/watch?v=aoFiw2jMy-0
                                • (Score: 1) by khallow on Monday February 23 2015, @11:40AM

                                  by khallow (3766) Subscriber Badge on Monday February 23 2015, @11:40AM (#148382) Journal
                                  Ok, maybe we'll discuss this next time.
      • (Score: 3, Interesting) by darkfeline on Saturday February 21 2015, @10:15PM

        by darkfeline (1030) on Saturday February 21 2015, @10:15PM (#147908) Homepage

        >TheMightyBuzzard
        I really need to get around to making that filtering script.

        >The difference here is under capitalism, the more you contribute to society the more you have. Under marxism the more you contribute to society, the more is taken from you by force.
        "The difference here is under capitalism, the more sociopathic you are the more you have. Under marxism the more you contribute to society, the more happiness you get back as a kind-hearted individual." There, fixed it for you.

        --
        Join the SDF Public Access UNIX System today!
        • (Score: 2) by The Mighty Buzzard on Saturday February 21 2015, @10:33PM

          Yeah, you are utterly not worth arguing with if you honestly believe taking from individuals by force what they have earned by their own sweat and giving it to lazyass slackers is a good thing. There is no sane way of incorporating that viewpoint in a rational mind. Seek help.

          --
          My rights don't end where your fear begins.
          • (Score: 0) by Anonymous Coward on Sunday February 22 2015, @02:38AM

            by Anonymous Coward on Sunday February 22 2015, @02:38AM (#147960)

            Yeah, you are utterly not worth arguing with if you honestly believe taking from individuals by force what they have earned by their own sweat and giving it to lazyass slackers is a good thing. There is no sane way of incorporating that viewpoint in a rational mind.

            If that money, given to "lazyass slackers", actually improves my lot - by virtue of essentially improving the quality of life of all members of my society, then you're damn right I think it's a good thing.
            I'm certainly happier to be living in heavily-taxed, expensive, "socialist" Norway (which has had increasing prosperity for over 100 years, tyvm), than any rich-get-richer, me-and-mine, dog-eat-dog, capitalist "utopia", you might care to throw out.

        • (Score: 2) by Justin Case on Sunday February 22 2015, @01:24AM

          by Justin Case (4239) on Sunday February 22 2015, @01:24AM (#147943) Journal

          > Under marxism the more you contribute to society, the more happiness you get back as a kind-hearted individual." There, fixed it for you.

          Say, are the meds bestowing ignorant bliss on everyone there in the asylum? Because back here in the real world being kind-hearted will motivate about 3 people, and the rest will take a vacation, stuff themselves with free food, play video games, and drink vodka until the Socialist dream collapses as it always does.

          I worked for it, I earned it, and those of you who think you can just take it are plain and simple thieves. And yes I'd deal with you as I'd deal with any thief given the opportunity.

      • (Score: 2) by nishi.b on Sunday February 22 2015, @12:34AM

        by nishi.b (4243) on Sunday February 22 2015, @12:34AM (#147933)

        Do you have any idea what those words means ?
        Capitalism means that the means of production (the capital i.e. the factories, machines...) are owned by private individuals, and that they can make a profit WITHOUT WORKING just because they own what is necessary for others to work.

        Communism is when those means of production belong to everyone, because Marx thought that no one should earn anything without working, just by being rich. On the path to communism (where there is no central state as everyone is equal), to offset the inequalities between humans, there is a state that uses its collective power to reduce the inequalities by owning the capital.

        It is possible to imagine a free-market communism : the assets of companies would belong to the state, but there would still be a competition between those companies on a free market.

        Regarding contribution to society, I still believe that the garbage man contributes more to society than a communication specialist hired by the tobacco industry. Yet on the job market one earns a lot less than the other...

        • (Score: 3, Informative) by The Mighty Buzzard on Sunday February 22 2015, @01:23AM

          You seem to be under the delusion that all work is created equal. It is not. The man who causes a factory to be built through expenditure of his own effort and stored effort(capital) has done far more for society than those who work a menial job in said factory. And he deserves recompense and even profit for his work and his risk. Any argument to the contrary is simply greed and envy, pure and simple.

          --
          My rights don't end where your fear begins.
          • (Score: 2) by nishi.b on Sunday February 22 2015, @04:49AM

            by nishi.b (4243) on Sunday February 22 2015, @04:49AM (#147993)

            And how is this relevant to our world where most rich people just inherited their money ? About the risk, again, you take the mythical american dream vision of the entrepeneur that while working earns enough to launch his own company and takes a personal risk if his company fails. But is that really the world we live in ? This scenario is a small part of the reality, but the idea of risk is still funny when you talk about professional investors. Who won when Goldmann Sachs was making billions ? Who lost when they lost billions ? I didn't see traders or bank executives losing their house, or being forced to live in the street. But that is what happened to the menial worker in the factory. So who is bearing the risk ?

          • (Score: 1) by K_benzoate on Sunday February 22 2015, @07:15AM

            by K_benzoate (5036) on Sunday February 22 2015, @07:15AM (#148016)

            This might be true if we reset each generation with a blank Monopoly board and distributed the funds equally before starting the game. That is not, and never has been, the reality in which we live. Even then, many people will rise and fall based purely on lucky accidents of history, and not merit. I got an immediate and unearned headstart because my parents worked hard with what they were born into. They got an immediate and unearned headstart because they were extremely lucky with the land they found themselves in possession of through no effort of their own; because their great-(...)-grand parents came here from Europe and murdered all the people who were already living there.

            Striking a balance between the brutalizing regimes of pure communism and pure capitalism should be the project of our civilization. A maximizing of human flourishing will not be found at either extreme. There are assuredly many mutually exclusive ways to succeed, but these are certainly dwarfed by the number of ways to fail. This entire human project we call society is an effort to navigate the infinitely complex landscape that lies between those poles, and at present we have drifted right of centre.

            --
            Climate change is real and primarily caused by human activity.
            • (Score: 2) by The Mighty Buzzard on Sunday February 22 2015, @03:06PM

              Wah, wah, wah, my parents aren't rich! Poor baby. Welcome to the vast majority of people. Those parents who are rich have every right to do with their money as they please though, that includes passing their advantages on to their children, exactly the same as you are entitled to do.

              --
              My rights don't end where your fear begins.
        • (Score: 2) by Justin Case on Sunday February 22 2015, @01:30AM

          by Justin Case (4239) on Sunday February 22 2015, @01:30AM (#147946) Journal

          > they can make a profit WITHOUT WORKING just because they own what is necessary for others to work.

          Obviously you've never invested, because if you had, you'd know that doing it successfully is a lot of work.

          You seem to think The Rich just landed in a spaceship one day complete with their billions of dollars, champagne, yachts, and phat ass girls. I guess nobody ever anywhere worked to earn the money that provided them a little extra to invest.

          Oh, and when I do invest in your employer, I provide them a loan they can use to hire numbskulls like you, on the expectation that you'll do something useful so your employer can pay me back. You're welcome. And get back to work, slacker!

          • (Score: 2) by nishi.b on Sunday February 22 2015, @04:40AM

            by nishi.b (4243) on Sunday February 22 2015, @04:40AM (#147991)

            First, this was Marx's opinion, not mine. The ones who produce are not the ones owning the mines, the land, or the machines, but the workers.
            Second, you don't invest in my employer, as I am working in a domain where most investers don't go, but the state goes : long-term medical research.

            • (Score: 1) by khallow on Monday February 23 2015, @09:18AM

              by khallow (3766) Subscriber Badge on Monday February 23 2015, @09:18AM (#148346) Journal

              First, this was Marx's opinion, not mine.

              Please next time state it as such and not your own. I read the same phrase and I had the same impression as the grandparent post that it was your opinion.

              Second, you don't invest in my employer, as I am working in a domain where most investers don't go, but the state goes : long-term medical research.

              Sounds like there's a possibility that no one invests in your employer then. Investment implies an expectation, reasonable or not, of greater return than what was put in. When the state puts money in, there often is no such expectation even when claimed otherwise.

    • (Score: 2) by davester666 on Sunday February 22 2015, @08:46AM

      by davester666 (155) on Sunday February 22 2015, @08:46AM (#148039)

      Clearly, the only solution is to cut taxes for the wealthy and corporations, so they will invest in everyone's future.

      • (Score: 2) by aristarchus on Sunday February 22 2015, @08:56AM

        by aristarchus (2645) on Sunday February 22 2015, @08:56AM (#148043) Journal

        Clearly! Enough, as Saint Ronald Reagan hisself said, of the failed policies of the past!

  • (Score: 5, Funny) by Username on Saturday February 21 2015, @08:56AM

    by Username (4557) on Saturday February 21 2015, @08:56AM (#147711)

    Well if deflate is causing problems, just use LZMA on the debt.

    • (Score: 2) by c0lo on Saturday February 21 2015, @01:33PM

      by c0lo (156) on Saturday February 21 2015, @01:33PM (#147758) Journal

      Well if deflate is causing problems, just use LZMA on the debt.

      Speaking about debt, what about using a wavelet compression with a reasonable loss of, say... 70%? Something like a 8-12kbps MP3.

      --
      https://www.youtube.com/watch?v=aoFiw2jMy-0
  • (Score: 5, Insightful) by Rosco P. Coltrane on Saturday February 21 2015, @09:06AM

    by Rosco P. Coltrane (4757) on Saturday February 21 2015, @09:06AM (#147717)

    My father always told me not to buy stuff I couldn't afford. As a result, I manage my finances with due diligence: I own my house, I own my car, and I don't owe anything to anybody.

    Only I do: my government - which I own too, in theory, being that I live in a democracy - decided to spend on things they couldn't afford on my behalf. In fact, they decided this before I was born, so I was born in debt! And they're still at it.

    I worked hard all my life never to owe a cent to a bank. It was hard at times, especially as a student, to live near the poverty line and count pennies. But I did it. I pulled through. And despite all my efforts, I've been repaying loans I didn't take ever since I started paying taxes.

    Deflation should be good news for people like me. Instead, it's become a concern because *my* government works hard to debase *my* money. It's disgusting...

    • (Score: 1, Insightful) by Anonymous Coward on Saturday February 21 2015, @12:41PM

      by Anonymous Coward on Saturday February 21 2015, @12:41PM (#147747)

      Well it is at least hopeful there are some like yourself who realize where they are in the big picture.
      We are slaves paying for wars created by fear mongering old people about to die.

      What a wonderful life.

      • (Score: 2) by kaszz on Saturday February 21 2015, @06:59PM

        by kaszz (4211) on Saturday February 21 2015, @06:59PM (#147848) Journal

        Same system game goes on with pollution of the environment and taking on debt. Dead people don't have to eat poison food or pay debt.

  • (Score: 5, Insightful) by anubi on Saturday February 21 2015, @09:31AM

    by anubi (2828) on Saturday February 21 2015, @09:31AM (#147725) Journal

    Here's a longer term overview of interest rates... [wikimedia.org]

    The banks have been dropping interest rates for quite some time now to fuel round after round of speculative real estate profit-taking.

    Now, globalization is taking hold and fewer people are finding themselves with the take-home pay ( and the ability to shield it from taxation ) to pay debt service.

    A few years ago, the banks could always drop interest rates another notch to egg on yet another spending spree.

    Looks like they are now out of notches. We are not on the ladder anymore,,, we are now on the ground.

    Remember that last notch when Bernake single-handedly drove the whole world into a recession by hiking the rate ( that last blip on the right )?

    We have businesses that need to report a year-over-year "growth", but this time there won't be a downward step of interest rates to monetize that growth.

    On top of this, every dollar taxed from the "poor people" is taken directly from the tills of merchants, as the "poor people" aren't running around buying "investments" and tax shelters. It will not be long before merchants are faced with an ever price-sensitive market, as consumers divvy up what money they can scrape up between necessities and feeding the tax collector. A merchant hiking his prices will quickly lose his customer base, as the "little people" just don't have the money - as their job was outsourced.

    As more and more people feel the pain, more and more attention will be paid to Congress, and which Congressmen's tongue says one thing but his pen does another.

    All in all it might be a good thing if people will focus their attention on the problem and deal with it. We cannot outsource our jobs and all live on "investments" or "social services".

    The next Fed chairman to hike the rate is very likely to start another cascade of business failures, restarting the 2007 crash, except this time there is no room to try to flood liquidity into the market by dropping the rate even lower to egg on more loans. This is going to be very interesting and also very painful, as there is a lot of debt out there and if the ability to repay that debt is hampered, a massive cascade financial failure is likely. Our government did not help much bailing the banks out on that last one, as that only gave those guys reassurance that our Government would protect their asses by taxing even more the working stiff on the street, of whom many of them have now lost their jobs and house.

    We have way too much debt burden. It looks to me like a typical control system problem as the pole moves toward the right hand side. Debt requires payback money, yet the economy requires money as well. Too much debt burden and something is gonna give.

    When I was very young ( at the start of the graph I linked to ). a man was known by what he did. Now a man is known by what he owns. We need to revert to the former to get back on the upward part of that curve, not sacrifice altitude trying to sustain a model of wealth by connivery and lobbying, not work.

    --
    "Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
    • (Score: 3, Insightful) by Phoenix666 on Saturday February 21 2015, @04:03PM

      by Phoenix666 (552) on Saturday February 21 2015, @04:03PM (#147785) Journal

      As more and more people feel the pain, more and more attention will be paid to Congress, and which Congressmen's tongue says one thing but his pen does another.

      Fresh back from a family trip to DC during the kids' Winter Break, I am happy to report that the trees lining the National Mall have excellent limbs and will serve well as hanging trees. They are planted three deep a side and each can accommodate at least six; there is plenty of room for Congress, the Whitehouse, and the Supreme Court. Alas, for the multitudes of lawyers and lobbyists in that place we shall have to ask the good people of Virginia and Maryland to lend us a few million trees.

      --
      Washington DC delenda est.
      • (Score: 2) by redneckmother on Saturday February 21 2015, @04:26PM

        by redneckmother (3597) on Saturday February 21 2015, @04:26PM (#147792)

        Now I understand why the US outlawed growing hemp.

        --
        Mas cerveza por favor.
        • (Score: 4, Insightful) by Phoenix666 on Saturday February 21 2015, @04:32PM

          by Phoenix666 (552) on Saturday February 21 2015, @04:32PM (#147797) Journal

          Yes, it makes excellent rope.

          --
          Washington DC delenda est.
          • (Score: 2) by fadrian on Saturday February 21 2015, @05:57PM

            by fadrian (3194) on Saturday February 21 2015, @05:57PM (#147824) Homepage

            Yes, but won't our leaders get silk ropes, anyway, as nobles are wont to do?

            --
            That is all.
      • (Score: 0) by Anonymous Coward on Saturday February 21 2015, @08:34PM

        by Anonymous Coward on Saturday February 21 2015, @08:34PM (#147882)

        Trees are reusable for purposes like this. I'd rather start with the people on k street myself.

  • (Score: 2, Funny) by Anonymous Coward on Saturday February 21 2015, @09:47AM

    by Anonymous Coward on Saturday February 21 2015, @09:47AM (#147727)

    Sure, you still love to spend money. But deflation can be embarrassing. Your economic dysfunction could simply be a matter of cash flow. Try Debtallus. With daily Debtallus you can prove to the economy that you still love her. Debtallus, because there's never a good time for deflation.

    * for economic dysfunction lasting more than four generations see your representatives.

  • (Score: 5, Interesting) by sjames on Saturday February 21 2015, @10:42AM

    by sjames (2882) on Saturday February 21 2015, @10:42AM (#147734) Journal

    The same economists who panic at the thought of take-home pay increasing in value seem unconcerned about pay remaining the same while the value of that pay falls, as it has for decades.

    Surely a contracting economy isn't a good thing. People who used to do dinner and a movie every weekend having to cut back to dinner OR a movie once a month is surely not helpful. Corporate margins are at a high right now (just look at how the dow goes up and up while people have to start punching holes to tighten their belts again).

    For individuals, a paycheck that goes further makes them more likely to pay back debts faster, not less. Perhaps that's the real worry, people who aren't in perpetual debt. Perhaps even, god forbid, able to afford to hold out for better pay or better working conditions.

    That's not to say there are no downsides to deflation, I just find their arguments very revealing about whose side they're on.

    • (Score: 1, Interesting) by Anonymous Coward on Saturday February 21 2015, @09:28PM

      by Anonymous Coward on Saturday February 21 2015, @09:28PM (#147897)

      The thing is our society has taken on trillions in debt. Not a few million, TRILLIONS.

      So you 'buy a house' like most people want to do. You get a 30 year mortgage. You buy your house for 200k. Your bank loans you 200k to get this house.

      Now deflation takes hold. So instead of owing the bank about 340k when you are done you end up paying back 400k. WTF? You say? Deflation adds percentage points to what you owe. You and your bank literally do not have to do anything to make this happen.

      If you have borrowed money you so badly do not want inflation its not funny. Where as before lets say it took you 100 hours to pay back a chunk of your house. Now it takes 120 hours.

      You get more people defaulting on the loan because to work that extra time is impossible for them to do. Banks can not loan out money as no one would bother to borrow money if they can sit and wait and the value of what they own goes up. No one buys or sells anything as waiting is better. Scarcity goes way up. The 'price' value goes way down.

      The 1% litterally do not have to do anything to make themselves more valuable. As their assets are not 'erased'. The people who were the suckers and borrowed are screwed.

  • (Score: 5, Interesting) by Justin Case on Saturday February 21 2015, @12:07PM

    by Justin Case (4239) on Saturday February 21 2015, @12:07PM (#147740) Journal

    This situation exposes the lies of those who are arrogant enough to think they can "run" or "manage" the economy.

    As a general rule, people don't care about doing good, only about looking good. So every politician wants to be able to brag "Look how great the economy was under my control!" And they perform stunts that make things look a bit better today while kicking the problems down the road a couple years.

    This can't go on forever because the pile of problems (e.g. debt) keeps getting bigger. They think "It worked last time so I can probably get away with it again." But each time around, the flip side of unwinding all this nonsense gets ever worse. And we've run up an enormous stockpile of badness lurking out there to spring its trap on us sooner or later.

    I don't recall the commandment, carved in stone, that said "Thou shalt have continuously growing economic activity." The natural way is for prices to fluctuate, supply and demand to adjust accordingly. This does an imperfect but pretty good job of communicating to producers and consumers that they should do more of this and less of that -- automatically, with nobody steering the ship. So the best thing politicians can do is leave it the fuck alone!

    • (Score: 1) by dak664 on Saturday February 21 2015, @04:39PM

      by dak664 (2433) on Saturday February 21 2015, @04:39PM (#147801)

      " The natural way is for prices to fluctuate, supply and demand to adjust accordingly. This does an imperfect but pretty good job of communicating to producers and consumers that they should do more of this and less of that -- automatically, with nobody steering the ship. So the best thing politicians can do is leave it the fuck alone!"

      The Technocracy movement of the 1930s is still alive to some extent, and the study guide (written largely by M. King Hubbert) refutes the ideas of money and price. It asserts that both require continuous growth and the only sustainable economy is one based on a government-controlled energy currency.

      http://www.technocracyinc.org/ [technocracyinc.org]
      http://beta.technocracy.org/wp-content/uploads/2014/04/Study-Course-1-1.pdf [technocracy.org]

  • (Score: 5, Insightful) by PizzaRollPlinkett on Saturday February 21 2015, @02:56PM

    by PizzaRollPlinkett (4512) on Saturday February 21 2015, @02:56PM (#147771)

    The specter of deflation is WORRYING.

    The specter of inflation is WORRYING.

    If nothing happens, we're in a state of worried tension because something is GOING TO HAPPEN. And SOON.

    If still nothing happens, we get projections of what will happen in FIVE YEARS OR MORE, and they're usually not good.

    If there's a slow news day, we get filler articles about GERMS (all surfaces have germs, so these are easy to generate) or POISONED HALLOWEEN CANDY.

    If none of this stuff is going on, they'll interview someone who wants you to buy gold because THE ECONOMY WILL COLLAPSE.

    If we're not worried, the 24/7 news cycle is not doing its job. Something bad is ALWAYS about to happen TO YOU or YOUR CHILDREN.

    Eventually, though, you just tune it out.

    --
    (E-mail me if you want a pizza roll!)
    • (Score: 3, Funny) by RedBear on Saturday February 21 2015, @11:08PM

      by RedBear (1734) Subscriber Badge on Saturday February 21 2015, @11:08PM (#147917)

      BREAKING NEWS: Is there a WORRYING new trend of Internet commenters starting to TUNE OUT of IMPORTANT news articles about WORRYING new trends? WE'LL FIND OUT AFTER THESE IMPORTANT MESSAGES!

      --
      ¯\_ʕ◔.◔ʔ_/¯ LOL. I dunno. I'm just a bear.
      ... Peace out. Got bear stuff to do. 彡ʕ⌐■.■ʔ
  • (Score: 4, Funny) by infodragon on Saturday February 21 2015, @03:23PM

    by infodragon (3509) on Saturday February 21 2015, @03:23PM (#147777)

    Ever buy a computer and by the time you get it the technology is out dated? It's worth less than what you paid and with the same amount of money you could get more! I can't stand the frustration and has been terrible for the tech industry! We must stop it! Imagine what could be done in this world if we could reverse the technological deflation and finally enjoy the fruits of inflation! It would be Utopia!!!!

    --
    Don't settle for shampoo, demand real poo!
  • (Score: 1) by Anonymous Coward on Saturday February 21 2015, @04:58PM

    by Anonymous Coward on Saturday February 21 2015, @04:58PM (#147808)

    Deflation rewards savers and people holding cash. People who store/earn their living in assets will burn. These are typically the rich. They like to tie their worth up in bonds, real estate, and riskier 'investments'. Poor people just keep their money in the bank.

    Long story short, banks own the Federal Reserve--> Federal Reserve does everything it can to maintain inflation and scare-monger the population about deflation --> retired people or just financial responsible people get their net worth eroded away.

    • (Score: 1) by khallow on Saturday February 21 2015, @08:55PM

      by khallow (3766) Subscriber Badge on Saturday February 21 2015, @08:55PM (#147889) Journal

      Deflation rewards savers and people holding cash. People who store/earn their living in assets will burn.

      Assets handle deflation quite well due to paying less in capital gains taxes.

  • (Score: 1) by bram on Saturday February 21 2015, @07:43PM

    by bram (3770) on Saturday February 21 2015, @07:43PM (#147868)

    I disagree with the premise that deflation causes problems for debt holders.
    The amount of wealth that you lose due to paying off debt with more valuable money, is offset by money you save on interest.

    In deflation scenarios, the interest rates are low, maybe even negative. In inflation scenarios, interest rates are high.
    As long as you did not fix your mortgage rates for very long periods, a change in inflation rate will be countered with change in interest rate.

    • (Score: 1) by khallow on Saturday February 21 2015, @08:52PM

      by khallow (3766) Subscriber Badge on Saturday February 21 2015, @08:52PM (#147888) Journal

      The amount of wealth that you lose due to paying off debt with more valuable money, is offset by money you save on interest.

      Most debtors end up with less of that valuable money to pay off their debt due to deflation.

      In deflation scenarios, the interest rates are low, maybe even negative.

      Unless your interest rate is high, because you were expecting inflation. A lot of existing debt is not indexed to inflation.