Topic: No Money Exists Without the Majority - page 7. (Read 10252 times)

http://www.mpettis.com/2013/06/10/how-much-investment-is-optimal/#comment-23978

Andao,


Ditto the western banking system in reality, and especially once all the derivatives and liabilities in the system are factored in and the system has reset to (as I postulated in reply to illumined downthread). Fractional reserve banking systems are inherently socialist over time until the financial system resets with write-downs.

Leasing property is not necessarily socialist. Private property rights in the west are somewhat of an illusion due to the false high valuations by pulling demand forward 30 years with debt, high insurance payments, rising property taxes as states are bankrupt. The western real estate has not bottomed. I expect the gold-to-house ratio to increase another order-of-magnitude!


You cherry picked foreign exchange. Yet if we compare controls on exporters, I bet the USA is much more socialist with labor laws, export restrictions, and higher taxes.


China may be trying to keep the national cost on health care low, so it has a more competitive economy for exporting. As it shifts to a consumer economy, the priority will shift to the advantage that allowing more spending on health care, enables greater security and consumer spending of savings.

What I am saying is that when global exports crater circa 2016, China will undergo a radical and rapid transformation. The pent up demand and capacity for this change is ready. Whereas, the west doesn't have any capacity to adapt after 2016.

You overemphasize lack of interest of the Chinese to research some obscure facts about history. The main priority of Chinese today is to earn money, so they can buy a house, car, and get married. On that front, they know they are not [entirely] free and are eager to gain more capitalism.

What ? Vicious circles is usual way for your logic ?
Fine Let it be so...

How can elitist and super-guru (like you) depend
 from desires and manias of unwashed masses,
which he is creating with his "marketing" ?

http://www.mpettis.com/2013/06/10/how-much-investment-is-optimal/#comment-24051

illumined,

It is very difficult to make the depositors whole, because this is a highly leveraged fractional reserve system (e.g. I've read the Spanish banks are leveraged 26-to-1), and worse yet there are all these up to a $quadrillion of sovereign bond interest rate derivatives gambling bets effectively used as reserves (since Tier 1 capital are sovereign bonds), thus leveraging the western financial system into the stratosphere.

We have to hit the reset button on the entire western financial system. There are two ways to do this. The slow way which allows increasing the debt and continuing to misallocate capital. Or the fast way of declaring everything 0, and recapitalizing a new system.

So far, Japan and the west have chosen the slow way of continuing interest payments and ZIRP to keep the derivatives whole, with Japan in a 23 year decline.  If the West continues down the slow way, it will be a global contagion. The west must continue down the slow way, because the boomers are too old to gain from a quick reset, they would not be competitive with Asia given a lack of youth in the west.

Asia will break away and do its own quicker reset once this global contagion takes down global exports. Japan is 3 years from the 26 year downturn bottom expected by the repeating 78 year cycle.

Andao, finally got back to my desktop computer where I can type properly.

You cited the arrest of some activists in China and made the conclusion that this is not a "big improvement". How can you ignore the progress China has made on moving away from the totalitarianism of the cultural revolution, Great Leap forward, and the Tiananmen Square, to the widespread capitalism and freedom today? Of course, there are still some serious obstacles, but to argue there has been no big improvement is absurd.

Also that there exists activists who were emboldened by hope generated by the Premiere's policy statements, and that they were not immediately shot, is another indicator of how far China has come. China appears to be in the mode now of increasing tolerance, while maintaining suppression of a political spark that could send the whole thing spiraling out-of-control. I don't expect the leadership to succeed in a gradual transition from the remnants of communism to more free markets, because this last step (towards greater consumer share of the economy and foreign exchange freedom-of-capital for the middle class) requires removing the power of the 200 families that rule China. So unless there can be found a way for these 200 to continue to concentrate wealth and power, and open the economy more, then eventually there will be a Minsky moment, and another step forward in change similar to Tiananmen Square. Transitions occur in stages, as the economics and demographics overpower the stasis.

I think we need to consider the Asian culture of "face" when separating what the people on the street say when quoted, and what they actually do. Sure they play the "who you know" political favors game, because for now that is one of the primary means to do capitalism and succeed within the system which is still held back by the power of the Communist Party. But underlying this, the thoughts of the people are more Confucianist than Communist, and they want capitalism in their business activities. My perception is they want socialism to the extent that it creates a level playing field for eliminating evils of society. Since socialism does exactly the opposite due to the Olsen effect, then as the next economic crisis hits, they will grow more and more aware of their closer attachment to Confuscianism over a failed communist ideology which serves no purpose in their daily business lives as they strive to maximize wealth and security within their Confucianist core value system.

Their result will be different than the Europe or the USA to the extent their core culture is different (from Christianity, and the western culture of always moving forward man can improve upon nature versus Asian culture of cycles and repeating wisdom with nature in control).

The key point is that when the Minsky moment comes China won't have a majority of the population over 60 and unable to do anything but demand the government sequester wealth to sustain them. China will have a majority of the population in the 20 and 40 age brackets, thus able to roll up their sleeves and refocus energies on new markets after the fixed capital investment bubble has burst. And the rest of Asia is in proximity with the majority of the population in the working age 20s bracket.

Whereas the west is now burdened by the result of massive use of birth control and the bulge in births due to returning soldiers from World War 2, thus now not having sufficient youth to vote out the stasis of sequesting wealth from savers and transferring it to maintaining the increasing debt.

The freedom that westerners have is very fragile, because it only exists to the extent is does not conflict with the need of the boomers to sequester wealth to maintain their quality of life. In southern Europe, we see the youth unemployment is double the adults, as the boomers vote to sustain the debts and minimize effects on themselves.

Bitcoin has MANY flaws, not the one.
And only currency, which will address majority of them, will "overtake" and "eliminate" Bitcoin (and all it's "forks ).
Not the first "instant" coin as you said.

I guess, you'll have a lot of hard time
 with "marketing" all these theories
 of yours to the public
Whilst someone will do something, you trying to stop here with illogic.

Andao,

I have a moment to compose a hopefully more cogent rebuttal. This will continue on from the rebuttal I submitted a couple of hours ago.

I am wondering if you don't read carefully, or if I don't write coherently. For example, I wrote previously that Chinese are allowed to speak against the government, e.g. making a comment in a social network (if it is not censored) or at home, but they are not allowed to organize or become activists. Let me make it more clear. Chinese are allowed to express their personal opinion, but not allowed to form movements that threaten the power of the Communist Party (which I stated already in my prior comment to which you are replying).

In the West we are allowed to talk and organize politically, but this is pointless as the politics is already determined by the fact that the majority of voters are boomers and they will not tolerate a quick and sharp economic collapse the accompanies the defaults from write-down of the debt. But as Michael explained in an upthread comment about Japan, not writing-down the debt (i.e. not defaulting on the lenders) means a long-drawn out period of economic stagnation and decline (23 years thus far in Japan). Without a write-down, the capital stays locked up in interest payments and centralized amongst those who have proven they don't know how to allocate capital. Thus capital does not move to the most efficient, and thus the economy stagnates and declines.

I hope you understand that ZIRP (zero interest rate policy) causes capital to accumulate in the least risky sovereign bonds (e.g. USA, Germany) for safety, as well to speculation and emerging markets to seek yield. Thus ZIRP drives capital away from productive investment to bubbles. Precisely now we have huge dollar bond issues in developing countries funding a bubble in condos and fixed capital infrastructure. This means the developing world is short the dollar, as a Michael's past blog on globalization predicts, this capital inflow will reverse when the Minsky moment hits the West. In fact, you will see a huge rise in the dollar soon through 2016, as capital flees Europe (since Europe is moving rapidly towards capital controls and bail-in form of confiscation). Armstrong had predicted this and this is why we all (following Armstrong) had the knowledge to sell gold before the recent crash of gold.

This is a dead-cat bounce for the dollar and US real estate, being driven by capital in flows some of which is seeking a safe haven and then speculators seeing the trend and following it to chase yield.

Also potential home buyers in the USA are rushing to buy as interest rates rise (California house prices up +25% in past months), because the Fed sees the bubble forming and is talking about tapering down on QE. Armstrong predicted this too, so I was expecting it.

...this will be continued in the next comment...

...continuing from  prior comment...

Indeed the western media appeases the rage of the citizens with talk, but the action is all increasingly socialism. In my prior reply, I forgot to mention France already imposing capital controls and chasing away business with severe taxes and "do not fire" labor laws & regulations, and in the USA we have Obamacare which is destroying business. I already mention ZIRP which is a socialization of debt instead of a write-down of the lenders.

Whereas, China doesn't allow organization of dissent, and the reason is because the real economy is moving more and more capitalist and so there is no political vested interest that can hold up the Communist Party once the wildfire is lit. Thus they must prevent the spark, but the Minsky moment will provide that spark and then it will be dismantled rapidly. Whereas the West politically and economically can't reform because of the demographics can not allow it. Thus the West will devolve into a horrific outcome of wealth confiscation when the Minsky moment occurs (roughly circa 2016).

The privatization and discovery of information will spread very quickly in China after the Minsky moment because there is nothing stopping it other than the Chinese military. The people are young and will adapt quickly because in reality they are moving more to capitalism and back to their core values of Confucianism every day.

I was challenged again and rebutted again. See link in prior post for link to discussion.

============

Andao, did you ignore that I specifically said I am looking for evidence not comparing what is NOW, but the trajectory of where we are going in the FUTURE?

My main point of evidence is that in the West we can act as if we are free and most believe they are, but we are being secretly recorded, as proved by the recent infocalypse revealed by Edward Snowden (with numerous others providing similar leaks since 2001).

Whereas in China, the people know very well they are not entirely free, and they know they are being blocked and recorded.

The other evidence I offered is the fact that the West can not have unsocialized debts defaultss without destroying the retirement of the majority of the voters. Whereas, China can. Thus the West can not move away from socialism, China can. Thus the West is lying to itself about moving towards socialism, and China is not lying about moving away from socialism.

The opposing trajectories over the past 3 decades are clear and accelerating. China has opened from 100% totalitarianism to 50+% capitalism. The West has slid from capitalism to socialism and fascism underneath, and only capitalism on the face. Does ZIRP, bail-ins, significant proportion on the population on government support, union control of Europe, etc. not sufficient evidence for you?

I am rushed now, if you want to rebut, I can try to compose a stronger counter argument next time.

I was challenged, and I rebutted as follows.

http://www.mpettis.com/2013/06/10/how-much-investment-is-optimal/#comment-23978

I am writing from the perspective of social capital & trajectory, since I am projecting the future.

When the rule of law is itself corrupted by the demands of boomers to maintain what can't be maintained, thus handing control of the government to the bankers who will never write-down the capital stock, then the rule of law is an illusion that is already rotten inside and waiting for the Minsky moment.

Whereas, China's people are becoming increasingly vocal about corruption and their actions are increasingly capitalistic. I was told by a Chinese recently that it is perfectly okay to criticize the government, just don't organize into groups when doing so. The only practical limit is to not challenge the actual authority by organizing. Whereas in the West, it is becoming increasingly politically incorrect to criticize the government. In the USA, there are even laws and Homeland security policies that characterize a person as a terrorist if they belong to certain ideologies.

China is liberalizing their financial door slowly, while the West is closing it, now with capital controls increasing.

Absolutely not, the Chinese criticize socialism and praise capitalism. Whereas, Westerners criticize capitalism (Obama!, ZIRP, bailins, etc) and embrace socialism.

I can't imagine how you could be so blind. Oh wait, yes I can. You are Westerner, so you believe this propaganda you've been fed about your social capital being superior to China.

No you've gotten it backwards. Not having welfare in place, means the free market and private capital is more free to invest and innovate. Two more phenomenal decades of this private enterprise will provide the funding for the social programs China needs 20 years from now.

Chinese readily subvert the censorship on the internet, using varied techniques such as misusing words so their meaning is obscured. A few VPNs of input, can be spread out by forum posts and word-of-mouth.

I didn't say China has better respect for privacy NOW, I said that their control is not opaque and the citizens are not living in a fantasy world believing they have privacy. Thus they've been having a dialogue about it, and are well along the way towards being ready to dismantled it when the Minsky moment comes. Whereas the West is in denial thinking they are good, but actually rotten to the core of their social capital needs. And when the Minsky moment comes, the West is going devolve into what it really is behind the curtain.

How much you want to bet that the USA public eventually forgets the recent NSA infocalypse, and the behind-the-curtain abuses increase? Whereas, the Chinese are not going to forget until they obtain the freedom to capitalize freely.

Just sent this out for publishing on the internet. You should find it by searching the title "Asia Rising, West Declining" with Google within a day or so.

Asia Rising, West Declining

Asia will lead out of the coming global economic collapse because the Heritage Foundation data states the government spending as a percentage of the economy is significantly lower than in the West.

http://www.heritage.org/index/explore

Latin America's low government spending population is (sans Argentina, Bolivia, Brazil, and Venezuela) only 320 million-- much smaller than Asia's.

Thus despite rampant oligarchy collusion with government (e.g. Chinese SOEs, Korean Chaebols), the Asian population is not addicted to government spending. This is critical because we have to consider the different ways societies can adjust to a debt and misallocation crisis.

Societies which have nearing retirement age bulges in their population pyramids and thus high levels of social spending, are not able to write-down the capital stock and reallocate it to more efficient users. Instead of quickly defaulting on the political owners (the lenders) and the synergistic political majority boomer parasites, such decaying societies must do austerity on the youth (see high youth unemployment in southern Europe) and confiscate (ZIRP and "bail-ins") from the savers. At the bottom, this failed direction rations the retirements. Armstrong's (and my) 78 year cycle model says the West bottoms 2033 which is 26 years after the decline began in 2007, i.e. a lost generation. Japan is the perennial example, with Europe and the U.S.A. following on cue. These vested interests (lenders and boomers) throw support to all draconian measures which can maintain this stasis. Some examples include the G20 starting to call for hunting down wealth globally, France imposing wealth taxes and capital controls, and the NSA saving all communications so as to know where all wealth is being hidden (terrorists know how to use encryption and Tor, most savers don't). Note Japan's lost generation is almost complete and is nearing the final capitulation and bottoming phase.

Whereas, societies which are not burdened by this vested interest addicted to government spending, can "throw the bums out" and default on the lenders, to get capital flowing again to the efficient private sector.

The developing world (sans China) is becoming short the dollar with dollar bond issues and loans flooding fixed capital speculation and misallocation, thus will have a liquidity crisis when the dollar strengthens as the wheels fall off of Europe first and export (goods and services) income caters. China also has huge debts and imbalances as documented by Michael Pettis et al. Yet what remains after this coming chaos, is Asia a place of relative freedom and the West burdened by politics of wealth redistribution and the police states with breakdown of rule of law that accompany such. Private capital and innovation will leave for where it won't be attacked. China censors the internet, yet the NSA saves everything. The former is transparent to the people and readily subverted by them, the latter is hidden from the people and implicitly supported by the politics of wealth redistribution.

Hey dolt, I was talking about mass market needs, not flaws that don't matter to the masses.

http://esr.ibiblio.org/?p=4955&cpage=1#comment-403134


http://esr.ibiblio.org/?p=4946&cpage=1#comment-403070


http://esr.ibiblio.org/?p=4946&cpage=1#comment-403066


http://esr.ibiblio.org/?p=4946&cpage=1#comment-402900


http://esr.ibiblio.org/?p=4946&cpage=1#comment-402880

I started studying the economics of the world intensely in 2005, when I read a book by Harry Dent that led me down the rabbit hole. I finally ended up realizing that one man understands it all better than all others:

http://armstrongeconomics.com/armstrong_economics_blog/

He and I think almost identically, except I probably disagree on the (at least uninterrupted) rise of China. If  the Yuan will rise significantly in value, then China would move from an exporter to an importer and consumer which could coincide with the collapse of Communist Party system, then China would continue rising after such turmoil. See my comments at http://mpettis.com under my real name Shelby.

I started programming commercially in 1986 when I created one of the world's first WYSIWYG word processors with full functionality (e.g. multi-columns) for a PC (specially the Atari ST which was a contender to the Mac and Windows 3.1 at the time).


I understand marketing. Apparently you don't. I have done it in real life. If digital currencies become widely adopted, it will be because there is some need that is addressed. Once that need is addressed, people will want to use that branded solution, unless there is some other need that could be better addressed.

Unfortunately I think you will find that the needs that are important enough to get people to radically alter the way they conduct their lives is are few and far between.

You get basically one shot at being THE digital currency. That window is rapidly closing, except to the extent that Bitcoin has a fatal flaw that it requires 10 min delay before surety that a transaction won't be doubly-spent. That provides a window of opportunity for the moment. That window of opportunity will closed (taken) by the first currency to fix that. We will discuss that over in your Decrits thread.


You entirely missed the point in the OP about the source of the power vacuum. The system you speak of is actually embedded in the power vacuum. You have to address that power vacuum if you want to alter the system.


There was no circular logic. You missed the point that the demand for debt is not due to the existence or non-existence of debt-based money systems. It is exists because it is exists. You can't eliminate it unless you can make all humans equal all the time.

Bullshit. Switching to a digital currency requires dramatically changing the status quo in regards to money. Don't sit here and tell me that after that status quo is changed it could never be affected again. There is also *nothing* that precludes ongoing currency competition.


And who does debt make humans beholden to? Can we just completely eliminate that from the equation and lay the blame "on the numbers" rather than "on the system"? Seems awfully short-sighted to not even consider the latter.


Arguments that are completely rooted in the idea of debt-based currencies. "The only option to maintain participation in the economy is debt, therefore people like debt." That is a non sequitur. Such simple logical fallacies cast doubt on any further conclusions.

3D printing does metal with sintering. The material strength and smoothness is roughly as good as cast, but not yet as smooth or strong as forged or machined (although the 3D printed cars proves that better geometry obtainable with 3D printing can compensate for material strength).

Also I think there may be advances on the granularity of the sintering. At nanoscale, it might surpass forged and machined.


That doesn't logically follow. Early adopters and greater fools is inherent in all investing, but that doesn't mean that one digital currency won't gain sufficient installed mass, to make competition impossible.

Regardless, it has logically nothing to do with the political power of the 51%.


Booms and busts are caused by the fact that humans love (or feel they need) debt. I doubt this will ever change. See below...


Ah yes we've been talking about the impacts of crowdfunding:

http://esr.ibiblio.org/?p=4867 (my pseudonym is JustSaying there)

However, the reason demand for debt will always be around is because not all the humans can compete and participate in the new technologies perfectly well. They use debt to compensate. And the majority is always behind the technological curve.

Thus you won't be able to prevent debt with a currency design, because debt is desired by the 51%. The political power will route around your attempts.



Please re-read the OP more carefully.


Money can't be controlled by the majority because of the power vacuum described in the OP. Money is not the root of the power structure, so money can't displace the power vacuum.


If it is different, I personally don't believe society will adopt it, because the money we get is what is desired by the outcome of the power vacuum.

In short, the majority will always demand that the government can fund itself out of debt and debasement (thus future taxes, confiscation, and pestilence).

plastics are nothing for manufacturing, metal/ceramics combinations with existing manufacturing lines is where the future is going.

It seems to me as if you are agreeing with my point about currency clones and how if they are incentivized with a pyramid-like distribution, they can only be the norm rather than the exception. Even with perpetual debasement, no algorithm or fixed measure can determine the needs of the "51%".


This is a very apt statement.


We have to get to a Star Trekkian utopia at some point, don't we? In the mean time, a system must be devised to separate the control and creation of money from the elected or unelected leaders. Any system that does not allow for the "51% attack" on the money supply is simply going to get replaced now that the cryptocurrency paradigm exists. It seems as if again you are agreeing with me here, though we clashed on this point in the decrits thread. Co-opted production (government socialism) is not the same as co-opted money creation. I do believe my design has the blueprint to make much smoother transitions through the bust periods, and perhaps slow the boom periods simply because money is not created from nothing. Once money is no longer tied to debt-notes or to strictly limited supplies controlled by a few, how different could the cycles be? There is only one way to find out.

Not a good idea:

http://esr.ibiblio.org/?p=4946&cpage=1#comment-401478

http://www.random.org/
uses atmospheric noise to produce random numbers use this to insert randomness

wtf http://printin3d.com/

1) These are NOT proofs, but opinions IMHO.
2) Second piece is about systems of logic.
How do you know that human's brain operates
according THIS logical system ?

3) As far as i understand it, entropy in/of brain
 is in the form of huge number of connections
 between neurons (and maybe it presents there in some other form). So total entropy of brain
 is likely FINITE.

4) Maybe, it will be possible to build another
 (not brain-like) form of AI with properties
 giving that AI advantages over human's intellect.There are so many directions in AI-related computer science.