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> Try consuming something before it's produced. The process starts with government who can spend money without producing anything. Where do you think the actua

by dnomad 8y ago

> Try consuming something before it's produced. The process starts with government who can spend money without producing anything. Where do you think the actual currency units came from? Money doesn't grow on trees.

adventured 8y ago
The government derives all of its monetary power from the production of the economy they preside over (and get to tax in most cases). Just ask Venezuela how monetary production with collapsed supporting production works out.
- dnomad 8y ago
  > Just ask Venezuela how monetary production with collapsed supporting production works out. Yeah, this isn't how it works at all. Not surprising that people like you don't grasp very basics but try to think this through carefully: Governments can and do regularly summon and dismiss debts out of thin air. It's the very definition of sovereign. Venezuela's problems, like all sovereign debt problems before and since (see Germany, Zimbabwe, Rome), are due to its external dependencies. It has external debts. That means it participates in relationships where it is not a sovereign. Do you really think if Venezuela didn't need to import certain items (and therefore didn't need to borrow dollars) it would have any problems at all? And so no, "monetary power" actually has nothing to do with production capacity.
quadrangle 8y ago
While you're totally right about the government spending, that's where currency comes from, not where capital comes from. Currency in practice is our measure of capital, but it isn't inherently capital. The government could give everyone a trillion dollars, but whoever actually owns land and factories and natural resources will still be the people with capital.
- dnomad 8y ago
  > Currency in practice is our measure of capital, but it isn't inherently capital. In fact it is the only real capital that exists. The rest is just leverage. In a real economy all debts must be settled with sovereign debt ie currency. > The government could give everyone a trillion dollars, but whoever actually owns land and factories and natural resources will still be the people with capital. You've fallen to our own confusion. This is the classic mistake of people who don't understand Marx: the mere presence of assets doesn't make you a capitalist. Everybody has assets. It is only the people with currency (more precisely, the people owed currency) that are capitalists because their assets are sovereign liabilities and therefore must be accepted for all debt settlements. The "inside economy" can actually grow as long as people accept the sovereign debt for payments. The only limit of this process are the sovereign's borders and the existence of foreigners who refuse to be paid with the sovereign debt. This is important, particularly if you want to understand what's actually happening in China, where the entire system is driven by massive amounts of sovereign debt but the country as a whole has zero external debts (including its external assets). Growth, as the last forty years of China's history makes very clear, is not limited by any kind of exogenous investment. Countries don't need to borrow money to grow despite the narrative pushed by the global bankers.
  - quadrangle 8y ago
    I'm no Marxist, but capital is about private ownership of core natural resources and means of production. We use money to allow that ownership to spread around in complex ways. I agree with and accept your points about debts and liabilities etc., and they don't seem to conflict with what I was saying otherwise. Maybe we just agree and are clarifying semantic terms…
    - dnomad 8y ago
      > We use money to allow that ownership to spread around in complex ways. Yes, we agree. My point is that "private ownership" is just another way of saying that people have accumulated sovereign debt. There's no reason the sovereign must issue these debts by the way, the sovereign could directly seize control of all assets and try to satisfy all wants itself, but these days everybody pretty much agrees the sovereign should issue debt and not try to do everything itself. When it comes to growth, (the original question, "Where does the capital come from that flows in to savings?"), all of the debt in the system (particularly the private debts that are created when capitalists borrow and lend money) must be leveraged off existing stock of sovereign debt. If there was no sovereign debt there would literally be no money (in any form) to invest or borrow.

by dnomad 8y ago

adventured 8y ago

The government derives all of its monetary power from the production of the economy they preside over (and get to tax in most cases). Just ask Venezuela how monetary production with collapsed supporting production works out.

dnomad 8y ago
> Just ask Venezuela how monetary production with collapsed supporting production works out. Yeah, this isn't how it works at all. Not surprising that people like you don't grasp very basics but try to think this through carefully: Governments can and do regularly summon and dismiss debts out of thin air. It's the very definition of sovereign. Venezuela's problems, like all sovereign debt problems before and since (see Germany, Zimbabwe, Rome), are due to its external dependencies. It has external debts. That means it participates in relationships where it is not a sovereign. Do you really think if Venezuela didn't need to import certain items (and therefore didn't need to borrow dollars) it would have any problems at all? And so no, "monetary power" actually has nothing to do with production capacity.

quadrangle 8y ago

While you're totally right about the government spending, that's where currency comes from, not where capital comes from. Currency in practice is our measure of capital, but it isn't inherently capital. The government could give everyone a trillion dollars, but whoever actually owns land and factories and natural resources will still be the people with capital.

dnomad 8y ago
> Currency in practice is our measure of capital, but it isn't inherently capital. In fact it is the only real capital that exists. The rest is just leverage. In a real economy all debts must be settled with sovereign debt ie currency. > The government could give everyone a trillion dollars, but whoever actually owns land and factories and natural resources will still be the people with capital. You've fallen to our own confusion. This is the classic mistake of people who don't understand Marx: the mere presence of assets doesn't make you a capitalist. Everybody has assets. It is only the people with currency (more precisely, the people owed currency) that are capitalists because their assets are sovereign liabilities and therefore must be accepted for all debt settlements. The "inside economy" can actually grow as long as people accept the sovereign debt for payments. The only limit of this process are the sovereign's borders and the existence of foreigners who refuse to be paid with the sovereign debt. This is important, particularly if you want to understand what's actually happening in China, where the entire system is driven by massive amounts of sovereign debt but the country as a whole has zero external debts (including its external assets). Growth, as the last forty years of China's history makes very clear, is not limited by any kind of exogenous investment. Countries don't need to borrow money to grow despite the narrative pushed by the global bankers.
- quadrangle 8y ago
  I'm no Marxist, but capital is about private ownership of core natural resources and means of production. We use money to allow that ownership to spread around in complex ways. I agree with and accept your points about debts and liabilities etc., and they don't seem to conflict with what I was saying otherwise. Maybe we just agree and are clarifying semantic terms…
  - dnomad 8y ago
    > We use money to allow that ownership to spread around in complex ways. Yes, we agree. My point is that "private ownership" is just another way of saying that people have accumulated sovereign debt. There's no reason the sovereign must issue these debts by the way, the sovereign could directly seize control of all assets and try to satisfy all wants itself, but these days everybody pretty much agrees the sovereign should issue debt and not try to do everything itself. When it comes to growth, (the original question, "Where does the capital come from that flows in to savings?"), all of the debt in the system (particularly the private debts that are created when capitalists borrow and lend money) must be leveraged off existing stock of sovereign debt. If there was no sovereign debt there would literally be no money (in any form) to invest or borrow.