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The monetary system has turned modern capitalism into some kind of social lottery system which has nothing to do with value creation and everything to do with s

The monetary system has turned modern capitalism into some kind of social lottery system which has nothing to do with value creation and everything to do with social scheming (playing politics) and dumb luck. It's all about gaining preferential access to a limited number of opportunities and then locking opponents out - The monetary system actively helps capital holders to build moats around their businesses by ensuring that they and their business partners get preferential and disproportionate access to newly printed credit - This creates asymmetric playing fields which are anti-competitive by design. Cantillon effects mean that the further an entity is from the source of new money, the more scarce money is going to be for them. The lack of consistency when it comes to our perceptions about something as fundamental as the scarcity of money is the root of many of our modern problems. People who have access to easy money tend to spend money more easily and in larger amounts and they also tend to produce less. On the other hand, people who don't have access to easy money have to work much harder and produce much more value to get enough money to get by in a world where all the prices are determined by those who earn the easy money.

imtringued 5y ago
>The monetary system has turned modern capitalism into some kind of social lottery system which has nothing to do with value creation and everything to do with social scheming (playing politics) and dumb luck. You have described literally any scarce monetary system that is suffering from a lack of money. When there is a lack of money in the economy people try to get closer and closer to the source of fresh money because the old money has become inaccessible. There simply is nothing that forces money to circulate in the economy. If money was circulating we could do away with the deflation/inflation nonsense. >The monetary system actively helps capital holders to build moats around their businesses by ensuring that they and their business partners get preferential and disproportionate access to newly printed credit What I believe is that banks are simply ignoring small businesses for some inexplicable reason. If banks don't lend to the small guy then he has no choice other than to beg the government to do something meaning welfare or stimulus checks. >Cantillon effects mean that the further an entity is from the source of new money, the more scarce money is going to be for them. The reason why the distance to new money matters is that the distance to old money is growing or infinite. Money doesn't circulate. Government spending circulates money but it has always been considered a hack. Keynesian gold digging is a thought experiment trying to show that even doing the dumbest thing you can imagine is still better than doing nothing. I personally do not care about government spending funded through debt that much because a tax less system with deficit spending wouldn't have any compounding problem and if done properly wouldn't cause significant inflation. The effect of income taxation is much higher. A -> B -> C -> D. Income and sales taxes compound. Money that reaches D has been taxed more heavily than money that reaches A who gets paid by the government. If you get paid millions by the government it is entirely possible that your effective tax burden vs other citizens is 0 despite paying huge income taxes because the taxes you paid are immediately used to pay you again.
- cryptica 5y ago
  This is an interesting perspective and I suspect that this is how most central bankers think about it. But the way I see it, the old money was hard-earned money, it's good money so it should be difficult to earn it. This problem cannot be solved by artificially creating an alternative source of (easy) money (which is what the reserve banks did). By creating this stream of easy money, central banks allowed reckless, unqualified speculators to amass capital; this capital then gave these unqualified, reckless people the right to decide the trajectory of the economy and our lives. Because of this, nowadays, fools and crazy people are running the show. The sad thing is that even if you have an amazing business, you still cannot compete with those unskilled fools who earn easy money because they can always beat you on price. These fools will call this advantage 'economies of scale' and they will try to imply that it's related to production efficiency as a result of scale... but in reality, it has nothing to do with production efficiency or scale and has a lot to do with them having access to larger quantities of easy money due to their proximity to the money printers. 'Scale' is the effect of receiving a lot of money, not the cause. There is a similar inversion of cause and effect when it comes to selfishness and economic efficiency (E.g. Ayn Rand philosophy). Many people see a correlation and mistakenly believe that selfishness is the root of economic efficiency. In reality, an efficient system which produces surpluses will naturally make room for selfish, unproductive people to come in and absorb the surpluses. Altruists are the ones who produce surpluses, selfish people merely capture them.

imtringued 5y ago

>The monetary system has turned modern capitalism into some kind of social lottery system which has nothing to do with value creation and everything to do with social scheming (playing politics) and dumb luck. You have described literally any scarce monetary system that is suffering from a lack of money. When there is a lack of money in the economy people try to get closer and closer to the source of fresh money because the old money has become inaccessible. There simply is nothing that forces money to circulate in the economy. If money was circulating we could do away with the deflation/inflation nonsense. >The monetary system actively helps capital holders to build moats around their businesses by ensuring that they and their business partners get preferential and disproportionate access to newly printed credit What I believe is that banks are simply ignoring small businesses for some inexplicable reason. If banks don't lend to the small guy then he has no choice other than to beg the government to do something meaning welfare or stimulus checks. >Cantillon effects mean that the further an entity is from the source of new money, the more scarce money is going to be for them. The reason why the distance to new money matters is that the distance to old money is growing or infinite. Money doesn't circulate. Government spending circulates money but it has always been considered a hack. Keynesian gold digging is a thought experiment trying to show that even doing the dumbest thing you can imagine is still better than doing nothing. I personally do not care about government spending funded through debt that much because a tax less system with deficit spending wouldn't have any compounding problem and if done properly wouldn't cause significant inflation. The effect of income taxation is much higher. A -> B -> C -> D. Income and sales taxes compound. Money that reaches D has been taxed more heavily than money that reaches A who gets paid by the government. If you get paid millions by the government it is entirely possible that your effective tax burden vs other citizens is 0 despite paying huge income taxes because the taxes you paid are immediately used to pay you again.

cryptica 5y ago
This is an interesting perspective and I suspect that this is how most central bankers think about it. But the way I see it, the old money was hard-earned money, it's good money so it should be difficult to earn it. This problem cannot be solved by artificially creating an alternative source of (easy) money (which is what the reserve banks did). By creating this stream of easy money, central banks allowed reckless, unqualified speculators to amass capital; this capital then gave these unqualified, reckless people the right to decide the trajectory of the economy and our lives. Because of this, nowadays, fools and crazy people are running the show. The sad thing is that even if you have an amazing business, you still cannot compete with those unskilled fools who earn easy money because they can always beat you on price. These fools will call this advantage 'economies of scale' and they will try to imply that it's related to production efficiency as a result of scale... but in reality, it has nothing to do with production efficiency or scale and has a lot to do with them having access to larger quantities of easy money due to their proximity to the money printers. 'Scale' is the effect of receiving a lot of money, not the cause. There is a similar inversion of cause and effect when it comes to selfishness and economic efficiency (E.g. Ayn Rand philosophy). Many people see a correlation and mistakenly believe that selfishness is the root of economic efficiency. In reality, an efficient system which produces surpluses will naturally make room for selfish, unproductive people to come in and absorb the surpluses. Altruists are the ones who produce surpluses, selfish people merely capture them.