3 ms·

I might look into the Mandelbrot book. From my perspective if you accept that GDP is the economy's production plus the change in aggregate debt it seems a small

I might look into the Mandelbrot book. From my perspective if you accept that GDP is the economy's production plus the change in aggregate debt it seems a small step to see how debt growth builds during the boom and stops suddenly reducing spending to form the crash. Debt in itself is not bad but in the absence of stabilisation it is likely to cause problems. I quite like his Modern Jubilee idea a.k.a. QE for the public (although it is an alternative to TARP and the QE that took place in the midst of the 08/09 crisis not for now) I'm not sure how a traditional Jubilee would work and how it would stabilise the banks at all. The Jubilee Shares are the Keen policy I don't quite buy.

dnautics 13y ago
Basically it seems to me the distinction between the more contemporary, non-crazy, parts of the austrian school (i.e. not the goldbugs) and the chartalist position is how to deal with it. Austrians would suggest that debt is not fundamentally bad, but dangerous, and the market should price in the risk of debt (which it does not, because of things like bailouts and backed reserve lending), and that any attempt to stabilize the swings caused by lending activities will backfire and create moral hazard (the specific economic term). A modern jubilee might take a form like, legally not permitting any debt to last beyond X years. There is a particular moral hazard associated with sovereign and government debt - Unlike debt accrued by you or I, which is discharged upon our deaths, leaving the lender holding the bag (a risk that should be priced in the loan term), sovereign debt is unlimited. If you believe in the principle of "no taxation without representation" which really boils down to the idea that legitimate government should not act (i.e. spend) without the consent of governed - then is it really morally permissible for future generations to be legally bonded to the profligacy of previous generations? Where are the checks and balances? Can our grandchildren go back in time and vote against spending policies that they are responsible for paying back? So generational debt, which is generally considered to be immoral along the lines of slavery, especially among progressives who see it as a means of keeping the poor poor, is suddenly okay when the state does it. Perhaps unsurprisingly, the state itself is also reverting to this feudal practice. http://www.washingtonpost.com/politics/social-security-treasury-target-hundreds-of-thousands-of-taxpayers-for-parents-old-debts/2014/04/10/74ac8eae-bf4d-11e3-bcec-b71ee10e9bc3_story.html http://www.washingtonpost.com/politics/social-security-treas...

dnautics 13y ago

Basically it seems to me the distinction between the more contemporary, non-crazy, parts of the austrian school (i.e. not the goldbugs) and the chartalist position is how to deal with it. Austrians would suggest that debt is not fundamentally bad, but dangerous, and the market should price in the risk of debt (which it does not, because of things like bailouts and backed reserve lending), and that any attempt to stabilize the swings caused by lending activities will backfire and create moral hazard (the specific economic term). A modern jubilee might take a form like, legally not permitting any debt to last beyond X years. There is a particular moral hazard associated with sovereign and government debt - Unlike debt accrued by you or I, which is discharged upon our deaths, leaving the lender holding the bag (a risk that should be priced in the loan term), sovereign debt is unlimited. If you believe in the principle of "no taxation without representation" which really boils down to the idea that legitimate government should not act (i.e. spend) without the consent of governed - then is it really morally permissible for future generations to be legally bonded to the profligacy of previous generations? Where are the checks and balances? Can our grandchildren go back in time and vote against spending policies that they are responsible for paying back? So generational debt, which is generally considered to be immoral along the lines of slavery, especially among progressives who see it as a means of keeping the poor poor, is suddenly okay when the state does it. Perhaps unsurprisingly, the state itself is also reverting to this feudal practice. http://www.washingtonpost.com/politics/social-security-treasury-target-hundreds-of-thousands-of-taxpayers-for-parents-old-debts/2014/04/10/74ac8eae-bf4d-11e3-bcec-b71ee10e9bc3_story.html http://www.washingtonpost.com/politics/social-security-treas...