Michael Hudson sent this short video which explains the history of debt jubilees and the role of private debt in the rise of oligarchies. This is a useful piece in and of itself and as a tool for persuading friends and colleagues who may be ambivalent about debt restructurings.
142 comments
Comments are closed.
Great video, here is the full documentary (which I’ll now watch):
https://www.youtube.com/watch?v=RT9FfECB8A8
MMT and debt-based money is, even after years of reading here and NEP and Bill Mitchell’s site, is still something where all the implications of it grow on me slowly, as I think about it and debate it more, and one of the most important aspects of it which dawned on me over time, relevant to this, is how debt grows relative to the money supply.
We know that banks create money when they extend loans (a fact which is, unfortunately, hard to get people to accept), and that somewhere in the region of 97% of all money is composed of this debt-based money.
This means the Debt:Money ratio for every new $/€ starts off at 1:1, but interest means that this ratio grows over time, so that Total Debt vs Total Money Supply grows over time, and since interest is compounded, it grows at an accelerating rate.
So you’re going to have the ratio of Debt:Money grow continually over time, and not even inflation will ameliorate this, because both Debt and Money are measured in nominal terms – it’s impossible for Debt not to grow faster than Money.
To sustain this, you must have constant economic growth (which introduces new money as well as debt at a 1:1 ratio, pulling the total ratio closer to this), but even that is not sustainable because debt will still grow faster than economies.
Eventually, Debt will grow to many multiples of the size of the Money supply, until it becomes completely unsustainable, bearing such a load on the economy that economic output is harmed and debt-deflation sets in, and will trigger a crisis (this is the business cycle).
This is inevitable, and the mechanics of this, means there are only two ways to correct the imbalance:
1: Non-debt-based money, which is government creating and spending money (increasing Money relative to Debt)
2: Defaults, for reducing the amount of debt (decreasing Debt relative to money)
That’s it. It’s one or the other, you can’t rely on economic growth as not even that arrests the growth of Total Debt vs Total Money supply.
First: Great succinct comment! Thanks!
1: Non-debt-based money, which is government creating and spending money (increasing Money relative to Debt) JohnB
Yes, though many will quibble that fiat is still debt though and though that argument can be demolished wrt to at least SOME fiat, I won’t bother here. Just don’t be dismayed when the “money must be debt crowd” jumps on you. They are WRONG even wrt fiat. Yeah, I’m looking at you, Calgacus! :)
Moreover, common stock as private money need not have a whiff of debt associated with it as a brief look at any balance sheet will inform since common stock is shares in Equity and not a Liability.
This was a great clip. What you two just said is very logical. But later down, the thread gets so hijacked by T. Greer that I felt decrepit by the time I reached the bottom. Mexico’s et. al’s good comments excepted, of course. For the record today I want to say I think everything Hudson said is an accurate critique of human nature since at least the Romans, tragic as it is, and we need to look at it straight on and do something about it.
Mathematically, as debt growth accelerates, the banks increasingly own a larger % of the wealth… But in practice, the plutocrats plunder the banks and control the wealth.
At the end of this cycle, the market crashes and the big reset comes around.
While the tension is building, most don’t seem to understand that the problem is systemic and everyone is just a cog in this system.
Not long after the financial crisis the IMF announced that austerity for the world economy was in order. Knowing the IMF and how they approach policy I know that this policy had been long-planned as a contingency before the crisis. Thus I believe, that at the highest level of policy circles in the West at least austerity was seen as the way to weather the fallout from the exuberance of the previous few years because alternative #1 was and still is considered to be politically disruptive. Also, the oligarchs are well aware that climate change has to be addressed and the best way to do that is to scale back the world economy.
Should be an interesting few years as the fact that the growth model of economic growth prevalent since the end of WWII is no more. What will replace it is smoke and mirrors “growth” that we see today. The positive part of this (for the oligarchs) is that it will take a couple of decades at least for wealth to be squeezed out of the middle classes who are still largely oblivious to the sorts of issues we face here since the vast majority of people, in the U.S. at least, still have enough money to live, have internet and cable, mobile devices and the endless array of amusements and cheap trinkets to impress each other with.
1) Banks do not create money. They create credit. This is not the same thing. [Entities which create money do not go broke. The money multiplier everyone is so fond of is a bookkeeping error. There is a missing transaction in the multiplier loop which creates the illusion that banks create money.]
2) All money is debt based. It has to be. [In order for a credit to exist, an offsetting debit must exist. There can be no credit (and thus no money) without debt.]
All money is debt based. Benedict@Large
Not necessarily. Common stock is a private money form that has no necessary debt associated with it. Rather, it is a share of the residual of Assets – Liabilities.
And even SOME fiat can be PRACTICALLY debt-free IF:
1) The monetary sovereign NEVER borrows.
2) The monetary sovereign NEVER runs a budget surplus.
3) The monetary sovereign SOMETIMES runs budget deficits.
Then debt-free fiat to the sum of those deficits would accumulate in the economy. Note that I neglect the possible actions of a central bank since that abomination should not not exist.
I know you’re making a technical point but in the case of common stock even that does not apply.
You’re doubly wrong. First, common stock isn’t used as money and probably never will be. Second, common stock *is* debt; it’s owed by the company to the stockholders. It’s not got a specific denomination, true, but that’s exactly why it’s not useful as money. In one way it’s an even more brutal form of debt than bonds; stock can usually be used to take over and loot a company (the basis of Romney’s fortune, as well as many others more egregious than him).
Second, common stock *is* debt; it’s owed by the company to the stockholders. Fair Economist
The stockholders OWN the company minus any liabilities!
Your point is almost as silly as a person saying he owes himself what he owns!
I see that “money must be debt” is a firmly held, near-religious (Church of Mammon, I might wonder?) doctrine BUT IT’S WRONG!
And thus falls the 300+ year reign of the usury for stolen purchasing power cartel, though it might stumble on fatally wounded for a while.
And that’s what comes of a sinner taking Scripture seriously. All glory to it’s Author!
The stockholders OWN the company – beard
Not under the currant equity common stock laws.
Skippy… noone owns anything… they have claims subject to time and space.
All claims are against the Assets; anything left over is Equity and belongs to the shareholders in proportion to their shares.
The shareholders are not in line to claim Assets; they own those Assets minus any Liabilities!
Come on accountants! Speak up if I’m wrong!
Ask Detroit shareholders vs the derivatives holders.
It’s normal and necessary that shareowners take all the hits FIRST, if that’s what you mean, since they must payoff all creditors, in order of precedence*, till no Assets remain if necessary. It’s just like a one-owner business except there are multiple owners.
*There’s a better word but I can’t think of it.
I see you have not done your derivatives homework yet.
I’m more interested in the theory of capitalism so I can point out the hypocritical deviations from its ideals.
I can’t or at least won’t do it all – not with my current quality of life (Hint to God) – though it is quite adequate (Thank you, Lord!) but only for my current efforts which are more fun than work.
Is that you, Gary?
Slumming?
It’s not got a specific denomination, true, but that’s exactly why it’s not useful as money. Fair Economist
1) Every common stock of consequence has a market price in fiat.
2) Common stock money would also have a “price” in the goods and services the issuing company produced which could easily be lower than the fiat price because the company only needs a limited amount of fiat to pay it’s (and it’s shareholders) tax obligations. So why buy more except at a bargain price?
Now please object that the value of common stock is too volatile to be used as money!
In one way it’s an even more brutal form of debt than bonds; stock can usually be used to take over and loot a company (the basis of Romney’s fortune, as well as many others more egregious than him). Fair Economist
Leveraged buyouts use loans from the counterfeiting cartel, the government-backed banking system, to buy the stock of companies. Abolish government backing for the banks and that problem should disappear as well as stock buy-backs, an abomination since the the purpose of a common stock company is consolidate capital for economies of scale, not dissipate it!
“Banks do not create money.” Of course not. It would be counterfiet. And any magically appearing money in the banks vault or electronic books would be considered income and taxed via the IRS. The banks get their money from the Fed or the investment money markets. Trace the cash flow into and out of a bank. It is only obvious to book keepers.
Steve Keen bats back these myths regarding money and credit which are being proselytized by the neoclassical economists (e.g., Paul Krugman):
1) “Loans create deposits” which spend every bit as well as fiat.
2) Borrowing from a counterfeiter (the Fed) to relend is just as bad as counterfeiting itself though technically speaking the banks don’t lend reserves except to themselves, the Fed and the US Government but use them to counterfeit even more, See 1) above.
The game is up! Further obfuscation will not work and will only further anger the victims of it.
Loans don’t create deposits. Loans move deposits from the accounts of a person who is not using its money to the account of a person who wishes to use it. This is why depositors are paid interest, because without the deposits the banks would have noting to loan.
If loans really created deposits the banks would be counterfiting. They’d have no need for depositors. The first thing they’d do is mark up their own accounts.
The quantity of dollars is fixed. However many dollars the government has spent into existence is all the dollars that exist. The fed has created this alternate definition of the quantity of dollars called “money supply.” because otherwise it would have to admit it has no control over the quantity of dollars.
You need to go study how the banking system actually works, Money is indeed created by banks and anyone else who creates a loan that expects to be paid back. When you get that mortgage money to buy the house the depositors don’t give up their claim on their bank accounts, so new money has been created and it only backed by the creditworthiness if the borrower, not by taking away depositors money,
Goyo Marquez is touting the neoclassical party line — the loanable funds fiction.
Opposed to this neoclassical mythology we find the MMTers (Stephanie Kelton), the classical economists with a Marxist bent (Michael Hudson) and the post-Keynesians (Steve Keen).
Yep. Where do they come from? Or where have they been?
I’m too dejected by such ignorance to reply just yet.
Wow!
That’s interesting because I thought I was touting the MMT line a la Mosler, Kelton et al.
I’m pretty sure what I’ve said above is exactly what Warren Mosler says about bank loans. Obviously one of us is mistaken.
Goyo Marquez says:
I don’t think so:
Uh….that’s exactly what I just said. The distinction you may be trying to make is that banks don’t depend on their own deposits for loans. They regularly borrow deposits from other banks to make loans.
But that’s irrelevant to the subject under discussion which is, do banks create money by lending? They don’t, they cannot, it would be illegal for them to do so, and nobody in the MMMT side of things thinks they do.
Banks do not borrow deposits to make loans. They may borrow reserves after the loan is extended, but depository accounts are simply credited. In fact banks don’t actually loan money at all. They simply clear a reserve transaction now in exchange for a series of small payments in the future.
What Ben said.
Your mistake is here:
They regularly borrow deposits from other banks to make loans. Goyo M
Banks borrow reserves from each other, not deposits, which may be many times their reserves.
@ Goyo Marquez
You don’t seem to be able to disabuse yourself of the neoclassical loanable funds theory of money. I know it’s difficult. Maybe this will help:
I for one never found Wray that easy to understand. The person I think who was the real genius in bringing this stuff down to the level of the layman was the old-guard Keynesian John Kenneth Galbraith. His book Money: Whence it Came, Where It Went explains money so that the layman can understand it. And there’s an added bonus: it can be read free on the internet:
https://anonfiles.com/file/7401950f3b2717503553dcfb8b51d10a
Well… perhaps you guys are right, but my point is whether or not reserves are deposits it seems to me they obviously are.
The issue is do banks create money. To the extent that they must credit one account a debit another in order to make a loan, whether that account is another banks reserve/deposits or not, then it is impossible for banks to create money. There has to be an account that balances the loan transaction.
“In the banking system as a whole, loans create deposits, meaning that for each loan made by a bank (bank assets) there exists a bank deposit of the same amount originally created at the time of the loan as that bank’s liability. In short, for the banking system as a whole, loans equal deposits.” Warren Mosler http://seekingalpha.com/author/warren-mosler/instablog
but my point is whether or not reserves are deposits it seems to me they obviously are.
Yes, they are bank deposits at the Federal Reserve and they and physical cash constitute the real money in the economy. But the banks create many times (30?) those reserves in bank customer deposits (bank money) and they can get away with this (usually) because they know their depositors desire only a small amount of physical cash because it is impossible to transact with it outside the banking system WITHOUT risk. And it’s little risk to a bank even if a lot of customers wanted physical cash since:
1) It could borrow it from other banks or
2) borrow it from the Fed.
The loans from either source are safe (assuming the bank has lent “prudently”) because most of that physical cash (or its equivalent in reserves at the Fed) MUST come back to the bank that issued it to payoff the loans the bank created as customer deposits.
“The process by which banks create money is so simple that the mind is repelled.” – John Kenneth Galbraith
Goyo, the loanable funds model is dead. Here is an excellent free online course from Columbia university that explains exactly how loans create deposits and how the shadow banking system with dealer desks inc Eurodollar market works. Professor Merhling runs through the T accounts for all transactions.
https://www.coursera.org/courses?search=money%20and%20banking
Unfortunately the course didn’t consider how the government spends money into existence and taxes it out of existence. But the what Mehrling explains is the basis of MMT. He just stopped short of aggregating the Fed and the government.
I think somehow we’re talking at cross-purposes or perhaps I am totally confused.
But when Mosler says loans create deposits he doesn’t mean loans create dollars he means at the end of the day the balance is zero the loan cancels out the deposit. The liability cancels out the asset, and so on, down through the banking system so that no new money is created.
“In the banking system as a whole, loans create deposits, meaning that for each loan made by a bank (bank assets) there exists a bank deposit of the same amount originally created at the time of the loan as that bank’s liability. In short, for the banking system as a whole, loans equal deposits.” Warren Mosler
I think we may be talking at cross-purposes, or perhaps I’m just confused.
When Mosler says loans create deposits he doesn’t mean they create new money he means they cancel each other out so that at the end of the day there is no new money created. For every loan/assett created there is a canceling deposit/liability so that at the end of the day the total of new money created in the system is zero.
That’s pretty much all I’m trying to say, liabilities=assetts.
Liabilities – assetts = 0,
Loans – deposits = 0
Total new money created = 0
“In the banking system as a whole, loans create deposits, meaning that for each loan made by a bank (bank assets) there exists a bank deposit of the same amount originally created at the time of the loan as that bank’s liability. In short, for the banking system as a whole, loans equal deposits.” Warren Mosler
The accounting is bogus because while the assets are mostly real (except for the missing interest problem) the liabilities FOR THE BANKING SYSTEM AS A WHOLE and to varying degrees for individual banks are almost entirely VIRTUAL. Why? Because hardly anyone desires to deal with physical cash (see my other comment to you) so they leave their deposits (claims on reserves) in the tender hands of the banking system. So real liabilities, except between the banks themselves, hardly exist!
That is the dirty little secret of banking. So L + E = A is almost entirely UNENFORCEABLE wrt to the banks so it’s bogus.
More accurately, the accounting between banks is valid but the accounting with the public is a sinister, government-enabled fraud.
Mosler should be ashamed if understands this but continues to perpetuate the fraud.
Maybe this is a way to think about it.
Imagine a guy goes into a bank and gets a loan. An asset is created for the bank, the loan, a liability is created for the bank, the checking account.
On his way out of the bank Mr. Borrower changes his mind. He walks over to the loan officer and writes him a check, from his new checking account, for the full amount of the loan. The bank pays off his loan and closes his checking account.
Has anything happened? Was any money created? Did the bank make any profit? Did the borrower spend anything? I think the answer to all those questions is no.
Banks aren’t creating money.
That’s the issue not loanable funds theory.
Mere sophistry.
Call it what you will, the banks create purchasing power and DRIVE the population into debt with it.
And they do it via government-priviledge which negates the accounting since it’s a sham.
I understand the need for precision in language but what the banks create is symbolic purchasing power .i.e. “money.” As for the Fed, it creates literal fiat which no one will dispute is money.
Goyo M,
You changed or tried to change channels 5 times in 4 moves – and appear to be here primarily to f with people’s heads.
But if the debit is held by the public and will never “call in” the debt by definition (since it is owed to itself), in what sense is the money really debt-based?
But if the debit is held by the public and will never “call in” the debt by definition (since it is owed to itself), in what sense is the money really debt-based?
Money is never “debt-based” which is a crazy crazy idea. Money IS DEBT. Using “debt” in the fundamental sense “social, moral obligation”, that undergirds all other meanings, understood even in nonmonetary economies. And this debt is constantly being “called in”.
“Debt-based” is always wrong. The words “debt-based” signal not understanding money. Saying dollars are based on bonds is insane. It is like saying the value of the dollar bills is based on the value of hundred dollar bills. As FDR and millions others understood, “government credit and government currency are one and the same thing.” Dollars are bonds. And bonds are “quasi-money” as was well understood 70 years ago.
The debt is constantly called in by the public paying taxes, which are a debt going the other way, using the government debt to cancel a debt of the nongovernment.
Debt and the type of debt called money are always social relations, entirely “abstract” social relations. Of course if one considers the government and the public together, as one thing, ignoring internal social relations, then the internal social relations have disappeared, because you’ve just shut your eyes to them!
Money IS DEBT. Calgacus
Thanks for being so clear!
But you are clearly WRONG since common stock is an asset-backed private money that requires no debt unless you insist that the owners of a company (the stockholders) owe themselves what they own!
Don’t you understand? Both central banking and the common stock company* were invented about the same time, around 1600. We had a choice, share or legally steal. But we could not share wealth and power with the common folks, could we? So we stole them instead, for everyone’s good mind you! Well, now that arrogance is once again biting us in the ass.
*I may be wrong in which case the common stock company was invented far earlier, in Roman times.
‘Money’ is not debt.
Money units are what denominates debt and is used to pay debt.
Money, itself, is a legal, social construct.
However, in a “debt-based” money system, all money must be, minimally, equavalent to debt.
Someone must take out a debt(loan), and at that time we base the increase in the monetary aggregates on the amount of that loan. Which is a debt.
Thus, all money (c.e.) is debt-based.
But money is never, and can never BE, debt.
Money is debt-based for the simple reason that without any new debt, we cannot have any new money.
Look around.
You, and we, are here(*).
THAT’s the problem.
You have it backwards, Cal.
Greenie43: Well, I am just presenting the MMT, FDR viewpoint, which I consider true. While thinking money as “debt-based” is either incoherent or a tautology presented with confusing words. Straightforward, simple, easy, obvious things may look backwards to people who have been taught to think in a backwards, up is down way all their lives. Debt is the primary concept. Money is the derived, eliminable one.
As for FBeard’s idea of common stock as money, there are several replies – common stock as usually considered has never been used as money anywhere, because of the variability of its value. Who wants money that unexpectedly inflates and deflates drastically? Nobody sane. Do bitcoin users have an economy that they use bitcoin to pay for food and rent with? If the “common stock” can be used to buy things from the issuer, then you are just calling a debt of the issuer “common stock” and tacking a probably meaningless equity, gambling component – as if governments regularly ran lotteries based on the serial numbers of notes issued. There might be some cases where it might be useful to think of a state’s currency as equity in the state, e.g. in studying foreign exchange valuation. Related to this last, finally, as Fair Economist notes above, common stock, equity is considered as a debt, a liability of the company, and contrary to FBeard, this is a perfectly logical and sensible, true and correct thing to do, that could not be done otherwise. FBeard, you think of money as debt. You just don’t like the word “debt” and don’t like to use it when the dictionary and common practice says it is applicable, perhaps because you have a over-restrictive non-dictionary meaning of “debt” in mind.
Describing money as ‘debt-based’ is for the purpose of distinguishing the different ways money can be created, and it’s a wording I’ve borrowed from (I think) Ellen Brown; the distinction is this:
Debt-based money: Money created by private banks, created through loans and with a debt attached.
Debt-free money, or non-debt-based money: Money created by government, and directly spent into the economy, without any debt attached.
JohnB:Describing money as ‘debt-based’ is for the purpose of distinguishing the different ways money can be created There is only one way money can be or ever has been created. Somebody cuts a check, prints a note, mints a coin, makes an entry into a ledger or on a keyboard. Just records a number somehow. That’s all.
Debt-based money: Money created by private banks, created through loans and with a debt attached.
Bank money is not created “through” loans and does not have “a debt attached”. Attached to what? How? With glue?
Bank money is usually, but not necessarily, created along with, at the same time as a bank loan. But that is not at all the same thing as “through”.
Debt-free money, or non-debt-based money: Money created by government, and directly spent into the economy, without any debt attached.
It is terrible and confusing terminology. The word is wrong because the concept is wrong. It is not MMT. It is not even mainstream, thankfully. The AMI, Zarlenga etc propagate their confusions with this confused nonstandard terminology. You had it right, were completely technically correct above to start with. Banks certainly do create money, bank money. Most of the USA’s money is bank money nowadays. Benedict’s reply was wrong; it used nonstandard terminology. Read Mitchell-Innes above all, many times, or Wray, e.g. his primer to start with. MMT is so much simpler than the crazy confusions of the mainstream or the AMI. That’s why everybody understands MMT from birth, and has to go through a lot of indoctrination into insanity.
The money the government spends IS the debt. Bonds are only microscopically different. Bonds are just dollar bills with a date in the future on them. They’re just another kind of money. A better money for “the better people.” That’s all. Thinking they are magically good (mainstream) or magically evil (AMI) is nuts. Next they’ll have crazy theories about how Real Money must be printed with the blood of virgins (mainstream) or of sluts & players (the monetary “reformers”).
…common stock as usually considered has never been used as money anywhere, because of the variability of its value. Calgacus
That, like all other asset values, is driven by our current money system, which LENDS rather than SPENDS most purchasing power into existence. Ask yourself if the real desire for the goods and services of a company is likely to be as volatile as its stock price?
Who wants money that unexpectedly inflates and deflates drastically? Nobody sane. Calgacus
Correct. But that will mostly go away when the current, insane money system is abolished.
If the “common stock” can be used to buy things from the issuer, then you are just calling a debt of the issuer “common stock” Calgacus
Wrong! Does a store owe me anything or does it agree to give me goods in exchange for my money? The same applies if the store’s common stock is accepted for its goods and services.
and tacking a probably meaningless equity, gambling component Calgacus
It’s our current money system that makes much investment a gamble.
Related to this last, finally, as Fair Economist notes above, common stock, equity is considered as a debt, a liability of the company, Calgacus
Then why isn’t it listed under Liabilities? Do you not understand basic accounting? How can one owe himself what he owns?! He already has it (minus any liabilities)!
Like I said, you “money must be debt” guys appear to be in a religious cult, apparently serving Mammon.
The incredible irony is that I have to lecture Progressives on the virtue of sharing!
Btw, some DO desire an inflating and deflating money supply and greatly profit thereby.
But it’s one thing to profit from evil (unless one is eliminating it such as doctors and dentists do) though that is pretty despicable but those who deliberately cause it are lucky they have not yet faced Judgement.
haha. money multiplier. well, they had to call it something, and with how everyone interchanges terms like credit, money and hybrids like debt-money, maybe they just got lazy and settled on “money multiplier”.
reminds me of the joke “what is red and green and goes round and round?”
1) A Frog In A Blender.
2) Money And Credit In The Economy.
3) An MMTer Chasing A Dollar Bill Around The Economy.
All three answers are correct.
Then, the question no ones wants to ask – why does money and credit go at different speeds in the blender-economy?
So what are you saying, that the velocity of money explains it all, and all we need to solve our economic problems is to learn how to control the velocity of money?
Well, no. My basic notion is you solve the economic problems, then everyone finds out the money behaves just fine.
Anything else confuses the issue.
Not that it isn’t fun playing with confusion.
But I guess if you wanted to take a velocity of money centric view – one such solution would be to steal from the rich and give to the poor and that would get things circulating in the economy.
So let me try to get this straight.
If we consider the following three propositions:
You’re arguing in favor of (1)?
1.5 – it should play second fiddle to the real economy. it’s the grease and the scorecard. Sometimes you may even have to borrow it, but not always.
Banks do not create money. They create credit. This is not the same thing.
Benedict, that is not standard terminology, either in MMT or anywhere else. A semantic point, but many people find things confusing. If they’re used to confusing, backwards complicated thinking, clear, straightforward and simple dazes them. Unusual terminology doesn’t help.
Credit is not something particular to banks, nor money to governments. That’s not how the words are used ordinarily, and quite properly so. Banks certainly do create money. Banks don’t create government money. Banks create bank money. Both creations are cases of banks or governments creating credit: Bank money and government money are types of bank credit and government credit, respectively. Everything is a form of credit=debt. How could it be simpler?
FYI
While money must be minimally equal to debt as all money is created as a loan debt, the actual debt(P+I) that is created is greater than the money(P), and, as interest gets paid, an greater burden of debt is born.
But it is important also to recall that 99 percent + of money is issued as a debt, as currency must become debt in order to enter circulation through the private banking system.
So, although we like to say that currency is a liability of the government or the central bank, it is actually printed and distributed by the GUV to the FR banks at the cost of doing so – virtually no cost – and then issued into existence as a debt by the Member bank of the FR bank that puts it into circulation.
In the UK, the CB is publicly-owned and under the UK system, currency is issued with seigniorage to the state. But here, this is not the case.
99 percent of issuing seigniorage goes to the private bankers.
Thanks.
Ah, my comment really took-off while I was away :)
F. Beard: Yes, good point that ‘money as debt’ (as in, money is debt) does potentially confuse this (though not make it untrue); I still need to learn more about that line of arguments though, don’t know it well.
Moneta: Yes, exactly how I see it.
Benedict@Large:
On point 1, true – but it’s just easier to say ‘banks create money’, because going into the technicalities (I quite like Steve Keens writing on it here) doesn’t improve understanding of it in any way, only complicates it, when the basic point I’m trying to make is true.
On point 2, that is true only as far as banks are concerned – government can create and spend money too (and that is debt-free). In general, when I talk about debt in my original comment, it’s primarily about debt that bears interest.
Goyo Marquez: Check the link I posted above, and also this from Positive Money (quotes some very notable people); these are the standard links I use when I try to give backing to this argument in debate.
Ah, my comment really took-off while I was away :)
F. Beard: Yes, good point that ‘money as debt’ (as in, money is debt) does potentially confuse this (though not make it untrue); I still need to learn more about that line of arguments though, don’t know it well.
Moneta: Yes, exactly how I see it.
Benedict@Large:
On point 1, true – but it’s just easier to say ‘banks create money’, because going into the technicalities (I quite like Steve Keens writing on it here) doesn’t improve understanding of it in any way, only complicates it, when the basic point I’m trying to make is true.
On point 2, that is true only as far as banks are concerned – government can create and spend money too (and that is debt-free). In general, when I talk about debt in my original comment, it’s primarily about debt that bears interest.
Goyo Marquez: Check the link I posted above, and also this (link triggered spam filter, type into Google “positive money proof that banks create money”) from Positive Money (quotes some very notable people); these are the standard links I use when I try to give backing to this argument in debate.
Dr. Hudson always appeared on the extraenvironmental podcost recently, discussing the same topic at much greater length (1 hour+). Although most people fail to appreciate the sheer awesomeness of extraenvironmentalist for some reason. hmmm
This video is so embarrassingly wrong in its presentation of ancient history that I am surprised to see it endorsed here.
For the last 1,000 years it has been a cute trick to narrow in on whatever political issue concerns you the most and then declare it is the reason the Roman Empire fell. It is less common (because it is less coherent) to also claim that the very same vice is what made the empire rise. But this one is really novel. I am not aware of a single classicist or Roman historian who says that the Achaen war or any of the four Macedon wars were waged because the Romans wanted to get rid of kings who wanted to free the people from their debt.
The idea that irreversibly concentrated wealth was a Roman innovation is so silly that it would be a waste of time for me to drag out the dozens of counter examples. But even the idea he implies is false – the Roman Empire was founded on one of the greatest redistribution of wealth of the ancient world! Since Ronald Syme published his Roman Revolution back in the 30s it has been recognized that the dissolution of the republic and its replacement with empire was first and foremost an economic revolution. The old oligarchy was crushed, their possessions seized by the state, and their wealth divided among the soldiers of Augustus. More wealth was taken from the rich and given to the poor during Augustus’ bloody war than has ever happened in American history. (Relative numbers, of course. Though I suppose that the US Civil War might have come close…)
Then you have other quotes that are not wrong, just disingenuous:
The Gracchi brothers began their push to redistribute land into the hands of the peasants in 133 BC. The last Roman emperor was deposed in 476 AD. These two dates are six centuries apart. America has not existed for as long as the Roman empire thrived under control of the oligarchs. To speak fo these different times with the same breath – it is astounding! It is also one of the great errors of the presentation. First we are told of the evil Romans who conquered in first century BC to stop the forgiveness of debts; the we are told that if we don’t stop them, today’s oligarchs will bring about the fall of our civilization. But look at the chronology – that happened before Rome reached the height of her power! All of those great buildings we know today, the trade and civilization that would stretch from Egypt to Britain, all of that was in the future. The film does not offer a cautionary tale but a plan for success!
Poorly reasoned, historical uninformed polemic. Maybe the last half was good. I could not stomach enough of the first half to find out.
I’m not sure how correct is Hudson but, reading your comment, Greer, I’m quite sure that you are quite wrong.
Regarding the first point, it is well known that states like Athens or the Sumerian cities performed debt-cancellation schemes in order to return things to certain normality, something Rome did not (at most they forbade self-sale as slave for indebtment).
On the second point, I’m pretty sure that Hudson is not thinking of the Gracchi as much as in the late Christian-Roman process of feudalization, which effectively concentrated the land among the oligarchs and made free citizens “coloni” (what would later be known as “serfs”), totally dependent of their landlord masters and effectively quasi-slaves, triggering the greatest class war of antiquity: the Bagaudae, which shattered much of the Western Empire and were probably the most direct trigger in its collapse (via Germanic opportunistic invasions).
Wether this process of land concentration is rooted in the early Empire or even the Republic is for sure debatable but the real big process of land concentration is the one that brought the Empire to feudalism.
Sadly it seems that we don’t study the Western Roman decline and collapse with as much attention as its rise.
As for the time frame, we must not forget that things happen much much faster today (because Capitalism is extremely decodifying, rendering nearly everything obsolete in very short spans of time – and I’m not thinking just on computers and home appliances but especially on values and institutions). So I would say that any expectation that the US Empire will last nearly as much as Ancient Rome (never mind Ancient China, a historical example too ignored) is absolutely naive. In fact, I’d rather judge on the examples of the previous European hegemonic empires, whose effective lifetimes were of about one century or a bit more.
I have been told that serfdom played a large role in the fall of the Eastern Roman Empire as well.
I’d say that the ultimate trigger was the Hellenization of the Empire (largely driven by Christians): when Constantine created New Rome (Constantinople) and prepared the division of the Empire in two, Rome as such (Italy, the Western Empire) lost most of its revenue and was sentenced.
In parallel the process of feudalization began, which did not have such a dramatic effect in the (much wealthier) Eastern Empire (which lasted other 1000+ years) but really made of the Western Empire the rural and extremely hierarchical society that we find in the Middle Ages.
Many parts of the Western Empire were relatively free of latifundia, with a society dominated by free farmers. These areas, first Gallia, later the Basque region, rose up in revolt, either facilitating the most independent Germanic invaders (Vandals, etc.) or being confronted by those who pacted with Rome (Visigoths, Franks). The Bagaudae succeeded only in the Basque area, being surely the reason of the survival of the Basque language until present day as well as the free farmer “republican” society that persisted here until industrialization.
When Gaul, Hispania and Africa were lost, the residual Roman Empire of Italy signed its own dissolution under Odoacer.
The structural mechanism was Christianity and its effect on tax collection. The conflict over Christianity wasn’t the religion but that Christians wouldn’t submit to being a state owned church. In the Roman world, any person who wanted to be important had to pony up and spend a fortune on religious ceremonies which required festivals and put the money in the coffers of the state treasury.
Motive is difficult to tell, but its amazing how Augustus’ push for stronger religious fabric in society were followed by higher standards of living and overflowing treasuries. The presence of widespread Christianity was followed shortly by sinking tax collections and the debasement of currency.
The festivals would-be important Romans put on to become important Romans did have the effect of driving up wages because they had a demand for labor which could be scarce that day, so to make sure they had the people, they had to pay through the nose.
and the debasement of currency. NotTimothyGeithner
If fiat is ever “debased” it is when it is unnecessarily expensive!
Why? Because fiat is backed by the taxation authority and power of government and can have no greater backing. Instead, someone’s favorite shiny metal, such as gold, is backed by government when it is used to make fiat.
Kudos to the Christians if they knew this and it’s not unreasonable that they did since they no doubt knew Matthew 22:16-22 (“Render to Caesar …”).
I don’t dispute that Rome differed from Athens in this regard. What I dispute is that this was in any way connected to the Roman Senate’s decision to wage war against Macedon or the Achaen league. This is simply not an accurate way to portray Roman imperialism or the forces driving it.
I do not think this is true. Peter Turchin is fond of pointing out that over 200 different theories have been proposed to explain the fall of the Roman empire. I wish that many had been proposed to explain its rise! (Or more importantly for our day, how the Republic denigrated into civil war and ended up with an empire. If I was to find events in classical times that had parallels for our days, they would be it. )
As for whether the Bagaudae can be blamed for Rome’s fall – possibly? There are a lot of theories for why the empire and tumbled and a true engagement with their various strengths and weaknesses is beyond the scope of this comment thread. (Maybe I’ll write an essay on it some time over at my place? Heaven knows I am fond of long essays on historical thingamabobs and wonders….)
But looking at the most influential and/or prominent books of the last two decades, no one seems to put the Bagaudae front and center (probably because the Bagaudae rebellions were worst during the 3rd century crisis and the Roman Empire did not finally topple until the 5th.)
A quick breeze through:
J. Tainter Collapse of Complex Soceities — Uses Rome as a case example. Suggests that complex societies over come problems through social complexity. Social complexity faces the law of limited returns, however, and eventually the system becomes so clogged that additional complexity cannot be added to it… and then things collapse. (Compare the size of the average bill written in 1930 with the average bill written today, and then think about how much harder it is to fix one of these 10,000 page bills than it would be something under 30 pages… and you get the idea.)
R. MacMullen, Corruption and the Fall of Rome — Argues that Rome fell because in the 3 and 4 centuries (‘specially under the Dominate) the patronage system that had once held the empire together fell apart, and both gov. offices and duties that were was once the reward of loyalty were sold for $. The emperor slowly lost control of his government and power was localized to local power holders with the money – making any centralized response to military crises impossible.
P. Heather,The Fall of the Roman Empire: A New History — Probably the most influential theory right now. Heather suggests that interaction w/barbarians on Roman frontiers led the barbarians to become politically centralized and more technologically advanced. Eventually they reached the point where they simply overwhelmed the empire. (Also interesting in his interpretation is his emphasis on the Roman ‘revival’ during the Dominate. The empire, he contends, was just as strong in 400 as it was in 100).
A. Goldsworthy, How Rome Fell — Goldsworthy contends that civil war did the empire in. But not all civil wars – specifically the ceaseless wrstling over the throne. This caused the emperors to structure both the military and the government itself in such a way to shield them from potential rivals and stop rogues from having an independent power base. It also made the military and government next to useless.
P. Turchin, War and Peace and War: Life Cycles of Imperial Nations —- Turchin suggests that all imperial states go through demographic-economic cycles of equality-inequality, elite over production, and social cohesion. Barbarians became strong just as Rome was at the bottom of one of these cycles.
Anyways, my point in going through all these is not that increasing debts in 3rd century had nothing to do with the fall (but it is worth noting that the same century saw horrible inflation and debasement of the coinage – not something we usually associate with debt), for I suppose it is possible. With the number of theories out there anything is possible. But none of these explanations even touches the debt question. Those presenting theories that are not commonly accepted need to be prepared to provide evidence that their novel interpretation is better than the explanations most experts in the field use.
Same thing works for the makers of the film. If they argue that citizen debt was at the center of the fall (and the rise!) of the Roman empire, then they better have more evidence than mere assertion. Otherwise they are better off saying nothing at all.
On this we agree! In fact I will go further: any comparision between the economics of ancient empires like Rome and modern post-industrial states like America are fundamentally misguided. The dynamics of wealth creation in the two systems are simply not the same.
T. Greer says:
Nonsense!
You make these empirical claims that are demonstrably false.
Why is that so? Could it have something to do with the fact that your particular brand of special-interest history is completely in the service of the controllers and possessors of capital?
Let’s take Peter Turchin, for example. His theory most definitely “touches the debt question”:
I haven’t said that the Bagaudae caused the collapse of the Empire, actually my whole point was that moving the capital to Constantinople and dividing the Empire in two was what caused the complete economic destabilization of the Western Empire. The Eastern Empire did not collapse, only much later. Why? Because it retained most of the economic base of the original Roman Empire, which was in the East.
Once Rome (i.e. the Western Empire, whose capital was soon moved to Ravenna anyhow) lost all that economic base, it was finished. The Bagaudae and the Germanic invasions were just the unavoidable last nail in a coffin ready for a century or so. Constantine “the Great” sealed the fate of the Western Empire with his pro-Hellenistic and pro-Christian orientalizing policies.
As for the rise of Rome, a key factor was that they were a frontier polity (with plenty of lands to conquer and plunder in the early period, notably Hispania and Gaul) and very able to close ranks when necessary. One could well say that their, unusual, devotion for Mars, god of war, was what brought them to their success. They were indeed very much lucky that their main rival, Carthage, was much more divided internally, because otherwise Hannibal would have won the war no doubt and we would be discussing instead (I guess) the Carthaginian Empire instead. This was one of those turning points of history that could have totally changed it all.
In spite of being quite martial and disciplined, they were otherwise very eclectic and took ideas from every other neighbor: architecture from the Etruscans, navigation from the Carthaginians, culture from the Greeks… They also founded their social peace in a primitive form of welfare (panem et circensis… and a stable state-subsidized price for opium). Like any other polity, they would not have survived if the masses starved in front of the Capitol.
But then of course they were merciless and, as far as I know, also institutionally very corrupt (the whole system worked on graft and privilege). I wouldn’t inspire anything on that empire: whatever many want to believe the most durable legacy has been polities like Spain or Italy, terribly weak internally, with bouts of ephimerous glory, because of such a Latin cultural legacy. Somehow it worked in the Iron Age because there was no real alternative, it seems. I would say that it carried since the beginning the seeds of its own destruction, just that with a bit of tolerance here, a bit of welfare there and many bits of the most brutal repression there, they managed to remain afloat in a world where they had no real challenges anymore after Hannibal (the late period and Byzantine wars with Persia were almost ritual, much like the Aztec flowery wars, posing no real challenge beyond the unavoidable loss of Mesopotamia).
“Social complexity faces the law of limited returns, however, and eventually the system becomes so clogged that additional complexity cannot be added to it… and then things collapse”.
Makes sense.
“… offices and duties that were once the reward of loyalty were sold for $”.
That only means that the Empire was bankrupt. And it was bankrupt because it had lost the East.
“The empire, he contends, was just as strong in 400 as it was in 100”.
No way. I’ll tell you a historical anecdote from the local history: in 407, Basque troops commanded by Romans (they have names but I forgot them) defeated the Vandals (et al.) at the Pyrenees. In 409 those Roman officers were back in Rome facing serious trouble with the Visigoths and nobody here seemed to care or to be able to stop the Vandals a second time: they passed by and conquered Hispania (not our lands though).
Around 400 the Western Empire was already in the verge of destruction and it was quite obviously very weak in the military aspect and internal cohesion. Soon after, in 418, the Romans, in order to save Italy, gave the Goths effective power over all the West.
Waiting for Odoacer to sign the end of the Western Empire was a mere formality after that.
All your sources seem a bit Toynbeean, except maybe Tainter, who seems to go a bit further. None of them even considers the Marxist approach, so important in the discipline of History. It was an economic problem: Rome had become really rich with the conquest of the Eastern Mediterranean (which was relatively easy for them). The real economy was there and paid taxes to Rome, once detached, Rome lost the financial essence of its empire, much like when Britain lost India. The rest is just the epilogue.
One may wonder on how such a stage was arrived to: why would the Romans detach half of their empire, the richest part? A reason is that everybody had become Roman and Rome itself had therefore lost its centrality more and more. Rome was not anymore just the city or even Italy but the whole Empire. Therefore the Greeks (and among them the Hebrew/Christians) had much greater power than before, and they also had the money to attract the seat of power to their homeland, and then detach the most burdensome areas of the underdeveloped West, not anymore so interesting once the gold had been extracted and Rome/Italy was not the priority to defend.
A similar co-opt strategy was attempted when Venice conquered and plundered Byzantium many centuries later but the Venetians declined to move their capital to Constantinople instead.
For the last 1,000 years it has been a cute trick to narrow in on whatever political issue concerns you the most and then declare it is the reason the Roman Empire fell.
Thanks for this reminder and the rest of your comment, T. Greer. I do find it useful to read and listen to Michael Hudson but whenever he’s talking about ancient history it sure seems like he’s trying to pull a fast one on his audience.
So concentration of all wealth and all political power into the hands of a tiny ruling oligarchy is the ticket to success?
In War and Peace and War Peter Turchin traces the inexorable concentration of wealth in Rome into fewer and fewer hands.
The “richest 1 percent of the Romans during the early Republic,” he writes, “was only 10 to 20 times as wealthy as the average Roman citizen.” In the years leading up to the overthrow of the Roman monarchy and the establishment of the republic in 509 B.C.
Now compare that to the inordinate inequality which existed 900 years later:
from Mexico:
I haven’t read my Roman history in awhile but that seems only partially right. The 5th century BC saw a relative decline in Rome’s power from what it had been under the Kings, but even though it may have been more equitable economically (I will not say equal) politically ALL of the power was in the hands of the patricians. There were at least ten instances of agitation for land redistribution in the 5th century that were completely ignored by the patricians who were poorer than their descendants but politically more secure against attempts to redistribute land or cancel debts.
367 BC is supposed to be like “year zero” for the Roman poor because in that year a law was passed which canceled part of the debt held by Roman citizens and placed a limit on how much land the wealthy could occupy at any given time. Although enforced originally in time this law was ignored as Rome expanded throughout Italy and conquered her enemies. The Senate made some of this land “ager publicus” (public land that anyone could use), while on the frontiers it planted colonies of Roman soldiers as well as individual allotments called “viritane settlements.” So the elite was not completely opposed to parceling off land to its poorer citizens as long as Rome’s territory (and presumably its economy) was consistently growing.
There are several factors which may account for the decline of the small peasant by the late 2nd century BC. First, there was possibly a large population expansion in the decades after the Second Punic War (indicated by Livy’s census records, which may or may not be accurate), which if true means that there was a lot more pressure put on the lands of poor and middling farmers. Romans used a system of partible inheritance so the next generation would have seen many of their lands divided up and getting smaller. This is inconsistent with what Plutarch and Appian say led to the Gracchi, which was a combination of population decline, rather than growth, falling numbers of citizens in the property-based militia army and the growth of slave labor.
This is where things to start to get really complicated because the evidence of what happened in the early 2nd century contradicts Plutarch’s and Appian’s reasoning for the laws. It’s possible that the conquests of Epirus (167 BC), Corinth & Carthage (146 BC) brought in large numbers of slaves into Rome to replace a declining peasant class, but I think it’s more likely that the slaves were brought into areas on the coasts of Tuscany, Latium and Apulia that had become malarious and pushed out whatever peasants used to live there. The owners of these estates never had to visit them themselves and could replace the slaves if needed because the supply was so large.
In any case, it is clear that by the end of the 2nd century BC that wealth inequality in Italy had been growing for quite some time and was aided by complex legal instruments that favored the rich. In particular, see the agrarian law of 111 BC which undid all of the popular Gracchan legislation. http://avalon.law.yale.edu/ancient/agrarian_law.asp
The thing that the late Roman Republic did have, and which the modern United States does not, is a fractious and violent divide between members of the oligarchy, starting with the Gracchi and continuing with Marius, Sulla, Pompey, Julius Caesar, Mark Antony, Augustus. America has no such divide and its oligarchy seems to have developed a much more focused class consciousness than was the case in late Republican Rome.
Just in support of Mexico, I read a scholarly article last year by a professor at Stanford comparing revenues and expenditures from the Han Dynasty to the Roman Empire. His finding was that the tax base of each empire was similar both as a percentage of extraction (perhaps 5% of GNP went to the State in taxes) and in raw size (well within one order of magnitude). He found also that Roman emperors paid their top military and political officials (already at least rich equestrians) much more than Han emperors paid their underlings. So money in the Roman Empire flowed to the top and stayed at the top much more than it seems to have under the Han.
T. Greer says:
This doesn’t square with anything I’ve ever read. Most historians I’ve read say something more like the following:
As an internally productive economy, Carroll Quigley argues that Rome peaked at about 200 B.C. This happened because by “200 B.C. the citizen-soldier and the family-size farm were both beginning to vanish from Italy.” These were replaced by the “great estates.” “In this way,” he explains, “many persons with no direct knowledge or interest in farming became owners of latifundia worked by slaves in charge of a steward.”
After the economic decadence set in the “attributes of an Age of Conflict became clear: class conflict, imperialist wars, irrationality, and declining democracy.” This shift, as Quigley argues always happens when the internal economy stagnates or goes into decline, gave “an increased role” to a “militarized system”:
@ T. Greer
You seem like a well-read connoisseur of history and skilled narrator. I asked the following as a student. Is there any time or place in history that economic activity has been able to satisfy the demands of compound interest for any sustained period?
Oh yes, there was no concentrated wealth v. Cicero, Pompey, Crassus, and ol’ mass murderer Gaius Julius Caesar…
It stayed massively concentrated until one Sicilian ‘lord’ Bennedict created his order on Mt. Cassino, with the permission of another, Gregory the ‘great’.
And how did the Gracci brothers make out? Both assasinated by their ‘betters’, those wonderful elite types.
I agree with previous comments that the ‘Fall of the Roman Empire’ debt premise is debatable. Collapse of civilizations is a contentious topic. What I do find interesting is the coming together of separate strands of academic enquiry around the notion of debt jubilees both historical (Hudson, Graeber) and modern (Steve Keen), and how this maps onto Harvey’s account of the problems of surplus capital. With the accummulation of masses of capital via the credit creation process, financial institutions have backed themselves into a corner. There is so much debt/money sloshing around the system, that these institutions are rapidly running out of the means to grow their accumulated financial wealth. Without growth, capitalists face systemic collapse, hence the drive to privatize public services, and open up new opportunities to grow debt. Is it possible that we need a debt jubilee to save capitalism from itself?
Write off the debt and there go the pension plans!
Do you write off parts of it and affect only some pension plans or be fair and make sure all pension plans see defaults?
But the same people who are calling for debt jubilee are also asking that pensions be preserved… so do we close off all pension plans, default on the debt and pay-as-you-go?
Steve Keen’s “A Modern Debt Jubilee” would enable debt to be PAID off so pensioners or their agents would have real cash to invest or honestly lend.
It’s government-backed credit creation, a form of legal counterfeiting, that is the problem since it DRIVES people into debt.
Gee wiz, people! Are we going to be tyrannized by bogus, unjust bookkeeping entries? When all that’s needed is reform and restitution with new fiat?
Just bookkeeping!!! Bookkeeping is a HUGE deal. It’s at the root of the checks and balances. If everything could be changed at the drop of a hat, our problems would be even bigger.
We can probably devise a better system but any systemic change will involve pain for some group. For some reason, many people believe that change can be done without anyone getting shortchanged in the process.
Bookkeeping by the banks is bogus because while their assets are quite real the liabilities of the banking/credit union system AS A WHOLE are mostly virtual since we have no real alternative for the risk-free storage of and transactions with our fiat apart from the bank/credit union cartel.
Moreover, a temporary ban on new credit creation would allow a huge amount of new fiat to be metered out to the population to fill the deflationary hole in the money supply that would otherwise occur.
For some reason, many people believe that change can be done without anyone getting shortchanged in the process.
Monenta
It is possible. We have a one-time opportunity to bailout the entire population with new fiat WITHOUT significant price inflation risk by banning further credit creation, at least temporarily, and metering the distribution of new fiat to just replace existing credit as it is repaid. That process could continue until all deposits are 100% backed by reserves since the new money, as far as the banks are concerned, would sit “useless”* in Federal Reserve accounts.
*Not entirely since it could back 100% reserve loans since they are NOT credit creation (But if the banks can’t embezzle they are not happy!) And the new reserves should be adequate for honest, 100% reserve loans.
Moneta says:
You damned right it will.
And in addition to stipping the princes of transnational capital and their paid liars of all their ill-gotten gain, it is absolutely imperative that we start decorating lamp posts with them.
Anything short of that and it will not be possible to put a stop to the social pathology which has consumed us.
Wrong approach!
There is little necessary pain and threats will only make the opposition dig in their heels and create a tremendous amount of UNNECESSARY pain for which the Lord will hold us accountable.
But the wisdom that is from above is first pure, then peaceable, gentle, and easy to be intreated, full of mercy and good fruits, without partiality, and without hypocrisy.
James 3:17 KJV
Well I suppose then that FDR took the “wrong approach” too, because here’s what he had to say on the subject:
FDR saved the accursed banking system to live to loot another day.
Tough talk is no substitute for wise action. A Steve Keen bailout would have worked then too and would have been wildly popular. Instead, new fiat was used to kill 50-65 million people in WWII and waste Europe.
Nice ad hoc rescue.
But I’m not falling for it, because we weren’t talking about whether FDR moved the Overton window back to the center or not, but about the merits of having just social norms along with punishment to enforce and stabilize them.
Well, here’s the problem:
How does one regulate theft? You give the banking system as a whole the right to steal and but then say “Don’t be greedy!”, “Don’t wreck the economy!”, etc. How naive can one be?
Some banker said something equivalent to “When the band is playing, you’ve got to dance to the music.” Another said something to the effect “We need to take away the punchbowl before the party get’s out of hand.”
So our economy is the equivalent of a drunken game of musical chairs?! Who ordered that?
But F. Beard, you don’t control child abuse by doing away with children.
Credit creation is INHERENTLY a private matter since the ability to repay stolen purchasing power plus interest to the original thief is morally irrelevant. And government-backed credit creation is THEFT. Ask any redlined black person before the practice was made illegal. It’s no less theft that the so-called less or non creditworthy are now the victims.
And it’s unnecessary! A monetarily sovereign government has absolutely no need for banks and as for the private sector, let it learn to SHARE rather than steal!
@beard… That’s all well and good if your basic inputs are totally sourced in country and all negative externalities are realized.
You can’t just smash down some esoteric ideological template down onto a – billions of years old – dynamic system… because… by golly it was written century’s ago.
skippy… Hint… Currently our species problem set is unique and with out prescient, yet, we have to transition to the next paradigm – with out completely destabilizing the currant paradigm.
And then there was Sydney Smith, the seminal British “Radical” and probably the greatest parliamentarian and advocate of popular democratic governance the British ever produced:
If I say, Give this people what they ask because it is just, do you think I should get ten people to listen to me?
Sydney Smith
But our current situation is NOT a zero-sum game and it’s a mistake to portray it as such. Instead, almost EVERYONE stands to lose, including the banks themselves, and so we should ALL be for reform and restitution.
You know, F. Beard, you have a heart bigger than Dallas. And that’s why we all love you so much.
But what you’re touting here is what Nietzsche was so critical of Christianity for. It is what he called the “crucifiction complex” — an orgy of passive nihilism.
Herbert Gintis et al sum it up in more technical terms:
Granted, a well-functioning society takes all types to make it work, including saints like yourself. As Peter Turchin explains, the behvioral experiments
But here’s the rub: all that touchy-feely stuff has its limits. As Turchin goes on to explain:
Of course people love and cherish the saints (e.g., you and the Rev. Martin Luther King) more than they do the more belligerent types (e.g., Reinhold Niebuhr, Malcolm X and myself). But that is a price I’m willing to pay.
My heart is not big at all!
I finally have a relatively comfortable, secure but very modest life, and I want to keep it! If the economy goes down I do too! That would not be so bad except I’m finally in love with someone who (I have solid reasons to believe) loves me back and I hope for at least 20 good years with her! So forgive me if I selfishly seek to delay the End for a few centuries. :)
Plus, I don’t hate bankers but I hate banking with a passion, to put it mildly. The banks blighted my parent’s lives and their children’s and it was some blight! The Good Lord seems to be rewarding my Scripture reading (such as it is) by giving me the wisdom to help finally destroy banking and it’s fun!
So I won’t be sidetracked into threats, violence or even hatred of bankers. Let every banker be rich and happy BUT let’s destroy banking for good and the Devil will howl in pain!
“That would not be so bad except I’m finally…”
Oh, so that’s where you’ve been. Is this the one from the laundrette?
Ha! That lady is an unbelievably sultry temptation (and has a big heart and great character too!) but luckily for me she thinks I’m too old. Else I might have not been able to wait as I must.
Moneta:For some reason, many people believe that change can be done without anyone getting shortchanged in the process.
Well, here logic is on the side of FBeard below, and against you and From Mexico. It is very, very easy to get the free lunch of not shortchanging anyone. Every nation in the world knew how to do it 50 years ago.
Suppose a person had the habit of sticking a knife in himself, gouging out an eyeball, losing a few pints of blood, whatever, whenever he started feeling better from the previous insane self-mutilation.
This is his real problem. He feels he must mutilate himself, not whatever imaginary “real” problem he thinks he has, which pales in significance.
Persuading him to stop doing this would be — A FREE LUNCH! MMT = “free lunch” MMT.
That’s all that MMT prescribes – societies should stop their incessant active self-mutilation, what Mosler calls Aztec (as in human sacrifice atop pyramids) economics. The hard part is to get people to see they are actively working very hard at mutilating themselves, though.
Yes, it’s not a free lunch but the PREVENTION of the destruction of lunches ALREADY PAID FOR because of an insane money system that LENDS, not SPENDS, almost all purchasing power into existence thereby REQUIRING ever increasing (accelerating, according to Steve Keen?) debt UNLESS the monetary sovereign intervenes. And no, a trade surplus is not the answer since we are then giving foreigners real goods and services for mere money tokens the monetary sovereign (not the domestic cb, that abomination) should create itself.
It’s a fine mess you “money must be debt” crowd has created.
Well I’ll let you two utopians fight it out, F. Beard with his debt-free utopia and Calgacus with his Positivist utopia.
“Aim small, miss small.” Mel Gibson character in The Patriot
Beard with his debt-free utopia From Mexico
Actually, 100% private credit creation is ethical* and debts to the government are too.
*And moral too, without a doubt, if interest-free. Beyond that, it’s a matter of personal conscience since usury from “foreigners” is allowed by Deuteronomy 23:19-20 and that definition is, I suppose, flexible if consistently applied.
Moneta, are you saying that pension plans are a form of debt? If the worker and the employer take money from their own earnings and save it, how are those earnings debt? I do not understand how pensions are debt except that the debt is owed to the person who saved the money in the first place.
I do see, however, how the banks come along and see a way to make money on the pensions that the workers created and begin to use the pensions to speculate with and sell and make money on. Is that where the debt arises?
Pension plans invest in fixed income and equities… when the credit crisis hit, had there been no bailouts, equities would have tanked with banks imploding and many bonds would have defaulted. Instead, we got the bailouts where the Fed bought the MBS and other delinquent securities off the pension plans’ books and permitted them to reinvest the fresh funds into new performing securities.
In my mind it is clear that without bailouts, the pension system would have collapsed and reform would have had to be done. That would have been a good thing for some and a bad thing for those with fat pensions.
Therefore, the biggest holders of the risky debt are pension plans. If you do a debt jubilee, you will be accelerating the demise of the top 30% who still have a pension.
This risk could be ameliorated by a guaranteed income. Granted, the net effect for someone who had hoarded a large amount of wealth as a “pension” could be unambiguously negative, yet that same result could also easily occur through simple laissez-faire regulation and a normal cyclical bust. But such a result would be dismissed as “just the way things are.
The point of pensions is not to finance profligate hedonism but to protect the pensioner from a state of destitution and allow a dignified existence. Any “pension system”, public, private or both, with a significant risk of large scale destitution baked into it in plain terms cannot work.
$56 Trillion of debt at 4% interest (average) is about $2 trillion a year on interest alone. That’s $2T that won’t be paid as salaries or invested in wealth production (mining, manufacturing, agriculture), it will be spent on speculation and political influence instead.
News for all of TPTB. Yes, you can’t print gold, but you can’t print topsoil, either. Only time and grasses can do that.
I agree, Scott. Not only can you not print gold and topsoil, you can’t print oil and you can’t run the industrial economy without credit. I absolutely love Michael Hudson’s sincere moral outrage but he fails to take the final (and increasingly obvious to me anyway) step to conclude that usurious societies are fundamentally immoral. Usury is a mortal sin. Its practice results in the destruction of the natural world.
This sin could only be committed by humans who see themselves as standing outside of the natural world. The punishment we are going to receive is likely to be of “biblical” proportions. We would do well to carve this on stone in many languages in case anyone comes out of this alive!
Preach it, sister!
Moreover, a careful (we dare not do otherwise!) reading of Scripture wrt profit (good) and profit-taking (bad) rules out usury and dividends BUT neatly leaves in the possibility of using common stock ITSELF as money thus avoiding the need to borrow, much less at usury.
Praise the Lord for His Word which is truly sharper than any sword of man’s!
Someone tried to do this in their own way. I imagine their goal is to save the richest first and then save people going down the economic pyramid till the “number to be saved” has been reached, and then “let” the rest die.
I ask again: if the Global Overclass wanted to kill 6 or 7 or 8 billion people and make it look like an accident, how would they go about arranging for it to just happen?
http://www.thegeorgiaguidestones.com/message.htm
“you can’t print topsoil, either. Only time and grasses can do that.”
Intensive livestock rearing make the crucial difference, when done in a balanced way. Have a look at Allan Savory’s TED talk: https://www.youtube.com/watch?v=vpTHi7O66pI
Even better is Savory’s longer talk at Tufts University: https://www.youtube.com/watch?v=uEAFTsFH_x4
and the absolutely extraordinary Q&A session that follows: https://www.youtube.com/watch?v=QxPNPXbVtfI
A magazine called Acres USA prints many articles and interviews about accelerated soil restoration under way by various methods.
Monsanto is probably close to figuring out how to print topsoil.
So basically he’s saying that all debt based monetary system goals since the Roman Empire has been to bankrupt the country they supposedly serve. Kind of obvious. This is why I’m for the 2 trillion $ coin idea to cancel… pay off the debt.
I’m with Hudson on all this (yes, there’s more to the Roman World than debt etc.). But this is not a matter of just economics and finance because it is obvious that we are in a lose-lose situation because our system, as currently managed by the oligarchs, is unhealthy for society as a whole. It encourages fear and scarcity in a world of abundance and the potential for relatively stress-free living. All classes benefit when society is happy, connected, and focused on love and happiness, even the rich. The question we should be asking is how do we move towards leveraging our techno prowess and access to tools (material and conceptual) into creating a world of peace, love and understanding.
Our system is based on fear and distrust and a ever-widening inability to understand relationship, connection and love that is the counter to the political arrangements we live under. Debt is a prison and it inspires all the other prisons we live under. My point is that we have to find a way to live together based on personal interactions not legalistic and monetary systems–I think this is the essence of anarchist sentiment which I favor even though I know it is impractical politically.
Banger,
I agree with you. We (humanity) need to focus much more on our connectedness and not just our individuality. And yes our economic system encourages “destructively selfish” behaviors.
This stuff was widely discussed by thinkers during the great depression and one of the best ideas that came out of it was the idea of “social credit” to distribute economic fruits of civilization to all. This line of thinking as been totally lost in favor of “survival of the fittest” idea.
But “survival of the fittest” also applies to community. The fittest individuals would see their connectedness to the whole of humanity and would use their talents and advantages not only for “self” but also for the benefit of the larger community.
Mansoor H. Khan
Here is something interesting on humans connecting with each other. http://www.jonathan-cook.net/blog/2013-11-28/what-would-a-modern-messiah-look-like/
Includes a new Russell Brand clip.
All of those great buildings we know today, the trade and civilization that would stretch from Egypt to Britain, all of that was in the future. The film does not offer a cautionary tale but a plan for success!
“What we see as the glory of Rome is really just the rubble of the rich, built on the backs of poor farmers and laborers, traces of whom have all but vanished. It’s as though Rome’s 99 percent never existed…
Tim DeChant, Income inequality in the Roman Empire:
“To determine the size of the Roman economy and the distribution of income, historians Walter Schiedel and Steven Friesen [“The Size of the Economy and the Distribution of Income in the Roman Empire” / Journal of Roman Studies / Volume 99 / November 2009] pored over papyri ledgers, previous scholarly estimates, imperial edicts, and Biblical passages. Their target was the state of the economy when the empire was at its population zenith, around 150 C.E. Schiedel and Friesen estimate that the top 1 percent of Roman society controlled 16 percent of the wealth, less than half of what America’s top 1 percent control.”
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=7246320
“To arrive at that number, they broke down Roman society into its established and implicit classes…In total, Schiedel and Friesen figure the elite orders and other wealthy made up about 1.5 percent of the 70 million inhabitants the empire claimed at its peak. Together, they controlled around 20 percent of the wealth.”
“These numbers paint a picture of two Romes, one of respectable, if not fabulous, wealth and the other of meager wages, enough to survive day-to-day but not enough to prosper. The wealthy were also largely concentrated in the cities. It’s not unlike the U.S. today…”
“Schiedel and Friesen aren’t passing judgement on the ancient Romans, nor are they on modern day Americans. Theirs is an academic study, one used to further scholarship on one of the great ancient civilizations. But buried at the end, they make a point that’s difficult to parse, yet provocative. They point out that the majority of extant Roman ruins resulted from the economic activities of the top 10 percent. “Yet the disproportionate visibility of this ‘fortunate decile’ must not let us forget the vast but—to us—inconspicuous majority that failed even to begin to share in the moderate amount of economic growth associated with large-scale formation in the ancient Mediterranean and its hinterlands.”
“What we see as the glory of Rome is really just the rubble of the rich, built on the backs of poor farmers and laborers, traces of whom have all but vanished. It’s as though Rome’s 99 percent never existed. Which makes me wonder, what will future civilizations think of us?”
http://persquaremile.com/2011/12/16/income-inequality-in-the-roman-empire/
Yep.
What is the retort Lambert so frenquenly uses?
“Better trolls, please.”
Once again, wealth does not equal money. A person with lots of money in not wealthy, he is rich.
One again, no distinction is made between two types of corporation or business … one involved with the production of wealth (wealth creation, without exception, requires labor) the other, is economically rent extractive (it steals from those that create wealth). A lot of wealth producing companies pay their management/owners in an economically rent extractive way (see huge owner awards ‘payment’) or are financed in an extractive way – converting tax to interest streams.
The imbalance in wealth is caused by the tax favoritism awarded to those that curently buy share in economically rent extractive financial flows instead of buying share in the currently, tax disfavored wealth creating financial flows.
Simply taxing the economically damaging, rent extractive side of the economy (very high rate) back into public use while at the same time, de-taxing the wealth producing side of the economy would restore equality and justice into our system.
“In spite of the ingenious methods devised by statesmen and financiers to get more revenue from large fortunes, and regardless of whether the maximum sur tax remains at 25% or is raised or lowered, it is still true that it would be better to stop the speculative incomes at the source, rather than attempt to recover them after they have passed into the hands of profiteers.
If a man earns his income by producing wealth nothing should be done to hamper him. For has he not given employment to labor, and has he not produced goods for our consumption? To cripple or burden such a man means that he is necessarily forced to employ fewer men, and to make less goods, which tends to decrease wages, unemployment, and increased cost of living.
If, however, a man’s income is not made in producing wealth and employing labor, but is due to speculation, the case is altogether different. The speculator as a speculator, whether his holdings be mineral lands, forests, power sites, agricultural lands, or city lots, employs no labor and produces no wealth. He adds nothing to the riches of the country, but merely takes toll from those who do employ labor and produce wealth.
If part of the speculator’s income – no matter how large a part – be taken in taxation, it will not decrease employment or lessen the production of wealth. Whereas, if the producer’s income be taxed it will tend to limit employment and stop the production of wealth.
Our lawmakers will do well, therefore, to pay less attention to the rate on incomes, and more to the source from whence they are drawn.”
Written around 1925
Some points about the Roman Republic which might help to indicate how enormously different that situation was from ours.
1.) The Roman nobility’s strong tradition of public service. One example of this should be enough: one-fourth of the men of senatorial rank were killed at the Battle of Cannae. It’s hard to imagine Jamie Dimon or Lloyd Blankfein being that self-sacrificing.Augustus didn’t crush the nobles economically–he needed them to help him run his empire! His aim was to put a short leash on the nobility’s political ambitions, which tended to destabilize the system.That was in fact Syme’s conclusion, namely that Augustus replaced the chronically unstable politics of the late Republic with a system built around allegiance to one person: himself.
2.) The legal connection between property ownership and military service up until the late 2nd century. In our society there’s a disconnect between the two; the people going into the military are usually those without(much)property.One major reason for the Gracchi land reform was the fear that the army would run out of recruits.
3.) Debt relief was resorted to in the Roman Republic. After the sack of Rome by the Gauls in 387 BC, there were caps placed on interest rates and partial cancellations of outstanding debts. Also, debt slavery was outlawed in 322. These reforms coincided with the admission of plebeians to high office(the consulship in 367, tighter control over Rome’s Italian allies, and the planting of more Roman colonies in central Italy. Land shortages, indebtedness and resulting popular discontent had led to military weakness; the major reason for Rome’s defeat by the Gauls had been the fact that Rome’s army was outnumbered three to one. As with the Gracchi later on reforms were prompted mainly by strategic considerations. The big difference between the fourth century and the late second century was that overseas conquest and the wealth that came with it had become the key to political success among the aristocracy. Land reform would have made conquest unnecessary, but would have also curbed the political appetites of the elite. So the Gracchi had to go, violently as it turned out.
I think we should listen to Michael Hudson as what he is saying about wealth inequality and its outcomes rings true whether or not every little detail of the history of Rome is accurate. When I see someone refute something so thoroughly, I am reminded of how many of the politicians and economists believe their own balderdash about how money works. Maybe orthodox historians need to look closer at their own beliefs also!
There is a tendency to assert that just because Roman society had MANY problems, that debt was not the over-riding problem causing its decline and fall.
It wasn’t lead piping or pewter wine cups, although that was a problem. It wasn’t the barbarians – they always were at the gates.
The voice of Roman historians was unanimous in pointing to debt as causing the radical break from the Republic and from earlier Mediterranean experience. Livy, Plutarch, Diodorus all traced the course of debt, even retrojecting the harsh debt problems of their era back into Rome’s misty origins.
Among modern historians, Arnold Toynbee’s Hannibal’s Legacy (1965) saw the turning point in the way that Rome resolved the ending of the Punic Wars – by treating the gifts of the wealthy as “loans,” and repaying them by transferring the rich campagna lands to the ex post facto “creditors” and political insiders, instead of settling war veterans on them.
On my website I have my articles on ancient enterprise from the Princeton volume, as well as the four Harvard and CDL volumes (soon to be five) from our ISLET archaeological-assyriological group.
The “bottom line” is that debt was the lever to pry away landownership, from Babylonia to Sparta and Rome.
Michael
Claims on the – Future – regardless of authority i.e. conceptualization… invariably never work out as planned…
Although there is enough correlated hard data to minimize unnecessary hard ship.. the rub will always be political ideology… why does it always have to boil down to belief… ego crutches.
skippy… has a species ever – believed – its self to extinction[???].
“Oligarchs Will Never Cancel Debts We Owe Them”
We shall do it ourselves then!
And yes! Morality, shmorality!
Restitution for theft is REQUIRED by morality and being driven into debt is a form of theft. And yes, the banks drive us into debt as anyone knows who has tried to save for a house since the house price typically grows faster than the interest on one’s savings.
My comprehension of our debt based currency is somewhat thin.
How else could it be constructed? What does a non debt based currency system look like? Asset based currency? And if so how do these systems differ, and what are the consequences/ramifications of the differences?
Government money, fiat, is necessarily* debt since it is an advance to the taxpayers (in exchange for their goods and services) of what they’ll need to pay their taxes with. The “debt” is that the government MUST accept that fiat back to extinguish the tax liability; that is the government’s debt. Fiat is a “stay out of jail for tax evasion” card that the government must accept.
Otoh, private money can be issued as liabilities (debt) of the issuer but it can also be issued as shares in Equity of the issuer (common stock) without the need for borrowing, much less usury.
*But not all of it! But I won’t go into that here.
Ironically, our government IS like a common stock company since those with the most fiat have the most “votes”, at least where it counts, the legislatures, where they buy or rent legislators.
What about the wealth the oligarchs have stolen from us? I for one am never going to cancel that.
I should add that money is not debt. It is simply a medium which allows access to society’s resources for society’s purposes. Currently we live in a kleptocracy. Society’s purposes, that is the kind of society we wish to build, are ignored, and its resources, which is to say our resources, are being hijacked and looted by our elite and rich classes.
That is clear to those of us who have taken the red pill, however much we disagree on the details. But what next? See my analysis of the system is unchanged since my first year in college. It was informed by writers as diverse as Henry Miller, Herbert Marcuse and C. Wright Mills. But, in the end, the vast majority of the people always take the blue pill and want to stay in the United States of Amnesia in blissful and deliberate ignorance. Even after the 2008 crisis when the most spectacular outburst of organized crime activity the country has ever known all “the people” wanted is to bathe in “change we can believe in” and “yes, we can.” The change turned out to be much belief and little change and the other one turned into the mud of political trench warfare.
For years I have urged people to look at the realistic steps we can take and for years all the left has wanted to do is to shake their fist at the oligarch with the exception of Occupy which made too many fatal and understandable mistakes to be fertile enough to spawn a movement. I see now that the left from the liberals (Hedges’ critique is classic and damning) to the more radical elements at the further edges is lost in illusions that if we shake our fist vigorously enough we’ll somehow take off. All I hear is facile analysis that mirror the right’s “bad guys and good guys” rhetoric. Well, all that is satisfying to be sure but doesn’t move us because us vs. them when you have no army does not make a fight but a perpetual rout.
Hugh, we need to do better and be more open and put our asses on the line if we really believe the stuff we are talking about. My own analysis has led me to see that the problem is deeply cultural and spiritual rather than political and economic, i.e., that the problem is so deep and so profound that for an opposition to the morality of money/wealth/status/greed is good to emerge it must articulate a deeper morality one grounded on perennial values. The problem we have is not that we lack understanding of the situation but that we have no vitality in the struggle and even those most victimized by the oligarchs want more not less victimization because they are only doing their moral duty to bow to the Moloch of radical materialism/consumerism.
Whew! What a doozy of a comment thread. There is a lot to respond to by a whole lot of people, so I am not going to go comment by comment. I’ll just summarize a few of my main points here – if you feel I have left something unaddressed, please sound off below!
1. Out of Mexico called me out for not recognizing that Peter Turchin’s demographic cycles do touch on debt. He was right to do so. I was wrong. Thank you for pointing this out.
However, I do not find it accurate to characterize Mr. Turchin’s theory of expansion and decay as one all about or even primarily driven by debt. He posits that empires fall into decline because of three loosely related cycles:
*Economic inequality
*The ratio of elite-aspirants to the population as a whole
*The ‘asabiyah’ or social cohesion of the group in question.
The first of these measures is sensitive to debt, the second less so, and the third – in Turchin’s theory – is driven by ‘metaethnic frontiers’ and high % of society engaged in conflict with the Other.
So yes, debt is relevant to his theory. But it is not the driving cause of these dynamics.
2. On Augustus the redistributionist – Peter Turchin’s War and Peace and War actually devotes a few pages to this topic. (It is worth remembering that Turchin claims the empire had several “falls,” the collapse of the Roman republic being one of them. The difference with the last fall had a lot to do with the folks the Romans were fighting at the time…) But I did provide the best reference to start with earlier: Ronald Syme’s The Roman Revolution.
3. On the choice of historical theories presented above – I did not choose those books because they fit any particular ideological agenda – I chose them because they are the most influential books that have been written on the subject over the last two decades. (My feeling for the field suggests that Heather’s interpretation is the dominant one. It is dominant for good reason – I do not think there are many people on this earth who know the archeology of the late antiquity ‘barbarians’ as well as he does. He has proven pretty conclusively that the barbarians knocking on Rome’s door in 400 just were not the same kind that were knocking on her door in 100. In face fo his evidence statements like “the barbarians were always at the gate” are laughably wrong.)
My personal read of the evidence is that none of these theories are completely correct; synthesis is needed. But discovering the true cause of Rome’s fall was not the aim of my comments here. The point is simple: the narrative presented in this video is not close to the explanations most experts in ancient archeology and classical history accept.
Perhaps they are wrong. But to talk about not cursing American civilization the same way the Romans cursed theirs without acknowledging there is a fantastically large debate about why the Romans fell and that your interpretation is a fringe one…. well, it is a bit disingenuous, isn’t?
4. On those same lines, did anybody respond to the critique that the narrative proposed has no real coherence? Debt is the reason Rome rose to power…. and it is also the reason it fell… but only six centuries later? This whole line of argument seems silly, doesn’t?
5. The reason it seems silly – and this is the most important point I can and will make here – is that all comparisions between modern, fossil-fuel based, growth-driven capitalist economic systems and ancient, agrarian, static economic systems of the past are fundamentally flawed. The dynamics of wealth creation and distribution in these two types of society are not the same.
Please see the following essays for more on this point:
Notes on the Dynamics of Human Civilization: The Growth Revolution
A Flawed Comparision: Inequality, Ancient and Modern
Or those who want a real read, Vaclav Smil’s book
Why America is Not Rome
for more on this point.
It is tempting to look back at Rome and project our current evils on them. But this is the wrong way to do things. The past should be understood on its terms, not in terms of our current political debates. It is not right when conservatives do it, and it is not any better when progressives do it. We are talking about a time when it took centuries for GDP per capita to grow by $100. Centuries! The ancients were playing a different kind of ball game. Only the historians with an agenda will tell you anything different.
“
Limited by the insane requirement that money (in large denominations) must be gold and silver and thus limited to the mining rate of those metals?
Then ah, how foolishness and idolatry are punished!
Otoh, the Jews were forced by persecution into a more sophisticated understanding of money? One that was not at all inconsistent with Scripture as long as Gentiles were considered foreigners?
My explanation of the fall of Rome because of loss of their Eastern colonies is not “a fringe one”. I am familiar with it since I was a kid, probably because I had the luck of having a Marxist History teacher in one course, who emphasized economic reasons, and also because I took a course of Economic History later on at university.
Your choice of historians, Greer, is tendentious because they all (but one, who is rather Chaotist, and therefore more interesting) seem to fall to the Conservative school, which is mostly pointless and unable to explain History in any meaningful way. I know that many universities favor this kind of pseudo-scientific explanations (and I reckon that here and there they may have a point, although pretty much marginal) but without looking at the economy, or rather socio-economy, they are bound to say nothing of help, but just pseudo-moralist rantings of the kind the Righ likes so much.
The real reason is obscured because, among other things, it leaves Christians in a poor or at least dubious standing, and that’s nothing no good Catholic (or Protestant or Orthodox) university wants people to know. But the real reason is that one: the moving of the capital to the East and the division of the Empire.
IF the Western Empire would have retained its Oriental economic base all the time, if the Eastern provinces would have remained under Rome’s control (and there was no reason to do otherwise but Helleno-philia and very especially the new Christian power), then Rome would have got the resources and imperial centrality to face all threats, as the Eastern Empire actually did (until it exhausted its own resources in futile ritual wars against Persia and ideological persecution of non-Orthodox Christians, who saw in Islam a “liberator” force then).
But maybe it’s like decolonization: it could not have happened otherwise. The train of history does never stop.
“Debt is the reason Rome rose to power…. and it is also the reason it fell…”
I disagree. Debt is a vague term to begin with: are you talking of private debt or public debt? Then the Roman economy was not at all of Capitalist nature: the few real manufactures that existed were all state-owned (essentially war industry) and the bulk of the economy was agrarian (and trade).
Regardless of all that, Rome did perform several land reforms, in order to preserve some semblance of “middle class”, so to say (free farmers), affecting Italy. This applies mostly to the Republic but even in Imperial times it was customary to reward the retired legionaries with lands. This was not “debt cancellation”, as in Athens, but it served a similar purpose.
“… all comparisions between modern, fossil-fuel based, growth-driven capitalist economic systems and ancient, agrarian, static economic systems of the past are fundamentally flawed”.
In this I can well agree. Our societies are much more complex and therefore much more fragile.
Our capacity to alter, and therefore destroy, the environment is absolutely unprecedented and that is a challenge that probably no empire ever can survive, maybe not even the species as such. In addition to that the extremely complex production/trade/finance networks, as well as the almost instant capacity of communication we enjoy now, create a level of complexity that is truly mind-boggling and for which no ancient Roman nor Chinese nor whatever other examples serve as precedent.
In fact we should better look at our more recent past, like the Great Depression, the Robber Baron era or even the slow collapse of the Ancien Regime in the 18th century under the burden of wealth concentration in way too few heads… heads that would eventually be detached from their bodies.
IMO the best comparison is the late 18th century. We should learn from that.
These ideas were about when Michael Hudson and I were kids. Despite this, capital has been treated as neutral in most social analysis. I taught what we might consider the Hudson-Keen-Black line 20 years ago. It was a losing battle.
Unions had more power 20 years ago and outsourcing was not as common.
The neoliberals are about to be victims of their own success, I’d bet. You can’t cheat as many people as they have and blame the victims without causing serious outrage at some point.
“It should be no surprise that the economy collapses every five to seven years.”
The calm time in between the storms is for the Jamie Dimons of the world to skim, coerce, extort, terrorize and steal every cent they can. Then during each collapse, swoop in for the big heist and confiscate every armored truck.
They must be foaming at the mouth in anticipation for the next collapse, which by Jamie’s estimation would be due any day now.
Even diamonds are not forever since they burn at about 850-1000C in air. :)
Important to distinguish beween public debt in a fiat floating currency regimes (nomisma) and specie-backed convertible currency regimes, on the one hand, and private debt on the other. In the US public debt is not a problem (although what the gov’t chooses to spend on is to a large extent–bloated military, etc., to the detriment of the public weal), as it is in the Euro countries; however, private debt is a very real problem, much of it based on control fraud, but also on a hypertrophied consumerism, and so on.
First – Great discussion – proves how ignorance is always used to control the poor!
Second – The United States is not and most likely never will be a Democracy! The Republic was created for the benefit of the wealthy!
Third – The Republic has cleraly become, based on observed reality since WWII, a Plutocracy!
Fourth – The CentaMillionaire$ and Billionaire$ will destroy the planet before they will ever ALLOW the little people to TAX them out of existence!
Fifth – Every passing day provides more proof the CentaMillonair$ and Billionaire$ need to be eliminated!