One of the positives about the Occupy Movement is that they have encouraged learning, thinking, discussion, about finance and the economy amongst people who have no knowledge of finance and the economy. Simon Dixon, in this video, says the system is crazy and is broken and talks about moving towards a sustainable economic system. He is saying that banks create ‘money’ by lending ‘notional money’ (my term) and charging interest. Each time they lend ‘notional money’ they create ‘money as debt’ . If I borrow money from the bank to buy something of real value such as a house I incur a debt that I must repay by selling my labour or assets. If I sell my labour to the state as a teacher or doctor, etc., the state pays me through raising taxes and borrowing money; if I sell my labour to a non state business that business pays me through selling the product of my labour. I have sold my labour to the state and the state has agreed to pay me a pension as part of my recompense, however in addition to paying me the state needs to repay the banks. But the state does not receive enough income from taxes to repay the banks, even repaying the interest has become so difficult that the only way the state can do this is to raise taxes while cutting spending and selling assets. These two short videos argue that these solutions cannot work:
The first video claims that the predicted economic collapse is intentional. Simon Dixon argues that this is unlikely, but his rationale, that politicians do not understand finance well enough, is not convincing as financiers do understand finance. Nevertheless Simon is apparently offering some attempt at a solution.
Dennis Kucinich seems to be saying essentially the same thing as Simon Dixon, that there is a need to take away the ability to create money from the private banks and give it back to states. This should go hand in hand with a move to more direct and participative democracy.
Glad to see your involvement with economy. I haven’t watched the movies and clips yet – please excuse that.
Most economists including lefty economists become involved in the economic game and as such make the issues complicated. Whilst the following analysis will not stand up to academic scrutiny (because they are involved in the game as well), it works? Money has no real value; it used to have with barter and then the gold standard but now its only value is what is generally agreed. The recession was also a global economic agreement. The hedge funds based on sub-prime loans were found to be insubstantial – before the collapse they agreed they were substantial, and this triggered a pack of cards to fall. The lack of confidence led to further falls, and we had many attempts at governments balancing books.
But that is not what is really happening. The books do not balance, have you ever seen any? When the 1% want more money they instruct their puppets who then make up some excuse, such as bailout money, and give it to them. Then they increase taxes and apply austerity measures to make it appear that they are trying to balance books.
And when Greece needed money, it appeared. Where did that money come from? No-one knows. They might say the Fed, the bank of England, Deutschebank but who knows? Is it real in any way?
So how does the economy work? The 1% and their financial stooges pretend it works. Because they are in control we have to follow. Debt just increases, people play games on stock markets, and we all go through a supposed economic process that appears to have substance but in truth has none.
A sustainable solution is the only one for a real economy, but that will mean serious upheaval as we get rid of this 1% economy. With the 1% addicted to the amount of money they have in their personal accounts, are they going to relinquish that spending power? They will use force to maintain it.
In the end each person needs to protect themselves by developing a skillbase and network that will enable them to function without money because who knows how and when this ponzi scheme will collapse.
See also http://youtu.be/0CaYuss28HQ which I’ve added to my post. Dennis Kucinich seems to be saying essentially the same thing as Simon Dixon, that there is a need to take away the ability to create money from the private banks and give it back to states. This should go hand in hand with a move to move direct and participative democracy.