Open Mike 02/04/2017

Written By: - Date published: 6:00 am, April 2nd, 2017 - 25 comments
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25 comments on “Open Mike 02/04/2017”

  1. Carolyn_nth 1

    A long but fruitful read, by an ex Mayor of Cleveland, who grew up in poverty, and came to understand how the US financial system and it elites, creates inequality and poverty.

    Poverty is not an abstraction. People wear it on their faces, carry it on their backs as a constant companion, and it is heavy.

    Those of us acquainted with that condition often lack understanding of the nature of the material world, and, since access to material wealth seems random, are prey to the notion about wealth preached ironically by the Pardoner in The Canterbury Tales, “Radix malorum est cupiditas,” ‘The love of money is the root of all evil.”

    One does not need to have taken a vow of poverty to be poor, one needs only the unconscious or conscious acceptance of the underlying precepts of a class-based society, the meek acceptance of a doctrine of predestination, the assumption of one’s status as merited and the acceptance of a political economy that equates one’s personal wealth with one’s innate value as a human being, while the so-called invisible hand of the marketplace quietly dips into the public till, and “moral hazard” is a polite term for theft.

    Is it possible to lower taxes, AND have an equal, livable society with adequate public services, as the article claims? – by ending the banks’ role in creating debt?

    • John up North 1.1

      A very good read Carolyn, and very much mirrored here in NZ with all the public wealth earning assets also being move into private portfolios.

      On the same web page the article below this one is also of interest and speaks about a change in the Mississippi local govt policies regarding the unemployed/low waged/disabled etc and state assistance.

      Reads very much like those changes enacted here in NZ by Natz to remove by hook or crook as many people from the support systems of govt “so they can reach their full potential without being held back by dependence” would you like a wrap-around service with that?

      Having some real good conversations with young people around me as to how they feel about the current state of affairs in Aotearoa, seems our schools need to add something on politics and how govt works to the curriculum to go along side those courses on finances/budgeting, how credit cards and dept work, proper sex ed (including what is/isn’t consent), some actual real history on this bloody country (te tiriti, land wars, confiscation) and maybe a shedload on compassion for your fellow being!

    • lurker 1.2

      +100

    • Nic the NZer 1.3

      I have written some articles for one of these Positive Money groups some time ago, but no longer believe in it. The things which their proposals don’t quite grasp are,
      1) Money is a debt (for it to have any value some entity needs to accept it as debt defrayment), if you actually prevent banks creating money then you are ending bank lending.
      2) Its almost impossible to prevent bank lending, as its effectively a mechanism of a trade credit. The money that a bank has on liability is of a form that commercial banks create themselves, in their own accounts. As such you would need to treat ‘banks’ different in accounting to other businesses in any attempt to effect this.
      3) There is a mechanism where central banks will sell their own liabilities (bank reserves) in order to facilitate commercial bank settlement. In NZ the rate of this is called the OCR. If they don’t then banks can’t settle and defaults can occur. How this is modified effects what the reforms mean. One version of this is that for every dollar of commercial bank debts created these end up being backed by central bank dollars (meaning 100% reserves), which the central bank readily supplies (in the case that a central bank guarantee’s bank deposits, this is effectively already the case (e.g _not_ in foolish NZ)). In this case nothing changes, and the solution ends up being a meaningless change in accounting practice. In the other case central banks refuse to sell sufficient reserves or sets a very high interest rate (in NZ the OCR) on these reserves. If they refuse then inter-bank settlements default. The upshot of this is that interest rates are likely to be much higher under such a policy. Higher interest rates drive inequality as the lenders (obviously more than not the wealthy) do much better in relation to the borrowers.

      The reason people typically believe this will be sensible is often based on a faulty assumption about the relationship between price rises and the money supply. The assumption being that increasing money supply is causing price rises. More than likely the causal direction is reversed and if you measure increased prices and those higher prices were paid then more money has been created to facilitate the payments.

      The whole thing in reminiscent of the implementation of Monetarism in the 1970’s where governments tried to limit bank reserves (including government deficits) and
      (believing this had a facilitating relationship on commercial bank lending (this is called the money multiplier model in economics)) and so to control inflation. This idea collapsed as a theory shortly after being tried because bank reserves never limit commercial bank lending (and they continued to grow regardless).

    • The Chairman 1.4

      “Is it possible to lower taxes, AND have an equal, livable society with adequate public services, as the article claims? – by ending the banks’ role in creating debt?”

      Look at banking returns then consider what impact those returns would have if they remained in public hands.

      • Nic the NZer 1.4.1

        These, 100% reserve proposals don’t attempt to nationalize bank profits into public hands however. That could be (and has been) achieved by various forms of commercial bank Nationalization, but to the extent this is useful its not that helpful. The point of your countries finances is really not that they be ‘profitable’, your countries finances being ‘profitable’ is often not a socially equitable way to run a nations finances.

        • The Chairman 1.4.1.1

          Ending banks’ ability to create debt would end their ability to function as selling debt ultimately leads to creating it. As a result, banking would require to be nationalised.

          The extent of how useful those returns become when transferred into public hands is largely dependent on how the funding is utilised. But there is no doubt current banking returns would be a major boost to the public coffers.

          Whether or not banking operates as a profit making enterprise (if nationalised) would still result in returns largely remaining in local hands (either via consumer savings or new government returns) further benefiting our economy.

          • Nic the NZer 1.4.1.1.1

            “Ending banks’ ability to create debt would end their ability to function as selling debt ultimately leads to creating it. As a result, banking would require to be nationalised”

            No, they can still facilitate the transactions between debtors and borrowers under such a banking model. The positive money group were always explicit that private banking still was possible under their proposals. If anything banks are already as nationalized as far as is absolutely essential, they are already subject to total reserve bank regulation just to get a license.

            “The extent of how useful those returns become when transferred into public hands is largely dependent on how the funding is utilised.”

            The ability to access ‘funds’ already doesn’t effect the governments budgeting process. This argument is a non-sequitur.

            • The Chairman 1.4.1.1.1.1

              No. Ending banks’ ability to create debt would end their ability to function as selling debt ultimately leads to creating it.

              You’re talking about reserve settings, which can curtail their ability to sell debt, not end it, period.

              The governments ability to access funds is not the same as the government earning its own funds.

              Thus, the government accessing funding generally requires them to go into debt, hence resulting in debt repayment having to be budgeted for.

              • Nic the NZer

                “No. Ending banks’ ability to create debt would end their ability to function as selling debt ultimately leads to creating it”

                I think you will find in a typical mortgage loan the bank doesn’t sell the debt, it buys it from the mortgagee. Of course as long as your banks can still make payments then they can buy debts which are for sale in some form. Maybe you are actually proposing outlawing mortgages (or other debts) but that is not what these full reserve banking proposals do by any means.

                “Thus, the government accessing funding generally requires them to go into debt, hence resulting in debt repayment having to be budgeted for.”

                Actually anybody who knows anything about macro economics knows that a country with its own central bank can always make payments or set its own budget at all times. This is true even if they borrow the funds for monetary policy setting reasons. Your premise that the country is financially constrained in setting its own government budget by commercial banking is simply invalid.

                • The Chairman

                  I’m not talking about reserve settings, thus the banks’ ability to create money, I’m talking about ceasing their ability to create debt. Therefore, nationalising them.

                  My argument is the country would be financially better off, thus less fiscally constrained if banking returns (if nationalized) were added to the government’s coffers. Instead of going offshore and into private hands.

                  • Nic the NZer

                    So you literally suggest to abolish mortgages and other debt contracts, unless they are nationalized banks I guess?

                    On your other point, the country is not fiscally constrained as it stands, all it needs to do is write a budget and then that budget happens. Its happened every year since you or I was born. In no cases did the NZ government have any trouble paying anybody who works for them (with the obviously unrelated exception of the Novopay debacle, and the like).

                    • The Chairman

                      “So you literally suggest to abolish mortgages and other debt contracts, unless they are nationalized banks I guess?”

                      That’s the one.

                      On my other point, it wasn’t the country is fiscally constrained, it was it would be less fiscally constrained – i.e. the government would be in a better fiscal position earning more funds as opposed to borrowing.

  2. I don’t think this sort of petty attack will help Tamati Coffey’s chances in the Waiariki electorate:

    Don’t get caught out this morning – or on Sep 23rd. #changethegvt

    Move like the Maori Party
    Remember to take New Zealand backwards –
    #daylightsaving

    Facebook: https://www.facebook.com/tamaticoffey2017/

    That’s on his Facebook page that’s authorised by the Labour Party – do they approve of this backward approach, or is Coffey acting on his own? It will be interesting to see where he ends up on the list, I think he is one Maori candidate not putting everything on the line as an electorate candidate.

    • JanM 2.1

      Many in the Maori world are genuinely angry about the shenanigans the Maori Party are involved in which they can see are against their better interests. Tamati is entitled to express his anger, and humour is a legitimate way of doing that. I think it is funny – hopefully so do a lot of his potential voters.
      You are just being silly.

      • Pete George 2.1.1

        It seems to have been deleted now, so I don’t think I’m the only one who didn’t see as a funny way to promote Labour as a decent alternative.

    • millsy 2.2

      The Maori party belive in dismantling public health, education and welfare system and replace with iwi provision.

  3. Nic the NZer 3

    This Steve Keen lecture could be taken as a fairly direct criticism of the L/G sound finance proposals.

    http://socialdemocracy21stcentury.blogspot.co.nz/2017/03/steve-keen-on-austerity.html

    @Mathew Whitehead, I think I made the same points to you the other day already. But Steve covers some details a little more thoroughly than that.

  4. Cinny 6

    Excellent episode of The Listening Post this week..

    Westminster Attack: The media’s “terror” template

    From breaking news to a familiar story: A deadly attack at the gates of the UK parliament has the news media reaching for well-worn templates and the government calling for greater powers of surveillance”

  5. The Chairman 8

    Hone threatens to pull his supporters backing of the Māori Party
    http://www.newshub.co.nz/home/shows/2017/04/mana-party-leader-slams-m-ori-party-s-land-reform-bill.html

  6. Ethica 9

    Good Wellington mayor pays employees the living wage and saves money. Cuts out the contractor and employs workers directly. So sensible.

    http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11830515

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