Running Out of Money?

    “You can never be too rich or too thin” (or something like that) said, uh, somebody or other . . . maybe — it’s attributed to a bunch of people few members of the public today ever heard of.  Leaving aside the “too thin” bit as a bit beyond our competence, we’ll focus on whether you can be “too rich.”  Quick answer: yes, you can be too rich, especially if no one else has any money . . . money here defined as “all things transferred in commerce.”  (That’s in Black’s Law Dictionary, at least the edition we have.)

The Economic Answer to AI, I: The Problem

 Recently we re-read New America (1983) by the late Poul Anderson, a compendium of four related science fiction novellas tied together into a coherent whole.  It was, as is typical of Anderson’s work, well-written, fitted within known science and social trends at the time it was published, and dealt with serious themes in a thoughtful yet entertaining manner.

The End of Private Equity Firms? No Way!

A few years back a member of the CESJ board of directors expressed concern over the Economic Democracy Act and the necessity of shifting new capital formation from past savings to future savings.  There was also the issue of phasing out governments monetizing deficits by emitting bills of credit (the constitutional form of “creating money” out of nothing).

Where is Pope Leo XIV Coming From?

The election of a new pope has repercussions far beyond the Catholic Church, Christianity, and even all religion.  Especially since the Catholic Church became a truly international organization with the loss of the Papal States in the 19^th century, people of goodwill everywhere look to the head of the Catholic Church as a voice for good, even if they do not always agree with what he says.

Keynesian Economics and Income Distribution

Occasionally, we get a question from a reader that forces us to think . . . what on Earth Keynes and his disciples thought they were doing and what they are still trying to do with Keynes’s backwards economics.  Recently we received the following question:

A Breakthrough for Democracy

On Friday, July 1, 2022, the Republican Governor of Missouri, Michael Parson signed a bill that is designed ultimately to reduce poverty, racism, and a host of other problems in an area encompassing some of the most economically disadvantaged neighborhoods in St. Louis.  The initial phase is to form a commission funded by the state of Missouri to study the problem and develop recommendations for implementing what Eugene Gordon of the Descendants of American Slaves for Economic and Social Justice calls “the Heart of America Project.”

What is a “Bank”?

Banking for most people is a little like pornography.  There is something not quite right about it, but a lot of people seem to like it and can’t seem to function without it, and they can’t define it, but they know it when they see it.

Attack of the Killer Robots

The day of the killer robot is nigh, at least according to analysts of the current war Russia is waging against Ukraine.  It seems that advances in drone technology will soon allow both the Ukrainians and the Russians to employ self-directed drones to carry out strikes without having to worry about interference with their remote directional systems.

Breakthrough for Democracy in St. Louis!

Breakthrough for Democracy in the Heart of America, St. Louis, Missouri

Special Correspondent Rick Osbourne

On Friday, July 1^st, 2022, Republican Governor of Missouri Mike Parson signed a bill that’s designed to dramatically reduce poverty (and a myriad of related problems) in an area encompassing some of the roughest neighborhoods in St. Louis, without costing the government a dime! Moreover, as this project (known as the Heart of America Project) unfolds, it’s expected to create tens of thousands of citizens who are suddenly ECONOMICALLY PRODUCTIVE members of the local community in ways they’ve never been before.

Inflation v. Employment, or, Cotton is King

Regular Readers of this blog may have gotten the idea that we’re not exactly enamored of Keynesian economics.  If so, they have the right idea: we’re not.  And there are a lot of very good reasons for it.  For today, however, we’ll confine ourselves to the alleged tradeoff between inflation and employment.

The Problem of Liability

As we saw in the previous posting on this subject, there were significant institutional barriers preventing Ebenezer Scrooge from doing the completely right thing by Bob Cratchit and making him a partner instead of a mere employee.  For example, anyone who “participated” in any way in a business was considered a part owner, even if he didn’t have legal title to anything.  That made him jointly and severally liable for all debts of the business.  If the enterprise went belly-up, he could go to debtor’s prison.

Future Savings Money

      As we saw in the previous posting on this subject, “usury” is not all profit or interest, but profit (or interest) taken when no profit (or interest) is due).  It is justified by the presumed need to accumulate savings before financing new capital formation.

But Is It Usury?

 

In the previous posting on this subject, we noted that the difference between interest per se and usury is that interest is a legitimate sharing of profits on some equitable basis, while usury consists of taking a profit where no profit is due.  Complicating understanding of this difference is the confusion between past savings and future savings, and the different types of money derived from each of them.

The First Principle of Economics

As we saw in the previous posting on this subject, there are short term expedients that if implemented as permanent solutions impose a condition of dependency — slavery — on the great mass of people.  This is not to say that such things as stimulus payments, redistribution, job creation, full employment, and so on, are not essential at times, but they are not the solutions that so many people seem to think.

Abolishing Private Property

In the previous posting on this subject, we closed by noting that at some point the noted lawyer-economist Louis O. Kelso asked himself the questions (probably not in these exact words), “If advancing technology makes such superabundance possible, why is it essential for people to have employers to pay them wages for labor that is not necessary for production?”

5. Five Roadblocks to Social Justice: Financing the Future

In the previous posting on this subject we looked at the “problem” of advancing technology and the various responses that have been developed, which boil down to rejecting technology, or redistributing what belongs to others, whether the technology itself, or what it produces.  We closed by suggesting that envy and greed are not exactly optimal for anybody, and that perhaps we should be looking at justice — which is the response we will look at today.

Two Different Types of Savings

In the previous posting on this subject, we closed by noting that, if new capital formation cannot take place without savings (which have never not only not denied, but freely admit), and yet we’ve demonstrated beyond the shadow of any doubt whatsoever that existing savings cannot possibly account for the vast amount of capital that exists in the modern world, where on Earth did the financing come from?

A New Philosophy of Public Debt

Back in 1943, as Keynesian monetary policy was completing its first decade, Dr. Harold Glenn Moulton, president of the Brookings Institution, published a pamphlet, The New Philosophy of Public Debt.  Although today Brookings is solid Keynesian in its approach, while Moulton was at the helm it presented an alternative to what many regarded as Keynes’s unwise, even dangerous monetary and fiscal policy.

A Framework for a Solution

Now that the dust (or whatever it is) has (sort of) settled from the election (more or less), America and the rest of the world can get back to a more immediate problem: How to make people productive so that they can take care of themselves instead of going hat-in-hand to the rich or to the State.  Nor is this an academic exercise, given that government has shown itself all-too-willing to create money backed by its own debt and throw it at the problem, thinking something has been done.

Resolving the Economic Dilemma

 As we saw in the previous posting on this subject, the popular notion of finance — embodied in all three mainstream schools of economics (Keynesian, Monetarist/Chicago, and Austrian) — is that it is essential to cut consumption and accumulate money savings in order to finance new capital formation.  This, however, leads to a paradox that Dr. Harold Glenn Moulton of the Brookings Institution called “the Economic Dilemma.”