Modern Monetary Theory discussion

[Patine]

None of this describes the how of this supposed coming collapse. In my lifetime the only economies to collapse were—surprise!—not those of capitalist countries that had protection of private property.

Soviet Union? Big socialist behemoth.

Somalia? Siad Barre was a devotee of “scientific socialism,” and one of the continents poorest countries stayed that way.

Cuba? Totally dependent on Soviet welfare to prop up its inefficient state-planned economy.

Zimbabwe? Their economy tanked once “war veterans” from the ZANU-PF went and took all the productive businesses.

Venezuela? Chavez and Maduro.

Those cases are all far worse than anything that’s happened in the capitalist world.

The fact that the 1929 Wall Street Crash (though probably before any of our lifetimes) actually happened AT ALL, and no one was prepared or saw it coming, except a very few, who were just dismissed completely as Cassandra's, or doomsayers, and no one was prepared for it, and it excelerated the occurrence of the biggest war in history thus far (though, such a war was almost certainly in the making anyways - the timetable was certainly just put up significantly), and in a twisted irony, if said war hadn't hit, the economic suffering would have dragged out longer - all of this shows the "invulnerability of Western free market Capitalism to such crises" is a modern placebo, as the fail safes to prevent such a thing again - or worse - just don't exist, and big engines of commercialism are only getting more reckless and more fast and loose, and taking more risks to make more vast profits.

mmhmm, that's still what it sounds like though.

It's probably your 21st Century American ego that makes it sound that way. And I say that as an analytical attempt at explanation, not a personal attack or insult.

 

[Moriarte]

None of this describes the how of this supposed coming collapse. In my lifetime the only economies to collapse were—surprise!—not those of capitalist countries that had protection of private property.

Soviet Union? Big socialist behemoth.

Somalia? Siad Barre was a devotee of “scientific socialism,” and one of the continents poorest countries stayed that way.

Cuba? Totally dependent on Soviet welfare to prop up its inefficient state-planned economy.

Zimbabwe? Their economy tanked once “war veterans” from the ZANU-PF went and took all the productive businesses.

Venezuela? Chavez and Maduro.

Those cases are all far worse than anything that’s happened in the capitalist world.

So, introducing more control mechanisms into capitalist systems won’t work because .. “Soviet Union, Zimbabwe, Cuba”. And yet, after 2008 crysis, a wave of changes in the financial sector was proposed and implemented in the US, which are, essentially mechanisms of additional control. As expected by some (not all), US haven’t turned into Somalia in the process. And while China is slowly moving towards free market economy with a “strong core”, the US is destined to move away from free market economy. In my opinion, both US and China are moving towards the same thing - a balanced position between free market forces on one hand and adequate oversight on the other.

 

[amadeus]

So, introducing more control mechanisms into capitalist systems won’t work because .. “Soviet Union, Zimbabwe, Cuba”.

I think then there has been a miscommunication between the both of us.

In your prior post, you had said:

If we were to talk about the world of controlled economies, in this world the crysis could be avoided.

As far as my understanding was, "controlled economy" would be synonymous with "planned economy" or "command economy," which would describe countries like the USSR and Cuba.

 

[Patine]

I think then there has been a miscommunication between the both of us.

In your prior post, you had said:


As far as my understanding was, "controlled economy" would be synonymous with "planned economy" or "command economy," which would describe countries like the USSR and Cuba.

There are other forms of "controlled economy." And, it's also possible @Moriarte was also referring to, or including, hypothetical, little-used, or experimental models, too. Saying a simple phrase MUST automatically default to the well-known, hard Marxist line, and can be nothing else, is a bit of a cliched and limited thinking assumption.

 

[amadeus]

There are other forms of "controlled economy." And, it's also possible Moriarte was also referring to, or including, hypothetical, little-used, or experimental models, too. Saying a simple phrase MUST automatically default to the well-known, hard Marxist line, and can be nothing else, is a bit of a cliched and limited thinking assumption.

I don't think I jumped to unreasonable conclusions based on how the post was written. In the English language, "controlled economy" is synonymous with "command economy."

Now where in my reply to @Moriarte was I not sufficiently conciliatory? They explained their position further, I acknowledged it, and tried to address where the initial miscommunication happened.

 

[Patine]

I don't think I jumped to unreasonable conclusions based on how the post was written. In the English language, "controlled economy" is synonymous with "command economy."

Now where in my reply to @Moriarte was I not sufficiently conciliatory? They explained their position further, I acknowledged it, and tried to address where the initial miscommunication happened.

I wouldn't say they're synonymous, necessarily, in the English language. The popular zeitgeist and the viewpoints of most economists except the ones who deal on the most theoretical of levels, most bankers, investors, and the employees and treasury and finance ministries and departments. But on a linguistic, and academic and theoretical level, I would say there is more leeway and wiggle-room. And, it strikes me that @Moriarte was speaking, to a notable degree, on an academic and theoretical level.

 

[El_Machinae]

The miscommunication has now been solved.
I don't think anyone thinks that economic shocks cannot be greatly reduced by wise government interventions. There are an incredible number of win/win arrangements out there that won't happen with a government agency causing compliance.

 

[civvver]

USA won't ever have anything similar to the great depression again in our current society. There was actual food scarcity then. A giant dust bowl. No banking guarantees from the government. No global military presence to ensure our dollar remains strong.

 

[Patine]

USA won't ever have anything similar to the great depression again in our current society. There was actual food scarcity then. A giant dust bowl. No banking guarantees from the government. No global military presence to ensure our dollar remains strong.

Are you making a bold assumption that the current economic, political, military, etc. state of affairs of the U.S. is now static and eternal, and will not change or diminish, from now until doomsday?

 

[El_Machinae]

USA won't ever have anything similar to the great depression again in our current society. There was actual food scarcity then. A giant dust bowl. No banking guarantees from the government. No global military presence to ensure our dollar remains strong.

Pending ecological catastrophe, obviously. That said, the US had an extremely strong dollar during the Great Depression, depending on how you measure such things. Heck, there was a period where each dollar WAS backed by gold.

 

[Naskra]

Heck, there was a period where each dollar WAS backed by gold.

Not really. US gold certificates of all kinds were managed by fractional reserve. All countries did this.

 

[civvver]

Are you making a bold assumption that the current economic, political, military, etc. state of affairs of the U.S. is now static and eternal, and will not change or diminish, from now until doomsday?

Mostly. What's going to upend it? US has plenty of oil and food production, a huge military budget, a huge nuclear arsenal, the biggest stock exchange.

 

[Patine]

Mostly. What's going to upend it? US has plenty of oil and food production, a huge military budget, a huge nuclear arsenal, the biggest stock exchange.

You're obviously not a historian, are you? At least not a world historian across the scope of recorded history. Only someone with a much more focused education on history, in time period, geographic range, arbitrary view of relevance, and history topics focused on. Also, you're assuming all factors that could change would be very simple and cliched, and thus immediately dismissed. There were once times when Pax Romana could not be foreseen as EVER ending, and the sun truly could NEVER possibly set on the British Empire...

 

[El_Machinae]

Not really. US gold certificates of all kinds were managed by fractional reserve. All countries did this.

How am I misinterpreting this chart?
US_gold_reserves_2.png

 

[civvver]

You're obviously not a historian, are you? At least not a world historian across the scope of recorded history. Only someone with a much more focused education on history, in time period, geographic range, arbitrary view of relevance, and history topics focused on. Also, you're assuming all factors that could change would be very simple and cliched, and thus immediately dismissed. There were once times when Pax Romana could not be foreseen as EVER ending, and the sun truly could NEVER possibly set on the British Empire...

Those were all before global electronic economies and nuclear weapons. Anyway it doesn't really matter that much to me as by the time anything does change I'll be dead. And no I don't mean climate change, I mean american being dethroned.

 

[Naskra]

How am I misinterpreting this chart?

The way you were intended to. Once the US stopped issuing or redeeming gold certificates in 1933 (officially, earlier in practice), The gold reserves bore no necessary relation to the dollar.

 

[El_Machinae]

But they were part of the dollar's strength when it comes to international trade, no? With regards to internal redemption, that doesn't really have anything to do with the dollar's strength. Er, not to the same extent that it helps control international rates. "Strong dollar" means what you can buy internationally with it.

The way you were intended to.

This comes across as condescending. Stop it.

 

[Naskra]

This comes across as condescending. Stop it.

It is condescending. You're being suckered by a misleading chart made by goldbugs. It's a chart of spot gold price against something not well-defined. The chart is designed to mislead (and sell gold).

 

[El_Machinae]

Ah well, shame if you actually had something useful to say, then

 

[Naskra]

Ah well, shame if you actually had something useful to say, then

"Ignore that chart" is useful information. It does not represent what it purports to.