So what's wrong with fascism?

[potatokiosk]

it's one set of terms, because in another macro econ nomenclature I=S inherently.. buuuuut

But the point is that if G=T, and Im=Ex, then there is no private market investment... I think there's a problem there. Since this is measured in GDP aka dollars, it means money. The private sector, aka investment, can't print its own money so that means it goes bankrupt. Meanwhile that doesn't help the government because the government already has an infinite bank account.

So if you want private sector investment then government has to run a deficit. Aka print new money to meet the expanded quantity of the economy to maintain prices. Government errs on the side of inflation since it's very hard to be precise and demand-side deflation is very bad.

Anyway, fascists aren't very good economic planners but like the George Bush economy, accidentally big deficits are better than none at all.

Why can't the central bank print money and buy securities from the private sector to increase the money supply?

 

[Lord Baal]

We've been running a deficit for decades. So has France and Germany. Most countries run essentially a perpetual deficit. Here's an annoyingly small graph for the US:

Here's an annoyingly big graph for the UK:

Spoiler big :

Here's an annoying graph for France (it's annoying because it's French):

That assumes continual growth though. Growth can last for a long time, but it can't last forever. Of course, I'm no economist.

 

[Terxpahseyton]

Why can't the central bank print money and buy securities from the private sector to increase the money supply?

Why can't the central bank send every family some cash and be done with it?
And what exactly do you mean by securities if I my ask? I understand securities as stuff one promises a creditor if one can not serve ones debt. Why would you want to sell those?

 

[potatokiosk]

Why can't the central bank send every family some cash and be done with it?
And what exactly do you mean by securities if I my ask? I understand securities as stuff one promises a creditor if one can not serve ones debt. Why would you want to sell those?

The word has more than one meaning:
http://en.wikipedia.org/wiki/Security_(finance)

Mailing every family free money would work too, but it wouldn't give the central bank the option of decreasing the money supply later.

 

[Cutlass]

it's one set of terms, because in another macro econ nomenclature I=S inherently.. buuuuut

But the point is that if G=T, and Im=Ex, then there is no private market investment... I think there's a problem there. Since this is measured in GDP aka dollars, it means money. The private sector, aka investment, can't print its own money so that means it goes bankrupt. Meanwhile that doesn't help the government because the government already has an infinite bank account.

So if you want private sector investment then government has to run a deficit. Aka print new money to meet the expanded quantity of the economy to maintain prices. Government errs on the side of inflation since it's very hard to be precise and demand-side deflation is very bad.

Anyway, fascists aren't very good economic planners but like the George Bush economy, accidentally big deficits are better than none at all.

My confusion is with the part where you claim that the government must run a deficit in order for the money supply to be increased by the central bank so that the economy can grow. From everything I know in economics, that's conspiracy theory territory. I can't even imagine a reason why that might be true.

 

[Hygro]

Because infinite economic growth isn't possible. There is no cheat code for infinite money.

Money is not wealth or productive capacity. There is a "cheat code" for infinite money because that's what money already is: a socially constructed currency that governments issue to pay for state activities, and that people use because it beats the other options for a medium of exchange because they have to pay taxes. Because they have to pay taxes they therefore demand government issued money (and government employees are especially stuck as they are paid in that money anyway) so it's just that much easier to trade in official currency than it is with informal currencies or bartering. Money is infinite. The central bank is allowed to (and does) create trillions of moneys, dollars, on some kind of spreadsheet, in a single action.

Again, money is a fictitious commodity, decided politically. In America's case that political function is fortunately heavily filtered through economists and our central bank, but the president appoints the central bank president and Congress controls the purse.

Now whether economic growth can be infinite is a different question. But there should be a money surplus (government deficit) as long as there's a real wealth surplus (economic growth) that needs non-deflating money to make it tradable.

Why can't the central bank print money and buy securities from the private sector to increase the money supply?

It does! Quantitative easing is an example of that, and I know you know that But let's think for a second, what kind of private assets do you want the central bank to buy? The central bank has to then buy assets at the right price and at the right quantity to not suck real assets out of the economy into the dungeon hoard that is "government savings", while providing enough money units so that industry can operate without a shortage.

My confusion is with the part where you claim that the government must run a deficit in order for the money supply to be increased by the central bank so that the economy can grow. From everything I know in economics, that's conspiracy theory territory. I can't even imagine a reason why that might be true.

Well, you can have it by private credit expansion since the central bank doesn't give transfer payments to individuals, but government deficits mean people don't have to owe it back with interest to private banks. Unless you think I'm missing something here, if a government is shrinking aggregate demand (surplus) and interest rates are at 0, the government is going to end up tanking the private economy and will suck up all the money. This is because money invested will be below money taken away.

It's mathematically impossible to have a surplus in trade, government, and the private sector all at once (or a deficit in all three). One of them has to be different than the others. The only one that can't bankrupt is the government (which includes the Fed) so that's the one that should run a scientifically appropriate deficit level.

The word has more than one meaning:
http://en.wikipedia.org/wiki/Security_(finance)

Mailing every family free money would work too, but it wouldn't give the central bank the option of decreasing the money supply later.

Taxes ^_^, or have t-bill rates go sufficiently high so that everyone saves their money, slowing down the money velocity reducing the money supply.

 

[Cheezy the Wiz]

Why can't the central bank print money and buy securities from the private sector to increase the money supply?

Money is created by banks, not by the central bank. The Treasury (in the US' case, since we have no central bank), prints new money. It doesn't create it. You might say that banks create the demand for the printed money, because that allows that money to circulate. But banks don't need that money to circulate, because this new money is created using debts, and inflation destroys the profit created by interest on those debts.

 

[Cutlass]

Well, you can have it by private credit expansion since the central bank doesn't give transfer payments to individuals, but government deficits mean people don't have to owe it back with interest to private banks. Unless you think I'm missing something here, if a government is shrinking aggregate demand (surplus) and interest rates are at 0, the government is going to end up tanking the private economy and will suck up all the money. This is because money invested will be below money taken away.

It's mathematically impossible to have a surplus in trade, government, and the private sector all at once (or a deficit in all three). One of them has to be different than the others. The only one that can't bankrupt is the government (which includes the Fed) so that's the one that should run a scientifically appropriate deficit level.

The US money supply, M2, 1945: $177.28bil
The US money supply, M2, 1970: $601.46bil

The US national debt, 1945: $259bil
The US national debt, 1970: $371bil

The US GDP, 1945: $223bil
The US GDP, 1970: $1,051bil

I don't see any case to be made that the money supply or the nominal growth of GDP is connected to government debt levels. In any sense.

Nominal growth of GDP requires growth in the money supply. In a less direct fashion, real growth in GDP requires growth in the money supply. But neither of those things requires a growth in public debt. In fact, if it wasn't for the utter economic and administrative incompetence of Reagan and Bush and Congressional Republicans, the US would have essentially the same US federal debt now as it had in 1945.

Don't forget this chart:

US federal debt was essentially flat from 1945 to 1981. And yet that was the best ever era of economic growth in American history. Debt grew by leaps and bounds after that, but real wealth growth in the US slowed during the Reagan to Bush era.

The real world does not support your understanding of money.

Reducing outstanding government debt is also unrelated to "government is shrinking aggregate demand". AD can grow perfectly well with a government that is paying down it's outstanding debt, whether in real or nominal terms.

You can talk to Integral on this if you want. But honestly I have no idea where you are coming from.

 

[potatokiosk]

It does! Quantitative easing is an example of that, and I know you know that But let's think for a second, what kind of private assets do you want the central bank to buy? The central bank has to then buy assets at the right price and at the right quantity to not suck real assets out of the economy into the dungeon hoard that is "government savings", while providing enough money units so that industry can operate without a shortage.

The size of the monetary base, compared to the total private assets in the US, is pretty small. I think if we put, say, 1% of the private assets in the US under the ownership of the Federal Reserve the economy could get along just fine and the fed wouldn't need to buy any real assets like land or buildings in order to accomplish this. Buying commercial bonds doesn't reduce the availability of real assets in the economy.

Taxes ^_^, or have t-bill rates go sufficiently high so that everyone saves their money, slowing down the money velocity reducing the money supply.

Yeah, the government running a surplus could work. In any case if the government can just print money and give it away there's no need to accumulate government debt in order to maintain a sufficient money supply.

Money is created by banks, not by the central bank. The Treasury (in the US' case, since we have no central bank), prints new money. It doesn't create it. You might say that banks create the demand for the printed money, because that allows that money to circulate. But banks don't need that money to circulate, because this new money is created using debts, and inflation destroys the profit created by interest on those debts.

The central bank creates the monetary base, or the Treasury creates it when the Fed tells it to if you're being pedantic, and the size of the money supply then depends on what people decide to do with it. It's the central bank's job to ensure the monetary base matches the level of demand for it in order to maintain a stable inflation rate and "full employment", which it normally does by printing money and buying government bonds, or selling those bonds to get the money back, which is a reason why anyone would argue that government debt helps the economy function.

 

[Tahuti]

Money is not wealth or productive capacity.

I don't think Lord Baal means that at all. Indeed, economics is hardly a zero-sum game and I'm pretty sure everyone here agrees with that (aside from economics illiterates who insist it doesn't). Of course there is cheat code to create more money, but it lose its value. I think that's somehow implied that you can't create more money without impacting its value.

The US money supply, M2, 1945: $177.28bil
The US money supply, M2, 1970: $601.46bil

The US national debt, 1945: $259bil
The US national debt, 1970: $371bil

The US GDP, 1945: $223bil
The US GDP, 1970: $1,051bil

I don't see any case to be made that the money supply or the nominal growth of GDP is connected to government debt levels. In any sense.

Nominal growth of GDP requires growth in the money supply.

What <snip>; If economic growth outpaces debt increase, real debts will actually decline. Likewise, governments can incur more debt if the economy grows. Of course, it's macroeconomics, and governments won't really come into trouble for over borrowing, which is hardly even possible if governments are able to control their own money supplies, be it indirectly.

Nominal growth of GDP doesn't require growth in the money supply at all. Money - when used to measure GDP - is merely expressive: You could also use the value if apples or oil if you felt like doing so (or gold or bitcoin for that matter).

Don't forget this chart:

US federal debt was essentially flat from 1945 to 1981. And yet that was the best ever era of economic growth in American history. Debt grew by leaps and bounds after that, but real wealth growth in the US slowed during the Reagan to Bush era.

Notice how the graph takes off early 80s, around the same time of Reagan's inflation fighting policies. Interestingly, debt was decreasing during the Bretton Woods era. As if the lack of inflation dissuaded the USA from borrowing as the Fed's determination to keep the Gold peg true to actual market values prevented inflation.

Moderator Action: Inappropriate language removed.
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[Cutlass]

What <snip>; If economic growth outpaces debt increase, real debts will actually decline. Likewise, governments can incur more debt if the economy grows. Of course, it's macroeconomics, and governments won't really come into trouble for over borrowing, which is hardly even possible if governments are able to control their own money supplies, be it indirectly.

Nominal growth of GDP doesn't require growth in the money supply at all. Money - when used to measure GDP - is merely expressive: You could also use the value if apples or oil if you felt like doing so (or gold or bitcoin for that matter).

Nominal growth absolutely requires growth in the money supply. Otherwise it won't be nominal growth. It's pretty much a tautology.

Notice how the graph takes off early 80s, around the same time of Reagan's inflation fighting policies. Interestingly, debt was decreasing during the Bretton Woods era. As if the lack of inflation dissuaded the USA from borrowing as the Fed's determination to keep the Gold peg true to actual market values prevented inflation.

Reagan never, and I do mean never, took an action which can in any sense be called "inflation fighting". The debt exploded under Reagan because he cut taxes and raised spending.

Moderator Action: You're responsible for everything in your post, included quoted inappropriate language. Please be mindful of this.
Please read the forum rules: http://forums.civfanatics.com/showthread.php?t=422889

 

[Hygro]

The US money supply, M2, 1945: $177.28bil
The US money supply, M2, 1970: $601.46bil

The US national debt, 1945: $259bil
The US national debt, 1970: $371bil

The US GDP, 1945: $223bil
The US GDP, 1970: $1,051bil

I don't see any case to be made that the money supply or the nominal growth of GDP is connected to government debt levels. In any sense.

Nominal growth of GDP requires growth in the money supply. In a less direct fashion, real growth in GDP requires growth in the money supply. But neither of those things requires a growth in public debt. In fact, if it wasn't for the utter economic and administrative incompetence of Reagan and Bush and Congressional Republicans, the US would have essentially the same US federal debt now as it had in 1945.

Don't forget this chart:

US federal debt was essentially flat from 1945 to 1981. And yet that was the best ever era of economic growth in American history. Debt grew by leaps and bounds after that, but real wealth growth in the US slowed during the Reagan to Bush era.

The real world does not support your understanding of money.

Reducing outstanding government debt is also unrelated to "government is shrinking aggregate demand". AD can grow perfectly well with a government that is paying down it's outstanding debt, whether in real or nominal terms.

You can talk to Integral on this if you want. But honestly I have no idea where you are coming from.

Nothing you said contradicts anything I said except when you directly assert I am wrong. You are using different variables to describe different things.

 

[Angst]

Fascism is a grandoise failure when it comes to modern understanding of anthropology because it makes all sorts of claims of how and what human societies are and should be, claims that consider societies organic bodies when they are in fact diffuse and fleeting with internal turmoil per their very nature. That's why liberalism works btw.

 

[Kyriakos]

Fascism does not produce high culture/society, but liberalism (if you mean what exists in Murica and most of Europe) is not producing anything of importance either. It is just that fascism is by its nature more linked to destruction, which makes it far worse than "liberalism", since the latter is supposed to be about general liberty.

Obviously you cannot control how an entire society is evolving, at least not with the current level of population, and the current natural multipolarity in most democratic societies. However this should not mean by itself that leaving things as chaotic as they are now is a good idea. Maybe fascism will return again, not because it is good, but because we already live in failed systems.

 

[Lone Wolf]

it makes all sorts of claims of how and what human societies are and should be, claims that consider societies organic bodies when they are in fact diffuse and fleeting with internal turmoil per their very nature.

Don't worry, they will be organic, even if they will bleed a little in the process of making them organic

 

[Angst]

(Looking over the last page) Wow has this thread exploded since the OP.

edit: And Lone Wolf was hilarious

Fascism does not produce high culture/society, but liberalism (if you mean what exists in Murica and most of Europe) is not producing anything of importance either. It is just that fascism is by its nature more linked to destruction, which makes it far worse than "liberalism", since the latter is supposed to be about general liberty.

Obviously you cannot control how an entire society is evolving, at least not with the current level of population, and the current natural multipolarity in most democratic societies. However this should not mean by itself that leaving things as chaotic as they are now is a good idea. Maybe fascism will return again, not because it is good, but because we already live in failed systems.

I'm not sure you understood my post, but I didn't explain much.

The natural multipolarity of a democratic society you cite is not just present in democratic societies. It's present everywhere. Democracy has merely embraced the differences and assured that different cultural and political actors have their voice in a state, regardless of size (Whether it functions correctly or not is up to another thread imo; the point is that its premise is fundamentally different from fascism). Fascism relies on outdated ethnological idealism, written before the formulation of cultural actors as cultural choicemakers, choicemakers being those that chooses and defines what their culture is, becomes the authority of cultural identity, etc. The point is that societal cultural identity is something constructed with loose ties to what's actually going on in a society, and some actors emphasize or dimininish certain traditions that they consider as being or not being part of the society's cultural identity. I know that you have heard of social constructivism before, and this is basically important, because it's high school level anthropology that basically disproves fascism's very basic premise - that a society is one organic body.

Believing in the organistic society is to emphasize the fallacious assumptions of the most powerful cultural actors (who are most often political in those kinds of societies too). It's simply not a thing. Every society has fleeting borders in regards to both identity and limits - I mean, even borders suck to maintain 'in the name of the organic body' without gaining a huge deficit. Every society has internal strife, and it is going to remain and build tension even if you consider it social illness. To ignore the internal strife and dismissing it as something unnatural or counterproductive to a society is to ignore the very fundamental premises of a society itself. For a society is chaotic. Regardless of its democraciness or not. Tangent: Ignoring the internal turmoil of a society is one of those things that basically makes an individual's emnity towards a Middle Eastern country racist.

Fascism is an idealism that is the epitome of wrong Western idealism. Regardless of its effeciency - imperialist progenitors were kinda powerful after all - it does not recognize human nature as it is and that leads to bad things - again, imperial progenitors. Fascism should be killed with fire.

 

[Kyriakos]

^Which is part of why i already noted that fascism is far worse than what we now have. That does not mean we now have anything good, though.

In fact, the very possibility that fascism or something similar will return is great evidence that the current systems are failed.

Obviously societies are chaotic to some degree, they also, obviously, function to some degree under circumstances. It is not the same thing to have a country advance on its own, with relative social peace, and have it sink in massive faction-creating problems which will lead to anything up to a civil war.

Population is out of all control by now nearly everywhere. Europe is still in general not that densely populated, but again democracy cannot really function with a limited amount of corruption when you try to apply it to massive numbers of people. A union of half a billion europeans is a good example of the failure of such an idea.

 

[Angst]

My spideysense is tingling. Is that an anti-EU doomsday post?

You understand that EU isn't democratic, don't you?

 

[Kyriakos]

I can assure you that some people believe it is.

It is in reality a monstrous distortion of anything democratic.

 

[sophie]

Fascism does not produce high culture/society, but liberalism (if you mean what exists in Murica and most of Europe) is not producing anything of importance either.

What the hell does High Culture even mean? What does it entail? Does it strive towards some kind of predefined standard? And how does modern art and culture not achieve this standard?

If you regard Shakespeare and Mozart as High Culture then you're going to have to justify "Much Ado About Nothing" and Die Zauberflöte