Posts Tagged ‘economics’
New rules– No government subsidization of private debt, and no borrowing at all by government:
I saw your internet storefront; business must be brisk.
Yes, I’m going to need a loan to help expand. I stopped by a branch of the Fifth Second, but of course, it’s no longer a bank, since there are no banks other then the government, all-electronic bank. The Fifth Second is willing to loan me money, but now that money will be coming out of their private funds rather than out of depositor’s funds.
Why don’t you just use one of those new internet sites, where they match up savers and borrowers? There’s a huge influx of savers, willing to lend out money, since deposits at the government bank don’t earn any interest. The small, riskier loans are pooled, to reduce risk, but with so many savers throwing money into these loans chasing yield, I wonder if we’ll see another bubble, like what we saw with housing and college tuition loans.
But there’s a difference. Weren’t the housing and college tuition loans insured by the government?
Yes, now there is no government interference and the private markets will very quickly set proper rates. I don’t think we’ve ever seen purely market determined interest rates before. Now, there will never again be any federal or municipal debt to crowd out the credit markets. And the Fed, together with its interest rate manipulations, are gone forever!
Wasn’t the sheer size of government debt considered the largest bubble in history?
That’s what happens when debt is considered risk free. And there is theoretically no limit to the amount that can be issued, when interest rates approach zero. But how could anyone think that passing more and more debt onto future generations, could be considered risk free?
Now, exactly how did they defuse the bubble?
The entire government debt was eliminated. Large portions were written off. Some was paid giving away government property. Special tax assessments were made, using net worth taxes wherever possible, and some were allowed to pay by giving away ownership of properties, businesses, and other assets, where it might have been difficult to sell them to raise money. Lengthy negotiations were required. But the choice was between either a controlled settlement, or a catastrophic, uncontrolled collapse.
I’m glad our leaders had the foresight and courage to make the right choice.
Even the right choice was extremely painful. So painful that it was decided never to let the government issue debt again! At the same time, they questioned why the government should even have its own money. Instead of depositing tax money into a government account and then spending it, they could instead spend instantly created money and then retire that amount of money through taxation. This way all money could remain in private hands.
How could we trust government to generate the right amount of taxes to match government spending?
Taxes needed to be scalable and automatic, without the type of delays caused by debating wealth reallocation issues. That’s why simple rules were chosen, using the net worth tax where possible, since this is the only type of tax that does not reallocate wealth.
Gee, I’d like the power to create money out of thin air every time I want to buy something.
Actually, government spending will be much more constrained than before. If the President announces we’re going into another war, he better have a very good reason, because people will know that taxes are about to rise!
Duration : 0:3:36
‘Visual thinking’ is a new technique that we use to create visual explanations of complex messages. It enables you to literally see the various elements & how they all fit together.
We’re currently using this technique for some of our clients to help them communicate business strategy to employees as an alternative to large PowerPoint documents.
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Paul@thisishome.co.uk
Matthew@thisishome.co.uk
Duration : 0:2:22
In which John explains the Greek debt crisis, which has pushed the Greek government close to defaulting on its loans, the reasons why the Euro zone and the IMF are desperately trying to bail Greece out, and what the rising cost of sovereign debt means for the massive budget deficits throughout the developed world.
Thanks to Karen Kavett at http://www.youtube.com/xperpetualmotion for the illustration.
Debt Chart: http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg
Duration : 0:3:49
Some of the principles behind consolidating your debt explained.
Duration : 0:3:29