Bearsy

I don't really know much about how "economics" works or any of that shit.
I had a drunken idea/question the other night when talking about the debt and class struggles.
My idea was: As I understand it, money and debt is for all intents and purposes imaginary... why don't "they" just wipe out all debts? Clean slate. I know it would have to be a global agreement, but this economic crisis is also a global problem.
Why can't they just say "whatever money you've got now, is the money that you've got"

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my_scatterheart

Because it's not really about money.

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Be mindful even if your mind is full. -J. De La Vega

farmergiles

Because of all the vested interests present.

If everyone told the banks where to get off they would be out of business and so would all the politicos in their pay.

Also regular people have savings, pensions etc which they are scared of losing.

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Xil

the real way to do economics is on a personal level. dont go out and buy stocks, give a loan to a friend in need who you believe in


all that trading is just stealing from ppl who actually do/make things

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John F. Kerry

well just as an example imagine one company sold a building to another company for 300 million dollars. that other company only paid like 20 million and has a debt for the rest that it has to pay back over x years. so "forgiving" the debt isnt helping some poor person, its just screwing the company that happened to sell it on credit. that kind of problem explains the whole situation. if all the mortgages a bank holds that are 1% paid off were just "forgiven" it might be nice for the people who get free houses, but the bank would probably go bankrupt, and at least, would definately not want to lend any money to new home buyers any time soon.

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Nasa under Obama

Roach

Like Greenspan once said, "You could have a doctorate in math, and still not understand derivatives."

which is only one facet of modern economics.

start here............

Economics - Wikipedia, the free encyclopedia


then having memorized that....^


lookup some economic anal-lists videos of recent times. I'll bet you still don't understand 10% of what is being said.

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Sir-Ex

The abolishment of debt won't occur until we go full martial.

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Smile

Ditch the cigs!!!!!!

Captain Cannabis

i am amazed that you actually seem to understand economics enough to thoughtfully answer a question.

where do i get my free house?!

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fuck the monkeys

~1~

It's basic really...

Corps are fearful of rising interest rates should the country's credit rating be down graded so they have 'invested heavily in cash' which means they've stitched it into the mattress and are sleeping soundly on it.

They hedged their bet against a tumbling economy, one they shoved down the hill.

So your answer isn't to forgive the debt, the answer is turning the corporations on their heads and shaking them until the money falls out. If they feel the need to do business elsewhere then maybe we should let them, America isn't short on ingenuity or imagination. Perhaps once our electorate isn't beholden to the corporate lobbys purse strings we can regulate the right industries and let loose the reins on some of our other overly regulated industries and find the balance.





But I'm just an old pseudo-hippie social anarchist, what the fuck do I know.

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The Rev

The problem with this idea is that "The money you've got isn't money you've got, it's money the bank owes you." You see, banks owe FAR more than they make. Every checking account, savings account, CD, etc. is an IOU. You put your money in, and they give you a ledger entry (your account) and then loan that money out to someone else. That person then puts "their" money in the bank, and it gets loaned out again, etc. etc. So where there's only 1 million dollars of actual money in existence (for example), there's going to be 10 million dollars in bank accounts. If you tell everyone they don't owe anyone anything anymore, then everyone's money (except the guy with cash in his mattress) vanishes from existence.

As for how the economy works, it's people trading goods and services (labor) for other goods and services. To avoid the problem of barter, we use a medium of exchange, money. Since our economy works on paper money, and the government has the printing press, the government has the power to print money for itself to spend (which is what the national debt mechanism actually is, with the Fed printing money to buy treasuries, and the government promising to pay it back, with interest). This fucks everyone because the amount of money in circulation is always equal in value to all the goods and services for sale. You double the supply, you don't create new real wealth, you just make the price of everything go up by 100% or so.

How the economy goes in the tank comes about through one of two events: the production of goods and services is damaged (like bombing factories in a war) or the price structure is damaged. The price structure is the relationship of prices to one another. For example, in your home, you have the price of your labor on the one hand, and the price of rent, utilities and food on the other. As long as they remain in proper proportion to each other, you're fine. However, if the price of your labor stays the same, but your rent doubles, then you're in trouble. Well, this sort of thing happens on an economy wide basis too.

When we have a boom or bubble, you see prices going up in one area of the economy (like your rent suddenly going up) out of proportion with other prices (like your labor). We saw this in the housing boom, as houses doubled in price relative to other prices. The same thing happened with tech stocks in the internet bubble of the late '90's. When we have collapses, these distortions correct themselves. Now, under a stable money supply, these distortions wouldn't get too big, because there's only so much money to support the growing prices, and it would have to come from other places (like cutting down on entertainment expenses to increase your retirement savings). Unfortunately, the government keeps growing the money supply through taking on more debt, and with an ever increasing supply of cash out there (which the banks make even larger through the lending practices described above) you have more and more money to support higher and higher prices, the result being a greater and greater degree of distortion of the price structure.

And when those distortions eventually correct, then you have a resounding crash instead of a minor correction, and everyone gets fucked. Of course, if you want to put off the crash, you just increase your output of new money. Carrying that idea to its conclusion results in hyperinflation.

The way to get the price structure to find an equilibrium, and end this madness, is to stabilize the money supply. This involves stopping banks from loaning and re-loaning the same money over and over (good luck on that ever happening) and stopping the government from borrowing any more money (even more unlikely). In other words, this will end in hyperinflation, sooner or later.



The Rev

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zerodown

@ OP: look at it this way, the system is doing so bad you can think of it as a terminal patient hooked to a respiratory machine. What you are asking is for the system to pull the plug on the machine that keeps it alive.

@The Rev: I understand economics, in fact I am finishing a bachelor's degree in accounting, and you have described the problem flawlessly. Banks have always been and always will be the problem, the root of all evil.

---

Sometimes I think the department of education should be updated, kids should be taking two essential classes since elementary school, economics and activism.

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"I've seen people so poor all they got is money."

We have to learn to unlearn
Its not contradiction, its amendment
Not everything we see is reality
Not everything we hear is the truth
Not everything we're taught helps us grow
~Cultura Profetica

"La locura se lleva en la cabeza y las drogas en los bolsillos"
~Roberto Iniesta

Roach

or get a job with a bank.

Someone very close to me started with a large bank two years ago. This week he's on a one week cruise around ports of South America with his signicant other, Works huge amounts of overtime, and will be getting married and financing a home next summer.

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