Any Economists on ICMag

[mrbiggs]

mpd,im no economist and i like the sound of what you are saying, but as the FED earns interest on the money it loans out and is privately owned, is it not in these very powerful peoples interest's to have collapses in the market, which not only earns them more money but also creates enough fear to change legislation, heading in the direction they want.
Also does the US income tax pay for intrest owed to the FED? and is the US income tax even legal or enforceable by a law.
It's late im backed and got my conspiracy head on...
peace.

 

[HawaiianPunch]

I don't believe it is legal but it is definately enforcable. All they have to do is lock up one person for not paying and broadcast to the masses that "this could happen to you too" and people will pay. The more that pay, the more funding they have to enforce. The only hope would be if everybody didn't pay

 

[TwoOhSix!]

forgive me if this is wrong, but that sounds like you are saying to stimulate the economy, just print up some more notes and use them to invest in the stock market.

Countries have been doing this forever. Need more money? Print more notes!

 

[mrbiggs]

One more Q. MPD and other economist's, Should i be buying Amero stock.lol.

 

[mpd]

@ GMT - no, I am saying that by switching from liability expansion (making new public debt when new cash - or what amounts to the same thing - is injected into the market as part of the money supply measured as M-1) to the purchase of equity securities accomplishes a number of fundamentally good things for our economy that the present system can never provide:

1. The purchased securities provide a periodic cash flow that will create enough of a gap between the cost of borrowing and the gross amount of these proceeds (over time) provides the opportunity to defease the debt in the market. Put simply: if the government says it is borrowing at one rate and then invests at another rate THE GOVERNMENT is paying, defeasance cannot take place, because you are indeed changing pockets with the money, but investing into the underlying private-sector economy on the same terms (more or less) as everyone else, then not only is it possible, it becomes a necessary part of future government fiscal policy because it provides what every fiscal policy needs - a current source of payment that did not come at the expense of the economy.

2. Take it a little further, if the government can use another set of means to generate a stream of income to pay for one fiscal policy measure, then it can be expanded to pay for all fiscal policy measures, replacing the taxation model altogether because the taxation model (our way of paying for governance now relies on taxation) has a limited output - the marginal rate of taxation cannot exceed 19% without creating a recession, so it is limited to around 19% of GDP and the investment-income model is not limited.

3. This approach changes the way labor, capital and management interact because the construct of businesses is such that there is no opportunity for one group to "make out" in this "at the expense of another" - the economy is NOT a zero-sum gain where you "win" because someone else "lost"; this is just a cruel hoax to get people to surrender their personal power for some nebulous concept such as "economic justice" or "social engineering" or "shared sacrifice". All of these are just empty precepts that politicians use now to keep people from realizing that the most powerful element in our national economy appears in their bathroom mirror every morning and not out of the hands of politicians in Washington. This is the plan that eliminates these issues.

@mr.biggs - it would be if the New Economy were contrived/designed/executed in a manner that allowed for large-scale market failures, but the design of the system I am offering up (with deference to all, I hope) a large-scale recession such as we are experiencing now is not a systemic possibility; there can be no recessions because the fundamental causes of recessions are eliminated from the macro-economy (the overall structure eliminates recessions from being able to happen because the conditions required to create a recession - called "conditions precedent" - never come to pass. This isn't as miraculous as you may think; we do this sort of "structured finance" in business all the time, we just haven't applied the lessons we have learned to our economy because the current capital markets are dominated by the investment banking industry and the investment banking industry would rather see the economy run into a ditch every now and then rather than give up their hammerlock control of the system.

@Two-Oh-Six - no, not the way I am talking about. You are referring to specious currency (fiat money) and I am referring to it in the past tense because this policy, together with the manner in which we create money in the American economy (not talking other countries here, just America as the first example) have to change in order to stop this very practice that is killing our global economy. My approach ends it - not only for the U.S., but other economies that use fiat money will HAVE to switch to this system or they would become its victims, but not victims the way most people might think. It's like riding a bike with one flat tire, you still get where you are going, just a lot slower than the fella who has that sleek new bike that is built to race like the dickens. Those that don't adopt this type of economic "architecture" for their economies will not be able to compete in the world economy because of the inherent inefficiencies these other approaches automatically bring to the table.

 

[GMT]

I'm glad that you aren't talking about the equivalent of just creating new money to pump into the system as that would clearly have the inflationary effect that you wish to avoid. I am concerned though that reducing public spending in order to buy up sections of the private economy would infact reduce the economy and the monetary supply within it. Once the state owns a share of major companies, and introduces regulation on how those companies may conduct business, you efectively have a public/private partner ship in commercial activities. That is a fine balancing act between capitalism and communism. One problem I can see is how well (or rather poorly) large scale govt schemes are run historically speaking, and the effect that this would have on the efficiency of corporations. A negative impact on efficiency would clearly hit profits and competitiveness within the market place. As dividends were paid out to the state, that reduces the money going into the hands of shareholders, (and more importantly the pension provision plans) while reducing the available equity for private investors to buy, driving up the price/earning ratios and reducing rates of return on these investments.

To my mind there are only four ways in which a govt can increase its nations economic standing, that is to make itself as self sufficient as it can in essential supplies, (food, energy etc) reduce its trading deficit (preferably create a trading surplus) by concentrating on emerging technologies and ensuring that the section of its population who will benefit from it, has adequate access to educational programs that will help the nation to stay, (or get to) the forefront of technology. Also the control of birth rates (esp in the poorest sections of the community (which typicaly has the highest birth rates)) is essential.

 

[mpd]

Ah, the state would have no say in how the companies conduct business because the companies are intentionally organized to distribute all excess cash flow as the cash flow is received - there's nothing to regulate or argue over - all the money is netted out to the investor (including the nit-wit federal government) as received. The construct of these business-combinations is where you may be getting hung up on the conceptual ladder here.

In a business-combination, the company is organized to undertake three (3) activities in its lifetime:

1. It raises capital via an open public auction of ownership interests in a limited company - as the legal term "limited companies" is typically defined in the United States - in the amount of 10,000 units. Every company organized as a business-combination has the same number of securities in its float - the only thing that changes is the offering price of the securities (e.g.: a $10,000,000 raise would be in 10,000 units, each having a price of $1,000, while a $25,000,000 raise would be in 10,000 units, each unit having a price of $2,500). The sponsor/developer/manager/entrepreneur/promoter has to purchase and own at least one (1) unit out of the 10,000 unit float of limited company (think limited partnership) ownership interests.

2. The company takes the proceeds of the offering and purchases income-producing assets that can be rented to third-parties for the use by said third-parties in the third-parties' business endeavors.

3. The company rents these assets to the third-parties and receives a fee that is equal to a pre-determined percentage of the gross sales made with the assets so rented.

This is all the company can do. The approach eliminates the specter of fraud because only sufficient income is provided each month to offset the costs of operations for the third-party companies - all the profit gets distributed through the limited company that owns the assets; that, in turn, is owned by the investing public. So in this "economic construct" or "business scheme" (both are common words used to describe the machinations involved with these business objectives) is designed to force the company to distribute the profit it generates each month and turn it over to the investors.

This eliminates the need for oversight and these limited companies are intended to be "silent partnerships" where the work goes on each day or month or year without the investing-public (including the federal government acting as an investor on behalf of fiscal policy initiatives benefiting our people) having any say in the matter - except - if the projected distributions of profit do not occur in accordance with the minimum investment-income projection goals - agreed to by all parties before the business receives dime one of the investing-public's money. If the promoter/entrepreneur/manager/developer cannot "deliver" the goods as promised in the beginning, there is an automatic "Event of Default" that requires a vote of all the shareholders in the deal and the vote does not allow the developer/promoter/sponsor/entrepreneur to have a vote in these proceedings (obvious conflict-of-interest) that MUST be one (1) of three (3) potential outcomes:

a. Everyone says okay, we'll cut you a break and let things continue. No change is a possible vote.

b. The majority votes for dissolution, in which case the business is immediately wound-up, all assets are sold off into the market and the net proceeds are distributed pursuant to the terms of the deal agreed upon in the beginning. This is a total shutdown; but as you can see, since the company can only purchase income-producing assets with the proceeds of the initial public auction, then even at wind-up there will be things worth money to sell in an orderly fashion so investors are never really in a position to lose all their investment - a key difference in my platform versus the current capital market platforms like the NYSE and the NASDAQ.

c. The majority votes to replace the entrepreneur/promoter/sponsor/developer/manager with a manager of their choosing, in which case the original sponsor gets a check for $100 and is out of the deal, losing their entire profit-stake in the enterprise, and operations then continue with the new general partner running things.

In my construction, if there is an Event of Default, the federal government's vote is automatically assumed to be for dissolution and wind-up of the enterprise and everyone else must outvote them or wind-up the enterprise.

I would submit this prevents the eventuality to which you have invested considerable concern.

 

[Mr. Tony]

I'm a business major, ( though a specialize in accounting). as far as the seed prices go I think the discussion needs to be on price elasticity.

 

[mpd]

Typical MPD Bullshit...

Typical MPD Bullshit...



Man, I just looked back at the beginning of the thread and the hub-bub about seed prices followed by my egotistical posting of an unrelated matter - a total hijack and I am sorry. I deserve it.

Talk about getting on your high-horse and riding off without a thought to anything other than your own bullshit...

Goes to show what happens when you don't take your medicine. It works better when it is in you MPD and not in the bottle.

 

[GMT]

MPD, I see what you mean now. I thought that you were advocating the govt use public money to invest in microsoft etc. at first. I think it may be a hard sell to get the private sector to risk its cash in such schemes though. But I can certainly see the benefits to the public finances. Over here we have things called public/private finance initiatives, PPFI, which is in effect a way of sending public money into the hands of private investors. The way in which the scheme works is this:
To build a new hospital, a private consortium of investors puts up the money (in practice borrows it from banks), the hospital is built, and the hospital is then leased to the govt. In practice the costs of leasing the building far outweighs the cost of borrowing the money and building it themselves, (clearly otherwise there would be no profit and no incentive for private investors). This keeps the capital outlay off the books of the tax payer, increases infrastructure development, and passes a large part of the costs of what the public can see, onto the subsequent govts. in order to say "under us .."..such and such " was built, whereas under them, nothing was built". In practice it gets the public a very poor deal. There have been incidents come to light where it is in the contract that no one but the consortiums people can carry out maintenace work (such as change a light bulb) and it costs £100 an hour for someone to come out and do it etc. I would rather see the govt build the buildings and lease them out to the private health sector, so that the private health sector subsidises the national health sector. But here the govt can't be involved in generating profits of any kind. Any cash they want HAS to come from either taxation or borrowings. I take it that no such rules exist over there? Or is this one of the rule changes that you wish to see? Do these "business combinations" already exist over there or is that one of the rule changes that you would like to see introduced?

Mr Tony, my area is also corporate accounting, price elasticity is an interesting subject in seed sales. Do Nirvana make more profit from selling 10 times the packs of seeds that Rez does, does Nirvana infact make 10 times the sales that Rez does. The problem with a discussion on price elasticity though is that we need the sales figures and costs of production for each company rather than merely the price that we see packs of seeds selling for.

 

[Mr. Tony]

Mr Tony, my area is also corporate accounting, price elasticity is an interesting subject in seed sales. Do Nirvana make more profit from selling 10 times the packs of seeds that Rez does, does Nirvana infact make 10 times the sales that Rez does. The problem with a discussion on price elasticity though is that we need the sales figures and costs of production for each company rather than merely the price that we see packs of seeds selling for.

Very true, I though some of those figures had been posted, I didn't read the thread.

I'd love to continue the discussion but I have an accounting exam to study for.


GMT are you a cpa?

 

[mpd]

No, we don't have those rules here in our economy, but if "Capitalism Version 2.0" was to be adopted by your government, then there would have to be some changes there that I have not begun to even consider, but would be necessary because the economy of Great Britain - the only country in the world with a "special relationship" with the U.S. - would not be placed at a structural disadvantage for which there is no offset.

No, business-combinations do exist, but we do need a rule change for our exchange programs so that the exchange platform would operate as specified.

Man, you are really getting it in the shorts; the government contracting gig sure sounds like it is at least as corrupt as the system we currently use, and that is the point. At the end, you are at the beginning; a corrupt system of government exists that favors one portion of the population over the others and politicians perpetuate the system so they can control the flow of funds, and thereby direct fiscal policy that doesn't really benefit all of the population. No, politicians tend to channel funds to those people who either voted for them, financed their campaigns, or both. Everyone is scared it will break down and it has now broken down and is in danger of sliding into the abyss within the next 24 months.

My current thinking is that we will have to watch the entire world economy meltdown before we will change the way we relate our economy to our desires to control the actions of everyone else who we have no business directing in the first place. Once it melts into a blob of bank failures and bankruptcies, then it might hurt badly enough that some genius inside the Washington Beltway will say, "gee, is there a better way of doing things?"

There you have it, all of mankind dependent upon the deliberations of some government entity that nobody knows anything about, but it will direct the fortunes of us all...

 

[Mr. Tony]

No, we don't have those rules here in our economy, but if "Capitalism Version Everyone is scared it will break down and it has now broken down and is in danger of sliding into the abyss within the next 24 months. Once it melts into a blob of bank failures and bankruptcies, then it might hurt badly enough that some genius inside the Washington Beltway will say, "gee, is there a better way of doing things?"

This is really what needs to happen for us to continue... I know those that control the media will try to brain wash the ignorant to keep this from happening.

But the way our government interacts with money is a shame to anyone with business knowledge. They are just so damn inefficient only because they can be there is no incentive or them to save money and use it wisely because they can just keep raising taxes.

 

[GMT]

I like your optimism MPD, but I'm afraid I'm a little more biased towards the nutty stoner conspiracy way of thinking. The poorer the people in the middle and at the bottom of the economic pile gets, the richer those at the top of the pile become, wealth is after all merely based on relativity. You arent rich if you have a million in the bank unless most people don't. This means that an economic melt down benefits those at the top rather than hurting them, which means those they finance are doing a good job for them. Those looking to be financed then guarantee future financing and the cycle continues. Also by reducing the average income levels, they reduce the financial independence of the average Joe, and limit their options in life. After all, idealism is something that most can't afford if they have a roof to pay for and kids who need feeding. Esp if speaking out will have a negative impact of future careers.

Tony, hopefully you spotted your answer in your rep, I didn't want to post it in the open.

 

[SkareCrow]

I think the problem with capitalism all stems from the federal reserve. Thomas Jefferson warned about the bankers and that they can be stronger than any standing army!

the Federal Reserve is a private entity. they are about as "federal" as federal express


US Dollars = Debt





Lets put this in lamen's terms

the US government wants the Fed to print money. Lets just say 10 billion for arguements sake. The us government has to give the fed 10.9 billion in bonds for 10 billion us dollars thus creating debt. So the fact that we print more money to pay off debt only increases our debt. It is an endless cycle made to dupe the average man. Paper money has no value! The only thing that makes it of any value is that we belive it has value.

 

[med_breeder]

I have a question for the economist here at icmag. Has the death of Michael Jackson had a signifacant imapct on the US economy? His songs are on top at itunes and amazon, his cds are flying of the shelves. after his death, newspapers around the country sold out, that hasn't happened since Obama's election win.
Since last week, I would assume that the economic impact has to be at least as big as
"Black thursday."
peace

 

[konstantgrdnr]

Well on the issue of the Government having to break down for a new better system to take it's place is a mute or non realistic one on the whole. In my opinion the people who perpetuate such systems are never, and I mean never going to change. The population has a history of looking towards other, what i call morons to come up with similar systems.We created a whole industry in that category, I think we call them Ivy league schools over here.

I know it is a simplistic explanation but it has a solid basis rooted in history. A great resource on a scenario which would occur if such a system were to collapse can be seen in the health care debate going on in the States. Look at all the lobbying and maneuvering taking place to game the system and the taxpayers,or the 700 billion which was paid out under the Bush administration and endorsed by the current Obama administration. Even though these are not the best available options for the whole population.

The final and most convincing argument has been made in Disaster Capitalism by Naomi Klien http://www.naomiklein.org/shock-doctrine/video-audio

I have been pondering this question and your type Economic model for years, though i am not an economist i believe the solution lies in creating a parallel economy which bypasses all the conventional trading channels in place, and dealing in a trading, service and cash related economy that avoids contributing enormous amounts of capital (taxes)only to see it manipulated by our respective governments and their corporate keepers for their own gain and our misery.

I look to craigslist and other cash only trading and selling sites in addition to not banking at a commercial bank, i use what we call a credit Union and trade whenever i can. Their are many models being used throughout the world, one of them was started in India lending to poor people and it was called micro-loan, which was laughed at by the banks at first now they have programs and suddenly see a dollar to be made when before they wouldn't of cared if such people starved to death. These programs and the money generated must stay amongst the people like in your proposed model.

I think that the Internet and soon to be High-speed wireless internet will allow like minded people to bypass the middlemen of the world and begin to take this world back.

 

[eglider]

I cant make the ideas get lined up here ..lol Im seeing it but cant describe what im looking at . Ok how do we pay only a dollar for every dollar we print. How to remove the Feds "interest" which creates a constant negative? Dollars tied to a number of commodities to prevent manipulation by the money monkeys? You stated earlier no but the dollar has to have a fixed "value'" to prevent inflation (dilution).
Interesting as hell but you'll have to walk me slow.

They ain't never called me lightnin'...

Hell how do we reassign value to what we already have??? Maybe I better nap...lol

 

[dixbutler]

The opportunity costs you refer to are possible because of scarcity. That is the simplest of economic ideas. Scarcity drives the supply and demand curve. As the supply goes up the price goes down. With very few comercial seed suppliers, the cost of seed is kept high, but there is not enough demand to support more suppliers.

That's my take

 

[CANNACO-OP]

buy and sell "high", just do each at the right time, but in seriousness, we have access to one....we will be in touch,, usa4peace.canna