Root causes of socio-economic problems

[BrentonEccles]

The general public need to know what is actually going on "out there" in the monetary system - most people seem to have no idea (mainly because the information isn't readily available), and I think that most here would feel a sense of responsibility to educate the public about the true foundational causes of this "global financial crisis."

I wish to direct your attention to some very important information, which covers the true root causes of our socio-economic problems while offering a sane solution.

Please take time, when you can, to watch the internet documentary Zeitgeist Addendum (which uses a US government source to detail the workings of the economy) and further read this Orientation Guide (http://www.thezeitgeistmovement.com/The%20Zeitgeist%20Movement.pdf) or alternatively view it in Video Format (http://video.google.com/videoplay?docid=3932487043163636261).

They are both from a global social organisation called "The Zeitgeist Movement" which currently has over 250,000 members, and will have surpassed (according to our current growth rate) 1 million by 2010. On March 15th we held over 450 events, and this was the official beginning day for our movement. The main event was in NYC, if you'd like to know about that event please see the New York Times review: http://www.nytimes.com/2009/03/17/nyregion/17zeitgeist.html

For additional information, please visit our website (http://thezeitgeistmovement.com) which covers these issues further, and provides a means for us to attempt to inform the public.

I'm not trying to win you over on anything. Just consider the information presented in what I've directed you to. There's no profit, no nothing but education for me or anyone else to gain here.


"Zeitgeist: Addendum, attempts to locate the root causes
of pervasive social corruption, while offering a solution. This solution is not
based on politics, morality, laws, or any other "establishment" notions of human affairs,
but rather on a modern, non-superstitious based understanding of what we are
and how we align with nature, to which we are a part. The work advocates
a new social system which is updated to present day knowledge, highly influenced
by the life long work of Jacque Fresco and The Venus Project. "

 

[richi1173]

This topic is more about self promotion than actually exploring the root causes of socio-economic problems.

How about paraphrasing and summarizing the points in the movie that you posted backed up by evidence?

 

[Synystyr]

The movie offers an alternative, but not really a path to get there. The deck is stacked, wide-eyed optimism only goes so far.

 

[BrentonEccles]

This topic is more about self promotion than actually exploring the root causes of socio-economic problems.

How about paraphrasing and summarizing the points in the movie that you posted backed up by evidence?

I'm sorry if it comes across like that. I don't mean for it to, but I guess my use of language might have that sort of 'essence' to it.

I'll paraphrase sections of Addendum:

Section I: Our monetary system is experiencing this failure because debt (amount of money) is at record levels because money can literally just be 'created' out of nothing. This has/is causing inflation, and thus the devaluing of the currency. As this continues, people will not be able to afford their loans, to buy products (etc) and this will end something that is necessary in our monetary system - cyclical consumption. The very nature of the system is unsustainable because it is, by design, an inflationary and contractionary system.
Section II: Anecdotal account of corporate corruption by John Perkins, author "Confessions of an Economic Hitman." Also covers the failure of models such as WTO, IMF, etc as global versions of the Federal Reserve, etc,.
Section III: Introduces Jacque Fresco and the Venus Project and details the fact that we do have the Scientific and Technological capabilities to provide for all the planets people in a Resource-based Economy. This can be further expanded on with examples of such things as the U.N's world water report which concluded that there is more than enough water for the worlds people but that the access is uneven due to political boundaries, etc,.
(And by the way, if any of you want to you can go down to Venus, Florida and visit Jacque to talk about this direction)
Section IIII: Discusses two aspects of natural law, and how aligning with those things is more productive than the despotism of 'doing as one feels,' while advocating activism and the creation of a global mass movement. Encourages individual moving away from relying on this system by 'going sustainable' as best you can.

Specifically, what topic area would you like evidence provided for? If you're specific - e.g., "give me evidence for claim X, Y, Z" that'd be helpful.

but not really a path to get there.

You think so? Why do you say that a direction isn't offered? Science and Technology applied to society is the direction. However, I suppose some people might need that expanded upon - but could you elaborate as to why you think no path is defined.

 

[Synystyr]

It takes coordinated efforts, and even suggested force, to regain bargaining power from private interests that place profit above societal reforms. Even then, bargaining with private corporations is not enough. Science and technology are a means to an end that most of us can't independently generate, in a time where the working class will continue having negative returns on compensation for labor. Most of us would agree on societal reforms, a few would not, and the few have the most chips and the most to benefit from us not having the ability to bargain.


To steal someone's sig,
"I have witnessed the tremendous energy of the masses. On this foundation it is possible to accomplish any task whatsoever." - Mao Zedong

 

[BrentonEccles]

It takes coordinated efforts, and even suggested force, to regain bargaining power from private interests that place profit above societal reforms.

I think that's where this systemic collapse comes in. If people haven't got faith in the monetary system and their leaders anymore, then that's the beginning of the end. Need I expand on the monetary collapse, or do you understand that the debt levels are unsustainable, etc,?

I think when some of The Venus Project's bigger aims start being fulfilled (prototype city, major motion picture), a lot more people will see that this is possible.

 

[richi1173]

Section I: Our monetary system is experiencing this failure because debt (amount of money) is at record levels because money can literally just be 'created' out of nothing. This has/is causing inflation, and thus the devaluing of the currency. As this continues, people will not be able to afford their loans, to buy products (etc) and this will end something that is necessary in our monetary system - cyclical consumption. The very nature of the system is unsustainable because it is, by design, an inflationary and contractionary system.

ITS CALLED INDEXING DUDE. The minimum wage is indexed yearly for inflation and most contracts are also adjusted for inflation. Inflation can both increase and decrease not just from money supply changes, but from aggressive aggregate demand and adverse inflation shocks.

 

[Synystyr]

I think that's where this systemic collapse comes in. If people haven't got faith in the monetary system and their leaders anymore, then that's the beginning of the end. Need I expand on the monetary collapse, or do you understand that the debt levels are unsustainable, etc,?

I think when some of The Venus Project's bigger aims start being fulfilled (prototype city, major motion picture), a lot more people will see that this is possible.

I'm well aware. The US has 50+ trillion in liabilities, and there is a quadrillion of derivatives floating around. I don't care for libertarian capitalists, but they know their stuff when it comes to money.

My problem is that there might not be any "Venus Project's bigger aims" because we will have little bargaining power in creating the societies we want in the first place. There isn't a democratic way to get what you want in government, only people to make small adjustments and create the illusion of real progress.

 

[BrentonEccles]

ITS CALLED INDEXING DUDE. The minimum wage is indexed yearly for inflation and most contracts are also adjusted for inflation. Inflation can both increase and decrease not just from money supply changes, but from aggressive aggregate demand and adverse inflation shocks.

I'm quite aware of that. I'm sure you know that one of the prime causes of the Great Depression was that debt levels were way too high. And I'm sure you're aware that, debt levels are -way- higher than what they were then because we can just print money now. Just so I can expand on the issue you're addressing - you're reffering to price indexing yes?

My problem is that there might not be any "Venus Project's bigger aims" because we will have little bargaining power in creating the societies we want in the first place.

So what you're saying is that there will be a lack of power? I would have to say there'd be the exact opposite. The difference between now and then is that people would contribute to society based on their abilities, rather than their opinions and nice ideas.
So, the incentive is that by learning things you'll be able to apply them to society. In this society you need marketing and all sorts of things to get an innovative idea out there, and even then if you can afford it you still need to be lucky. In a resource-based economy there'd be no such barrier to innovation. Does that (hopefully in some ways) address what you're saying?

Here is a short version of the Projects Aims. I believe Jacque's book "The Best That Money Can't Buy" expands on the direction of the project more.

 

[Gnug215]

I don't know, but hearing about this and this Zeitgeist thing immediately gets my critical alarm bells ringing.

Anyone else get that?

 

[BrentonEccles]

I don't know, but hearing about this and this Zeitgeist thing immediately gets my critical alarm bells ringing.

Anyone else get that?

Well I hope it does. Regardless of the fact that it sources reputable documents, you should approach all things with skepticism. Dogma is useless and dangerous.



On top of the information I've already linked out to, you might like to see the event that went on in nyc (and part 2) in march.

 

[richi1173]

I'm quite aware of that. I'm sure you know that one of the prime causes of the Great Depression was that debt levels were way too high. And I'm sure you're aware that, debt levels are -way- higher than what they were then because we can just print money now. Just so I can expand on the issue you're addressing - you're reffering to price indexing yes?

That means your data and your conclusions are non-concordant. If we have higher public debt today, that means we would have collapsed a long time ago, considering the Great Depression. Yes, and its price indexing used to adjust wages.

Furthermore, the US debt was actually decreasing through the 1920's. Which means it was not a relevant factor in the Great Depression.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo3.htm

Finally, there was no massive inflation in the 1920's, which would have been indicative of an expanding money supply. There was actually deep deflation caused by the cutbacks from WWI. A major cause of the Great Depression was the cut in money supply that the Fed instituted in 1928 - 1929, despite the total absence of inflation, to rein in the stock market. However, it was a little to late for that, just like the housing bubble.

 

[BrentonEccles]

That means your data and your conclusions are non-concordant. If we have higher public debt today, that means we would have collapsed a long time ago, considering the Great Depression. Yes, and its price indexing used to adjust wages.

Furthermore, the US debt was actually decreasing through the 1920's. Which means it was not a relevant factor in the Great Depression.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo3.htm

Finally, there was no massive inflation in the 1920's, which would have been indicative of an expanding money supply. There was actually deep deflation caused by the cutbacks from WWI. A major cause of the Great Depression was the cut in money supply that the Fed instituted in 1928 - 1929, despite the total absence of inflation, to rein in the stock market. However, it was a little to late for that, just like the housing bubble.

Well, in response to the underlined that is untrue. What is actually happening now is continuing expansion (which is what the growth in national debt basically is, as I'm sure you're aware). Unfortunately, the nature of our monetary system is that sooner or later it has to contract back inward (which, as you have said is what the fed did in the 20's) - and what has happened since the Great Depression is that we have 'stimulated' ourselves out of this contraction with big 'injections' of expansion.

What happens when this debt (all created through loans) cannot be sustained anymore?

Here's one example of this scenario occurring (and there are many), what happens when the central banks inevitably start raising interest rates all over again? And when you take into account the huge amount of loans that've been created through this crisis to sustain growth -- how are people going to afford that debt then, when they couldn't even afford it BEFORE the growth in debt?


From the Activist Orientation Guide: "Money used in the world today is Fiat and is usually regulated by the Central Banks. In the United
States, the Federal Reserve (its central bank) manipulates interest rates in order to control the
expansion and contraction of the money supply. Debts generated by loans (remember that money
comes into existence from loans; hence money is created out of debt) are exaggerated by the use of
interest, for the money to pay back the interest charged on the loan is never respectfully created in
the money supply. Therefore, when the money supply is expanded, typically creating "economic
growth" (new money being put to use), a proportionate amount of debt is created as well, forcing
people to submit to employment to afford the debt obligation.
Since the interest + principle of the outstanding loans will always exceed the available money supply,
this aspect constitutes nothing less than a form of economic slavery, for it is virtually impossible for
the collective public to ever get out of debt. Also, the term 'Economic Growth' is actually nonsense,
for all expansive growth is temporary and must be counter balanced by contraction. The only reason
more jobs are created is because more money is in circulation."

 

[ImprobableJoe]

:roll:

 

[richi1173]

BrentonEccles: What your saying is basically the point that Peter Schiff has been championing for a while- that the US has to much debt and not enough production to back it up. That, however, is untrue. A more clearer picture is debt as a percentage of GDP. Since, GDP is both the market value of final goods in a year, expenditures in a year, and income in a year, we can observe that out total income is still shy of deficit spending, macro-economically speaking.

http://zfacts.com/p/318.html

Actually, or potential output has risen since WWII, thats why the economy has expanded. The boom-bust cycle is there because of changes in aggregate demand.

Most debts are fixed, so they are unchanged by the changes in the federal funds rate. What does change is the availability of new loans. Government bonds are fixed and not adjustable, for example.

Both the Great Depression and this recession were caused by the Fed contracting the money supply too late. Alan Greenspan did not contract the money supply and thus raised the interest rate until June 30, 2004. The tech bubble which caused the recession officially ended in 2002. By that time it was too late already. What happened this time is that fortunately we avoided the entire collapse of the financial system.

 

[BrentonEccles]

You're quite right that our potential output has increased since WWII. However, that is in the longer term part of the problem.
I'm sure you're aware that monetary economics benefits only when products are scarce. So it's not the interests of industry to seek out holistic approaches to sustainability, because they simply couldn't profit from such a method of production and output. It's actually when the supply is in accord with the demand (or below, or as near to as possible) that prices rise - that's inflation.

Most debts are fixed, so they are unchanged by the changes in the federal funds rate.

My mistake in regards to the scenario I posted, I forgot about that.

What happened this time is that fortunately we avoided the entire collapse of the financial system.

Well, not quite. There are an array of longer-term reasons why the monetary system is going to flop, but in the shorter (and longer) term these newly created debts cannot be sustained.

Rather than me re-write something that can be easily referenced (PG 24-26):
"The 'Boom and Bust Cycle' (aka - "The Business Cycle") -Surface definitions of the "Business Cycle typically read: "the recurring fluctuations in economic activity consisting of recession and recovery and growth and decline."
However, this says nothing about the cause of the fluctuation. While there are various theories on the cause, it seems most economists tend to shy away from the 'elephant in the living room'"¦ and that is the powerful effect
Monetary Contraction (money removed) and Expansion (new money added) have on the Business
Cycle.
When money is added to the money supply, that money is then typically put to use for some reason.
Very often these reasons include starting a business, buying a home, investing in the stock market,
etc. This application of money often translates into so called "economic growth". Credit Expansion,
in the form of personal and business loans, is really the hidden force behind economic growth. This
is basically the 'Boom' period of the Boom and Bust cycle. If you examine prior trends of economic
expansion in the United States, you will find a lockstep correlation to the expansion of credit. (ie.
1990-2000 stock market bubble)
Unfortunately, money cannot be added into the economy infinitely, for the Debt and Inflation caused
by the expansion will eventually overcome the "growth" benefits. This is due to the reality that new
money is always needed to cover the outstanding debt, largely due to the need to pay back the
interest on the loans (which does not respectfully exist in the money supply).
What this means is that after a period of growth (boom) with the economic indicators now pointing
towards a weakening economy, a choice can be made by the financial regulators/government to
either:
[1] Continue the expansion by infusing even more money, often by lowering the interest rates (such
as the 'prime' or 'discount' rate) or by simply moving large sums of money to certain sectors (such as
the 2008 700 Billion dollar bank bailout).
or [2] Let the contraction (recession) run its course, raise the interest rates, and bring the economy
back to some kind of equilibrium, thus preparing it for another expansion.

As far as history is concerned, the pattern has been to do both, basically with the idea being to "ease"
the recession by increasing liquidity. The reasoning is simple. It is politically unpopular for the ruling
class to have unemployed, poor citizens. This can lead to contempt for the leadership and perhaps
revolution. Therefore, there is always the game of placating the public with false security in order to
avoid the truth coming out about the inherent dysfunctionality and corruption of the Ponzi scheme
known as the Monetary System

Now, the result of this "easing" of the contraction simply delays the inevitable and since the US
Government has "eased" virtually every contraction we have seen in the last 70 years by infusing more money into the system, a "Doomsday scenario" awaits"¦the "big contraction""¦ and it might be
happening at the time of this writing."

Unfortunately it's not so much that we might not be producing enough products to service the debt, but that the debt is too high in the first place. It's like going to a bank and getting more and more loans that you just cant afford, but instead doing it to the whole nation. So sure, government bonds and all that might bring us out for a bit but they're pure patchwork.

caused by the Fed contracting the money supply too late.

The fact that the supply was contracted at all, in such conditions, is very revealing - don't you think?

On top of all this, we have technological unemployment which is going to spell the real end of the monetary system - which requires a labour force.

 

[ImprobableJoe]

Isn't all money "fiat" be definition?

 

[BrentonEccles]

Isn't all money "fiat" be definition?

Yes. The only thing that really gives it value is how much is in circulation, and your confidence in it.

 

[richi1173]

You're quite right that our potential output has increased since WWII. However, that is in the longer term part of the problem.
I'm sure you're aware that monetary economics benefits only when products are scarce.

You have it all wrong, its not when its scarce, but when its DEMANDED.

So it's not the interests of industry to seek out holistic approaches to sustainability, because they simply couldn't profit from such a method of production and output. It's actually when the supply is in accord with the demand (or below, or as near to as possible) that prices rise - that's inflation.

No and here is why when potential GDP rises inflation falls.


Just so you know, inflation actually helps people in debt, particularly housing loans because of refinancing. Since most debt is fixed, like I have said, it steadily loses value over time. If you take a loan out for 1,000 dollars and the Fed expands the money supply making inflation rise by 2%, that loan has lost value by 2%. It steadily shrinks in your percentage of monthly spending. This is also true for US debt.

"So sure, government bonds and all that might bring us out for a bit but they're pure patchwork."

What? lmao

However, his/her claims have very big problems. Here's an example illustrating why.

Today I buy a two year 10,000 dollar government bond with an interest rate of 2%. For the sake of simplicity, this bond is paid annually. That means the money supply is going to expand 200 a year for the maturation period of my bond? Well, not so. What if I decide to sell my bond after a year has passed and the interest rate on bonds has increased to five percent. Remember, I still had 200 dollars in the money supply.

Well, here are the calculations.

Bond price x 1.05 = 10,200

Bond price = 9714.28

That is going to be added into the money supply plus my 200 from the year before. This equals to 9914.28. The money supply shrunk by 85 dollars.

Conclusion: In the long run, the Fed can decrease the money supply as well as increase it. The natural inflation rate is at 2%, so that is why you see the money supply steadily increasing. This also, like I have said, eases the debt.

 

[BrentonEccles]

No and here is why when potential GDP rises inflation falls.

There's a huge problem with this, though. Because GDP can't continue to rise when unemployment is rising, except in the case of technological unemployment which essentially keeps the wealth out of the hands of the public anyway.

You have it all wrong, its not when its scarce, but when its DEMANDED.

I'm not disagreeing with you. If the demand is high, and the product is scarce - that is beneficial to industry. This is 'supply and demand finding equilibrium' and this causes a rise in prices because the demand is higher, yet the AMOUNT of the product available doesn't increase.
You need look no further than, say, what happened to the banana supply in Australia not too long ago. After the cyclone in Queensland a lot of the plantations were damaged or unable to maintain the output they had been prior to, and bananas went up in price to something like 7$+ per kilogram.

You see, as technology continues to automate things (and this is just one example of the problem of monetary economics) people will not be able to get jobs. When this happens, they cant support production even if society has the means to produce anyway -- because there is not enough money getting to people to purchase it in the first place.

In the long run, the Fed can decrease the money supply as well as increase it. The natural inflation rate is at 2%, so that is why you see the money supply steadily increasing. This also, like I have said, eases the debt.

The debt does not ease because every dollar is a loan and is owed back. On top of that, all the money in the hands of the public is not the money that is created by the banks. I'm sure you're aware of this but I'll quickly cover it.
The central bank loans money to the banks, and this is what constitutes their reserves. The banks then create the public money supply through loans, by creating out of thin air, money on top of that original reserve. This is how money is expanded and this is the money the public uses.
Unfortunately, not only is that money supply weakened in purchasing power through inflation it's also owed back to the private banks (and the central banks) at interest. But the problem is that every dollar that is created has this interest attached to it, and therefore more money needs to be constantly loaned out to cover the interest charged. Even though the interest rate changes, and stays the same on bonds, the news bonds and all money also carry an interest rate as well. What this also means is that society can never be debt free. Any interest rate at all, is a big problem in the short and long term. If the bank stops the money creation cycle, then it can only be because they're contracting it back in.

I wont go on forever, because you can find this information out through the sources I've given and there's really no point posting it all here. But, seriously, what a joke that we're swallowing this crap.


Edit: I don't know if I clearly covered this above, BUT, we need to remember that in our system growth in the money supply is not necessarily an indicator of "economic growth" (job creation, production).

Edit 2: Can I just say, to those of you who are bringing up points here - please have read/watched the activist orientation info in full beforehand. Re-reading the guide I'm noticing some of you are bringing up points that are addressed in the guide.

Our output may have increased, but technological advancement is responsible for that and the advancement of technology is also where long-term unemployment lies. Here's an economic paper on technological unemployment: http://www.eui.eu/Personal/Researchers/georgd/JMpaper_duernecker.pdf