Root causes of socio-economic problems

[richi1173]

The debt does not ease because every dollar is a loan and is owed back.

Here is why inflation eases debt.
I have a loan out for 3500 dollars with 4% interest with a 5 year term. That means 175 in interest + 700 of the principal a month. My income is 1500 a month and is adjusted for inflation monthly. Let's assume I buy all the goods and services represented in the CPI, and I wish to spend the rest of that income on all those goods -$ 625

Then, next month, inflation rises by 2%. That means my income has gone up to 1560 and my expenditures have increased to 637.5. However, the term of the loans is still the same, 875
Now let's do the math. 1530, 637.5 = 892.5
See what happened here, my money expanded because the debt was not indexed to inflation. Since the 637.5 was what I spent a month, I can use the extra money to ease the debt because the debt has, in a sense, depreciated.

The central bank loans money to the banks, and this is what constitutes their reserves.

No, at least the Federal Reserve does not do this. I don't know about Australia's Central Bank.

The Federal Reserve loans money to banks as a last resort if banks cannot get money from each other. I would like to compare it to a family.

If you ask your dad for money, your dad would scrutinize and question every detail about the loan. It would ask why? for what? ect. Instead, you would prefer to get money from your brother that would question you less.

The way money is infused into the financial system is through open-market operations, not through loans.

Addition: It is done by rich depositors or institutions, not by banks.

 

[BrentonEccles]

The debt -cant- depreciate because every dollar (every single, none excluded) is owed back with interest. There is no dollar 'free' of this.

The idea is that the principal is expanded on top of the (private) loan created, but this doesn't work in the long run. There are a lot of interdependent factors as to why.

 

[richi1173]

The debt -cant- depreciate because every dollar (every single, none excluded) is owed back with interest. There is no dollar 'free' of this.

The idea is that the principal is expanded on top of the (private) loan created, but this doesn't work in the long run. There are a lot of interdependent factors as to why.

The example I used is owed back with interest, and even with interest it depreciated. Look through the example again.

 

[BrentonEccles]

The way money is infused into the financial system is through open-market operations, not through loans.

To an extent. We're both going off on mega-tangents here. Tomorrow I will address these issues properly (it's nearly 3am here).
The problem is not necesarily just the central banking model itself, but fractional reserve banking as performed by the corporate banks as well. This will suffice for tonight.


Even beyond all the problems of the ponzi fractional reserve banking system, there's the further problem that profit is an enemy of a sustainable world.

We'll discuss this further, I hope.

 

[richi1173]

BrentonEccles: I agree with you that taking out loan after loan is unsustainable and that one day humanity might leave all of its productions to machines. However, you have to take into consideration that humans want other humans servicing them.

For example, most people hate automatic company support. You know, when it says describe the service that you need and then it just fails to register it. That is why actual human operators are still around.

Technological change has given rise to the service industry.

 

[Ozymandyus]

BrentonEccles: I agree with you that taking out loan after loan is unsustainable and that one day humanity might leave all of its productions to machines. However, you have to take into consideration that humans want other humans servicing them.

For example, most people hate automatic company support. You know, when it says describe the service that you need and then it just fails to register it. That is why actual human operators are still around.

Technological change has given rise to the service industry.

The reason people hate automatic company support is because it is not good enough yet. All that is missing is better voice recognition software.

Most service companies that don't use automatic software use scripts for calls that are no different than a computer would use. The human stands in as 'good voice recognition and interpretation' software, nothing more. There is no difference between such human service and computer service except the ability to properly translate from voice to commands.

The service industry is on its way down - I get money from ATMs about 90% of the time. I take the automated checkout aisle often, and as rfid chips are implanted in products we will Always use such checkouts. I get my maps online from mapquest instead of going to AAA and getting them to help me plan a trip. Service is as automatable as everything else. Humans don't prefer even good service over fast and reliable service - ATM machines are proof of that.

 

[richi1173]

The reason people hate automatic company support is because it is not good enough yet. All that is missing is better voice recognition software.

It would never be good enough to replace a human; or if you want to give them Artificial Intelligence and have a Matrix situation, go ahead. When I called because my LCD broke, I had to speak to a real live human to describe the situation and pinpoint what the problem was. You can't do that as effectively with a machine. We eventually figured out what the problem was and they sent a technician.

The service industry is on its way down - I get money from ATMs about 90% of the time. I take the automated checkout aisle often, and as rfid chips are implanted in products we will Always use such checkouts. I get my maps online from mapquest instead of going to AAA and getting them to help me plan a trip. Service is as automatable as everything else. Humans don't prefer even good service over fast and reliable service - ATM machines are proof of that.

Not so, in the construction - service industry, for example, consumer confidence in the job is paramount. You must demonstrate that you are knowledgeable, friendly, and confident, or else the costumer will lose interest in what you have to offer. There is no machine that can substitute for that.

 

[BrentonEccles]

Not so, in the construction - service industry, for example, consumer confidence in the job is paramount. You must demonstrate that you are knowledgeable, friendly, and confident, or else the costumer will lose interest in what you have to offer. There is no machine that can substitute for that.

There definitely is machinery that can and will substitute for that. As Ozymandus said, most people use ATM's (this is an excellent example of technological unemployment).

And in large part, the reason why we have this service sector of fixing LCD's and laptops and all that shit is because the products are made to break down so that industry can maintain market share. The end of the monetary system and a move toward a resource-based economy would represent the end of competitive industry and a move toward industry that is a collaborative body joined together to make the highest possible quality products - we certainly don't have that today.

I've only just woken up, so I'll get back to the monetary system after I'm out of bed.