Johnny Brown
Well-Known Member
*****Split from Coronavirus Covid-19 thread****
Indeed. It's a damn good job money isn't real.
Indeed. It's a damn good job money isn't real.
I understand your point and for the wealthy it isnt, however i suspect its going to feel very very real to a lot of people in the next year if governments dont get this right. 140,000 job losses in Ireland in 48 hours.Johnny Brown said:Indeed. It's a damn good job money isn't real.
gme said:You cant pay your rent/mortgage with idiology.
gme said:I understand your point and for the wealthy it isnt, however i suspect its going to feel very very real to a lot of people in the next year if governments dont get this right. 140,000 job losses in Ireland in 48 hours.Johnny Brown said:Indeed. It's a damn good job money isn't real.
You cant pay your rent/mortgage with idiology.
Johnny Brown said:Indeed. It's a damn good job money isn't real.
northern yob said:Is this where we start burning money Adam? Is Bill Drummond really an economics genius....? If we all do it at the same time will it work?? It’s a nice idea and I get what your saying even though on this occasion I’m sober. As Gav says it’s not gonna pay anyone’s mortgages and even if this changes the world forever I’ll put everything I have on it not bringing capitalism down as our chosen system. Everyone’s money worries are about to get very real.
gme said:Johnny Brown said:Indeed. It's a damn good job money isn't real.
I understand your point and for the wealthy it isnt
I don't expect it to bring down capitalism.
For the person that says money isn’t real (I accept the theory) I would suggest that they are likely facing a different situation to us.
Johnny Brown said:northern yob said:Is this where we start burning money Adam? Is Bill Drummond really an economics genius....? If we all do it at the same time will it work?? It’s a nice idea and I get what your saying even though on this occasion I’m sober. As Gav says it’s not gonna pay anyone’s mortgages and even if this changes the world forever I’ll put everything I have on it not bringing capitalism down as our chosen system. Everyone’s money worries are about to get very real.
I don't expect it to bring down capitalism. I do expect an enormous fudge to take place in the world's accounts that will make the money tree used to bail the banks out look like a sapling. What's interesting is that this time it will have to directly benefit the common man.
gme said:Johnny Brown said:Indeed. It's a damn good job money isn't real.
I understand your point and for the wealthy it isnt
Hmm, I'm not sure you do! My point is that it is only the wealthy for who money is most real. If you don't have any you can't be harmed by it becoming worthless. We are already feeding the poorest through foodbanks not the economy.
The question for governments is how they finance the poor without devaluing the rich - although the markets are doing a pretty good job of that already.
Be interesting to hear Andy P's thoughts on what we might learn from Weimar Germany, my initial thought is that such an experience may have been the bedrock for their more recent success.
Johnny Brown said:Conversely the economy is entirely a product of our imaginations and has no unbreakable link to reality.
Could you please explain what you mean by "the economy"?
fatneck said:I am heartened today.
Johnny Brown said:Could you please explain what you mean by "the economy"?
Good question. I suppose that's a bit of a sloppy use of the term. I mean the modern financial systems and all the things ascribed a monetary value that would disappear were we to revert to a barter system.
For example... the world's shadow banking system is bigger than the entire commercial banking sector and twice the GDP of Earth.
seankenny said:So, a couple of things I don't get here. My time and yours are both ascribed a monetary value. Are you saying that should disappear, ie I should work for free?
And that use of the word "revert"... given that the very first writing we know about, back in 5000BC was writing down debts and repayments, in terms of money or at least "things owed", are you sure that much reverting would really occur? I have some eggs but want potatoes, you have some potatoes but want salsa classes... unless you're willing to go cheek to cheek and get trodden on, we're going to be needing some sort of money, no?
For example... the world's shadow banking system is bigger than the entire commercial banking sector and twice the GDP of Earth.
I'm not a finance guy so don't really understand this. If Earth's GDP is the sum of all goods and services on Earth, and the shadow banking system is lending capital produced on Earth, how come it's bigger? I did check, apparently world GDP is $80 trillion and the shadow banking system is worth $52 trillion, so it might not even be correct, but if it was, how does that work?
Johnny Brown said:seankenny said:So, a couple of things I don't get here. My time and yours are both ascribed a monetary value. Are you saying that should disappear, ie I should work for free?
No, as you say in your next line labour can be bartered and was certainly one of the first things to be traded.
Johnny Brown said:And that use of the word "revert"... given that the very first writing we know about, back in 5000BC was writing down debts and repayments, in terms of money or at least "things owed", are you sure that much reverting would really occur? I have some eggs but want potatoes, you have some potatoes but want salsa classes... unless you're willing to go cheek to cheek and get trodden on, we're going to be needing some sort of money, no?
Agreed, I wasn't suggesting we didn't need money. My point is the economy has mutated and grown from money being used as a trade token and store of value.
For example... the world's shadow banking system is bigger than the entire commercial banking sector and twice the GDP of Earth.
I'm not a finance guy so don't really understand this. If Earth's GDP is the sum of all goods and services on Earth, and the shadow banking system is lending capital produced on Earth, how come it's bigger? I did check, apparently world GDP is $80 trillion and the shadow banking system is worth $52 trillion, so it might not even be correct, but if it was, how does that work?
seankenny said:Feel free to move this to the financial crash thread if more appropriate!
seankenny said:Erm, but wasn't I saying that labour couldn't be bartered? As far as I know, economic historians haven't actually found any evidence of societies with widespread barter... surely what happens when there is much, much less money floating around is that labour and goods become traded via an intricate and inflexible system of social relations underpined by violence.
aside from knowing that you've read Kate Raworth,
I'm not entirely convinced it makes sense. If by "the economy" you mean the financial sector, even Yemen has one and it is not a functioning society. In fact 17th/18th century Britain...
And then we can buy and sell those bonds on the assumption that the government is always going to be around to pay it back. This has been going on since the 17th century if not before, so it's probably pretty useful, right?
Surely the picture on size of financial markets compared to GDP is complex?
To give an idea of the size of the derivative market, The Economist has reported that as of June 2011, the over-the-counter (OTC) derivatives market amounted to approximately $700 trillion, and the size of the market traded on exchanges totaled an additional $83 trillion.[9] For the fourth quarter 2017 the European Securities Market Authority estimated the size of European derivatives market at a size of €660 trillion with 74 million outstanding contracts.[10]
However, these are "notional" values, and some economists say that these aggregated values greatly exaggerate the market value and the true credit risk faced by the parties involved. For example, in 2010, while the aggregate of OTC derivatives exceeded $600 trillion, the value of the market was estimated to be much lower, at $21 trillion. The credit-risk equivalent of the derivative contracts was estimated at $3.3 trillion.[11]
Still, even these scaled-down figures represent huge amounts of money. For perspective, the budget for total expenditure of the United States government during 2012 was $3.5 trillion,[12] and the total current value of the U.S. stock market is an estimated $23 trillion.[13] Meanwhile, the world annual Gross Domestic Product is about $65 trillion.[14]
At least for one type of derivative, Credit Default Swaps (CDS), for which the inherent risk is considered high, the higher, nominal value remains relevant. It was this type of derivative that investment magnate Warren Buffett referred to in his famous 2002 speech in which he warned against "financial weapons of mass destruction".[15] CDS notional value in early 2012 amounted to $25.5 trillion, down from $55 trillion in 2008
Where the line between the second and third type should be drawn is open to debate but - as Sean says - is very complicated when you start looking closely at it.
any more than, say, the revenues of a small business should be close to the value of its assets.
As to the "correct" relationship between GDP and the scale of a country's financial system