BIS: Bailouts contribute to a worsening financial crisis

last SG · 2008-12-16T21:03:54+00:00

I don't think anyone seriously fully understands the problem now. It's a runaway crises. The problems of course can be traced to the lack of regulation, and...

Stevenson101 SG

Certainly no argument from me there, i've always believed the root to be a human one not limited to nationalities or race.

My point is that Economics' maths are based on unlimited growth and resources. I don't quite get what you mean by the flawed assumption.

When you say Economics recognised certain resources are unlimited, that's what i say the problem is. The actual amount might be vast enough to be difficult for us to imagine but it can't be unlimited.

The point of pointing the USA out is to recognise it is just as hypocritical as the countries it condemns. And that the problem is not going to be cured in some magical fashion by blaming any particular group or adopting a particular system, especially when it's humans ourselves that are the problem.

16/f/lonely SG

Certainly no argument from me there, i've always believed the root to be a human one not limited to nationalities or race.

My point is that Economics' maths are based on unlimited growth and resources. I don't quite get what you mean by the flawed assumption.

I beg your pardon....but what do you mean by economics is based on "unlimited growth" and resources?

It's sad but true.......certain aspects of human behavior won't change in a hurry.

freedomclub SG

I agree with Stevenson.

As Dr Albert Bartlett said "The greatest shortcoming of the human race is our inability to understand the exponential function."

In our make shit, buy shit economy, I mean consumer economy, GDP growth is measured as a percentage increase over the previous year's growth rate. On a graph, GDP growth is not a line, but an exponential curve. In the long run, this kind of growth cannot continue in a finite world and thats why consumerism and materialism is two of the most paralysing social concepts. Ultimately, when our resources run out, everything collapses.

Thats why we need to shift to a resource-based economy. http://www.thezeitgeistmovement.com/

I blame the US for the world's problems because the US Govt has already been hijacked by profit and power hungry corporations. As a result, corporations use the US's hemegonic influence in the WB/IMF to wage economic warfare on Third World countries via debt slavery, monopolise Third World markets and destroy domestic industry. Because the US has, or had the greatest economic, political and military power, its only natural for most of the blame for the world's problem to be heaped on her.

But on a fundamental level, it is definitely human nature to desire power. But I could argue that the existence of money creates an environment where competition and exploitation must exist.

16/f/lonely SG

Money would have existed anyway....because we tend to learn new tricks and twist them everytime.

There's nothing in this world that cannot be abused.

I won't blame the US wholly. Not when G8 and history carries on binding us.

freedomclub SG

Yeah, money has always existed but in our age of technology, we could create a world where there is no need for money. Thus, no more competition (at least materially) and no more exploitation (based on profits). The point is to be willing to consider a world without money.

That reminds me of an old discussion on this- http://sgforums.com/forums/10/topics/338046

Stevenson101 SG

I beg your pardon....but what do you mean by economics is based on "unlimited growth" and resources?

It's sad but true.......certain aspects of human behavior won't change in a hurry.

Man, i'm not a student of Economics so i can't really give you a good explanation of it. I'd probably be laughed at, so I'm hoping there's a student of economics on this forum that can explain it in better terms.

http://vorort.bund.net/suedlicher-oberrhein/unlimited-growth-criticism.html

This is the best link that i could find so far. But in a nutshell, we all expect to see our GDP grow by a few % every year. We have to, because our children will grow up wanting jobs too and the economy has to increase in order to provide jobs for them. That is why it's so important for China to keep up its 8% - 9% economy growth, just to stablize their society.

At 3% the gross national product doubles every 23 years, and at 5% GNP doubles in only 14 years. But where is the resources for all this going to come from? I cut a tree, it takes at the very least 10 years for it to grow to mature age, it takes far longer for higher quality wood like teak. When you put in perspective that it takes millions of years for fossil fuel to form, how long would it be before we run out?

Our current economics is based on that there must be growth, or the system will eventually collapse. However since natural resources are not replenishing themselves at a rate we're consuming, how long before this system gives out?

That, is the flawed assumption i feel economics is based on, it does not account for natural resources replenishment rate. Quite frankly, i don't think it could account even if it wanted to. There's just so much differing views on just how much reserves are there out there.

I hope you can understand what i'm trying to say. This is probably the best i can do for now.

And to your last statement, i have to disagree. Humans do not evolve the same way technology is evolving. Our next generation is not neccessarily more intelligent or stronger in any way, evolution dictates the ones with the more desirable genetic traits surviving to continue to breed and prosper, while the less desirable will fail to multiply and die out.

If we cannot change, nature will decide our fate. It is not the strong who survives, it is the one who can adapt.

Stevenson101 SG

That reminds me of an old discussion on this- http://sgforums.com/forums/10/topics/338046

The problem is i've considered your world without money. And i concluded that it cannot exist, because it would require a massive dieoff of humans for resources to be so abundant enough for no competition to exist. Even then, who is going to gather these abundant resources ? This question alone already answers whether no exploitation is even possible.

Everything we own now in Singapore, your room, your bed, your computer, internet connection. Our access to affordable food, water and electricity is because we outbidded a poorer country to gain access to it, either in money or more favourable terms. From a certain perspective, the fact we can be sitting in our rooms arguing about this on the internet is evident that we're exploiting others.

Is Africa starving because their lands cannot yield food? Or is it because it's far more profitable to sell it to us than to sell it to their locals? The farmer in Thailand worked hard for our rice too, why should they give it to Africans when they can get money by selling it to us?

This is why i find the constant arguments about the PAP and LKY laughable. We complain that they're exploiting the people, yet we cannot see we have to exploit others in order to enjoy the luxury we have now.

A car expends an obscene amount of energy just to move 70-90kg worth of flesh over a walkable distance. And yet we constantly complain when it gets more expensive to support such a luxurious lifestyle.

16/f/lonely SG

http://vorort.bund.net/suedlicher-oberrhein/unlimited-growth-criticism.html

I hope you can understand what i'm trying to say. This is probably the best i can do for now.

If we cannot change, nature will decide our fate. It is not the strong who survives, it is the one who can adapt.

I get your drift now.

But that economics is based on "infinite growth" and resources is not correct, at least not totally.

That growth is needed for stability belongs to the neo-liberalism class of view in economics. Proponents of such a view argue for the "trickle-down" effect. Essentially what it means is that they believe that growth is needed for all to enjoy. Such a view also entails that inequality within a society is ok, because they believe it is needed as an "incentive" to grow further, and that this growth will somehow "tricle-down" to the poor.

Neo-liberalism is a narrow view within economics because all it will ever see is growth, and that growth begets growth.

We all know that growth is not the only way to stabilise a country or the world as a whole and most economists actually don't quite believe that too.

Economics doesn't just look at growth. It looks at other factors, such as social costs. And it recognises that social factors are just as important if not more important if we want to lift the poor upwards.

Neo-liberalism ignores the enormous social and environmental costs caused by the push for free-market forces, and even go to the extent of ignoring market failures. Unfortunately, these people are also among the more influential and vocal, hence that's possibly why you have this idea of economics...

4sg SG

Economic growth is not carried out merely by exploiting primary resources and in the process exhauting them.

Economic growth can also means using the same or a lesser unit of an input but giving rise to a larger unit of output. All these unit of measurements in term of value, utility and consumption.

Vis-a-vis, Singapore is more resource poor, smaller and more lacking in resource than any one single African country. The point on exhaustable resource is true but it is not 100% correct to say we have outbid poorer African countries to access international goods and services that we are consuming.

Poverty has its root in many areas. I list some
1) corruption in rank and file,
2) corruption by office bearer,
3) inefficient bidding/sourcing system of the poorer nation.
4) economoic/social priority of the poorer nation. For example, some poorer nations value tradition preservation more over economic growth.
5) better access to international aid. One only has to read International publication to realize that some govt would rather feed their people the easy way - reliancy. It is easier to rely on handout from the wealthy nations than to sweat and toil for food.
6) the work ethos/ethics of the citizens.
etc etc

The concept on economic ills is sound but it is not the only ills and it is not the only cause.

freedomclub SG

In a cybernated society, where our technology is used entirely in a humane way, the resources of the planet can provide for everyone. Saying that we need a massive population reduction is just what the malthusians want. The same malthusians that want to stiffle development in the Third World and to usher the world into the post-industrial age.

Recently, there was a report that concluded that for everyone to live like the affluent First World, 3 Earths are needed. I agree that with our present lifestyle, collapse is inevitable. With rampant consumerism fueled by materialism, our society has been corrupted to the core. And what is sustaining this destructive trend? Economic growth, or what we've need told what constitutes economic growth. To supposedly continue prospering, we need to SHOP and CONSUME and further plunge the planet deeper into an irrepairable state. As long as social fundamentals do not change, there will never be a real solution.

freedomclub SG

The Neo-Alchemy of the Federal Reserve

By Ron Paul
http://www.informationclearinghouse.info/article21468.htm

December 15, 2008 "ICH" -- - As the printing presses for the bailouts run at full speed, those in power are no longer even pretending that the new giveaways will fix our problems. Now that we are used to rewarding failure with taxpayer-funded bailouts, we are being told that this is “just a start,” more funds will inevitably be needed for more industries, and that things would be much worse had we done nothing.

The updated total bailout commitments add up to over $8 trillion now. This translates into a monetary base increase of 75 percent over the last two months. This money does not come from some rainy day fund tucked away in the budget somewhere – it is created from thin air, and devalues every dollar in circulation. Dumping money on an economy, as they have been doing, is not the same as dumping wealth. In fact, it has quite the opposite effect.

One key attribute that gives money value is scarcity. If something that is used as money becomes too plentiful, it loses value. That is how inflation and hyperinflation happens. Giving a central bank the power to create fiat money out of thin air creates the tremendous risk of eventual hyperinflation. Most of the founding fathers did not want a central bank. Having just experienced the hyperinflation of the Continental dollar, they understood the power and the temptations inherent in that type of system. It gives one entity far too much power to control and destabilize the economy.

Our central bankers have had a tremendous amount of hubris over the years, believing that they could actually manage a paper money system in such a way as to replicate the behavior and benefits of a gold standard. In fact, back in 2004 then Fed Chairman Alan Greenspan told me as much. People talk about toxic assets, but the real toxicity in our economy comes from the neo-alchemy practiced by the Federal Reserve System. Just as alchemists of the past frequently poisoned themselves with the lead or mercury they were trying to turn to gold, today’s bankers are poisoning the economy with accelerated fiat money creation.

Throughout the ages, gold has stood the test of time as a consistently reliable medium of exchange, and has frequently been referred to as “God’s money”, as only God can make more of it. Seeking superhuman power over money in the way alchemists did in ancient times caused society to shun them as charlatans. In much the same way, free people today should be sending the message that this power and control over our money is no longer acceptable.

The irony is that even had the ancient practice of alchemy been successful, and gold was suddenly, magically made abundant, alchemists still would have failed to create real wealth. Creating gold from lead would have cheapened its status to that of rhinestones or cubic zirconia. It is unnatural and dangerous for paper to be considered as precious as a precious metal. Our fiat currency system is crumbling and coming to an end, as all fiat currencies eventually do.

Congress should reject the central bank as a failure for its manipulations of money that have brought our economy to its knees. I am hoping that in the 111th Congress my legislation to abolish the Federal Reserve System gains traction so that the central bank can no longer destroy our money.

Stevenson101 SG

The sad thing i feel about your opinion is that then there must be a massive dieoff in the Third World in order to buy time and enough resources for the First World to develop the neccessary technology and infrastructure to create your cyberated society.

It must of course, go hand in hand. The First World must also drastically cut their consumption rate to preserve the said resources.

I do not understand your term of malthusians, i merely look at the view point of simple Maths. Now, only the First World have the neccessary brain power/economic strength/infrastructure to develop the technology neccessary to reduce reliance on a slave bound Third World caste, yet if the Third World's population is not drastically reduced there won't be enough resources left for everyone but without a big Third World population, the First World cannot sustain its standards of living.

This is what i termed as a chicken and egg problem.

There isn't, i feel, going to be a "moral" solution, something everyone would be happy with to the problems at hand. It won't be something solvable through democracy, only through the lines of something near to socialism/facism/communism.

Of course in the terms of internet lingo i am a doomer, while you are a cornucopian. We derive different opinions on the same piece of information, and history have this tendancy to occupy a mid way point in the extremes of our opinions.

freedomclub SG

It must of course, go hand in hand. The First World must also drastically cut their consumption rate to preserve the said resources.

This is what i termed as a chicken and egg problem.

The Malthusian ideology got its name from Thomas Malthus, who believed that a massive drought wiping out millions, if not billions, is the solution to the 'over-population' problem.

How is this a 'chicken and egg problem'. According to you, there has to be a "massive dieoff" in the Third World for a resource-based economy to emerge. But if the First World can get weaned off consumerism and materialism, our present rate of consumption would gradually become sustainable. Of course, that would be the end of the fashion industry and the advertising behemoths that spend billions of dollars a year trying to get people to consume more and more to boost their self-esteem. Also, our concept of economic growth will have to change. The question should be, can this message be introduced into a system that is totally antithetical to it and, will the consuming fucks accept it?

The idea that millions more Third World people must die is a lie, perpetrated by said Malthusians like Henry Kissinger, who wrote in the 1974 NSSM 200 that "depopulation" has to be the highest population for the Third World. In straight-speak, isn't that similar to Hitler's Final Solution? The way I see it, this malthusian ideology works on the premise that the less unproductive peasants you have, the better off you are.

16/f/lonely SG

The thing is this:

"Third-world" countries remain "third-world" because of prejudice and squandered opportunities.

And the biggest irony is: Why are we even calling them "third-world"? What does the term even mean?

And how do we even wean off "over-consumption" when humans are characterised by "unlimited wants"?

If we tame the wants by regulation (how else so?), by keeping certain goods that are deemed "unnecessary" out of reach, then isn't that going against the principle of "freedom"? For the proponents of individual rights at the least? What goods should be considered "unnecessary"?

The questions are endless.

freedomclub SG

I don't know what should be considered right and necessary. But our present milieu where much of society's wants are dictated by impulses developed through years and billion of dollars of aggressive advertising cannot be right. That is the world created through consumerism.

On the Third World, besides irresponsible leadership, we cannot ignore the part that resource grabs have played in destabilising areas like Africa, ie the resource grab by corporations in the Congo.

Because the western role is a significant factor in prolonging poverty, the impetus for change must lie in the First World, in the social and political arenas.

Stevenson101 SG

On the Third World, besides irresponsible leadership, we cannot ignore the part that resource grabs have played in destabilising areas like Africa, ie the resource grab by corporations in the Congo.

Because the western role is a significant factor in prolonging poverty, the impetus for change must lie in the First World, in the social and political arenas.

I'm not arguing with your logic, i agree with you on what the real problem is. Our disagreement mainly lies with where the solution is.

And quite frankly, i think it's actually more realistic to hope for a massive dieoff in the Third World(Or the poverty stricken, if Third World is not a likeable term) then to actually hope that the First World citizens would actually willingly alter their habits. Why do you think these First World governments even went to exploit the Third World in the first place?

Look at the posts on this forum yourself, the majority of the posts are about wanting more, more and more. It isn't going to stop when the PAP is voted out. So what if a new opposition is voted in? Would we willingly cut down on consumption without external pressure? How is making things cheaper by a new government going to restrain this greed?

If we can't even understand this in a country of 4 million, how can we expect the Western World of 800 million to do so? They've been on the same drugs way longer than we have.

I enjoy this debate very much, it's very refreshing to have one without sarcastic remarks and vulgarities but i doubt we can ever come to agree on the solutions.

Stevenson101 SG

The thing is this:

"Third-world" countries remain "third-world" because of prejudice and squandered opportunities.

And the biggest irony is: Why are we even calling them "third-world"? What does the term even mean?

And how do we even wean off "over-consumption" when humans are characterised by "unlimited wants"?

The questions are endless.

That, is precisely the problem.

The majority of people on this forum are obsessive about the pipedream of freedom, that somehow our problems are going to go away once the PAP is kicked out of office, that LKY and LHL suddenly croaks..etc.

In the end, what they really want is the freedom is consume more by having cheaper stuff. What they fail to understand, is that the supposedly "First World" is built on the exploitation of the Third World. That their vaulted freedom is because of the abundant resources robbed from others, not because of a free democractic society.

That, i believe is why democracies has never worked well in Asia. We never had the influx of resources from robbing others. Japan's probably worked because of the influx of funds from America, as well as their cultural tendancies for reduced consumption and conservation. But it left them constantly vulnerable when the banks in America decides to "shave the sheep".

To my knowledge, Japan also never had to return the gold and treasures it looted from conquered territories. Instead it was used to fund their rebuilding.

Without that influx of resources, the country would never had enough to create the neccesary amount of jobs to close the poverty gap enough to generate the neccessary well educated middle class for a healthy, functional democracy. In this regard, LKY has done an excellent job, though he has possibly sealed his own end as well.

oldbreadstinks SG

simply must say this is a great thread, one of the best i've read so far in speaker's forum

freedomclub SG

I'm not arguing with your logic, i agree with you on what the real problem is. Our disagreement mainly lies with where the solution is.

If we can't even understand this in a country of 4 million, how can we expect the Western World of 800 million to do so? They've been on the same drugs way longer than we have.

I enjoy this debate very much, it's very refreshing to have one without sarcastic remarks and vulgarities but i doubt we can ever come to agree on the solutions.

Likewise, it is quite an enjoyable debate without being called a "conspiracy theorist".

I understand that your argument is more realistic than mine considering the sad state of the world today. However, as a human being, it is galling to accept the concept of half of the world suffering and dying so that the other half can enjoy its present affluence and consumerism. As I have argued in many threads, the real change has to come, not from the top-down, but from within the individual. Without understanding the true nature of society, it is impossible to wake up and behold the fields of human beings, having their lives sucked out of them like batteries.

As the article by Ron Paul discusses, it is the fraudulent fractional reserve system that is the root of the financial crisis. Ultimately, it is also the source of all, if not most, of the ills in the world. Exploitation and competition, causing suffering and death worldwide, is the result of subverting value and creating money as debt.

freedomclub SG

That, is precisely the problem.

To my knowledge, Japan also never had to return the gold and treasures it looted from conquered territories. Instead it was used to fund their rebuilding.

Exactly, the prevalent mentality of society is totally un-natural, relying on the exploitation of other people in a monetary system. Because of this, and the twisted consumerism that is instilled in most of the Developed World, the whole cycle of suffering and exploitation must go on.

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