Thursday, February 23, 2017

How Do We Design a DeGrowth Economy?

The conventional objections to DeGrowth boil down to: it isn't the status quo, so it can't work. Actually, it's the status quo that isn't working.
I've written about DeGrowth for many years, including Degrowth, Anti-Consumerism and Peak Consumption (May 9, 2013), Degrowth Solutions: Half-Farmer, Half-X (July 19, 2014) and And the Next Big Thing Is ... Degrowth? (April 7, 2014)
These are the basic concepts of Degrowth:
1. Consumerism is psychological/ spiritual junk food (French: malbouffe) that actively reduces well-being (bien-etre) rather than increases it.
2. Better rather than more: well-being is increased by everything that cannot be commoditized by a market economy or financialized by a cartel-state financial machine-- friendship, family, community, self-cultivation. The goal of economic and social growth should be better, not more. On a national scale, the cancerous-growth measured by gross domestic product (GDP) should be replaced with gross domestic happiness/ gross national happiness (GNH).
3. A recognition that resources are not infinite, despite claims to the contrary. For one example of many: China Is Plundering the Planet's Seas (The Atlantic). Indeed, all the evidence suggests that access to cheap energy only speeds up the depletion and despoliation of every other resource.
4. The unsustainability of consumerist "growth" that's dependent on resource depletion funded by financialization (i.e. the endless expansion of credit and phantom collateral). (This is covered in greater depth in my short book Why Our Status Quo Failed and Is Beyond Reform.)
5. The diminishing returns on private consumption and "bridges to nowhere" (crony-capitalist public consumption).
6. The failure of neoliberal capitalism and communism alike in their pursuit of growth at any cost.
Degrowth is heresy in what John Michael Greer calls the religion of progress (i.e. growth). The faith that growth equals progress is akin to the Cargo Cult of Keynesianism, the notion that expanding debt exponentially to drive diminishing returns of growth is not only necessary but a moral imperative.
Both the religion of growth and its Cargo Cult are narratives used to justify the expansion of global finance via financialization. Expanding capital, profits and power is the key driver, and the religion of growth is merely the public-relations narrative that mesmerizes the debt-serfs, political toadies and media sycophants.
Does this look like a world with plenty of room for everything to expand?
Does this look like a world ripe for limitless expansion of debt to fuel limitless growth of consumption?
This leads to a fundamental question: how do we design a system that enables us to do more with less of everythingHow do we design a system that incentivizes doing more with less rather than squandering resources via optimizing human greed?
A DeGrowth economy must fulfill two requirements:
1. The DeGrowth economy must provide paid-work livelihoods and opportunities for everyone who wants them.
2. The DeGrowth economy must institutionalize a decentralized, democratic, self-organizing process to allocate human, social, resource and financial capital as an alternative to centralized states/banks and profit-maximizing corporations.
These arise from three key insights:
2. Not everything that is valuable is profitable, and so maximizing profit is not the sole arbiter of "value," nor is it a sound process for allocating labor and capital for everything that has value but isn't profitable.
3. Centralization undermines democracy and generates privilege, inequality, insecurity, conflict and waste by its very nature. (I discuss this further in my short book Inequality and the Collapse of Privilege.)
DeGrowth requires two intertwined systems: a decentralized, localized, globally connected network of self-organizing productive "tribes" whose labor generates a global labor-backed crypto-currency.
DeGrowth is coming whether we like it or not or plan for it or not. Our choice is to blind ourselves to the implosion of the "growth" status quo and squander the opportunity to create an economic system that thrives in DeGrowth, or accept the end-game of financialized "growth" and embrace the technological tools that enable decentralized, localized, globally connected networks funded by a labor-backed crypto-currency.
The conventional objections to DeGrowth boil down to: it isn't the status quo, so it can't possibly work. Actually, it's the status quo that isn't working, and DeGrowth is the result of that simple yet profound reality.
For more on these topics:
A Radically Beneficial World: Automation, Technology and Creating Jobs for All (free 35-page excerpt)


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, Alexander K. ($5/month), for your stupendously generous subscription to this site -- I am greatly honored by your support and readership.
Thank you, Timothy P. ($50), for your outstandingly generous contribution to this site -- I am greatly honored by your support and readership.

Read more...

Wednesday, February 22, 2017

The Problem with Gold-Backed Currencies

Any currency is only truly "backed by gold" if it is convertible to gold.
There is something intuitively appealing about the idea of a gold-backed currency --money backed by the tangible value of gold, i.e. "the gold standard."
Instead of intrinsically worthless paper money (fiat currency), gold-backed money would have real, enduring value--it would be "hard currency", i.e. sound money, because it would be convertible to gold itself.
Many proponents of sound money identify President Nixon's ending of the U.S. dollar's gold standard in 1971 as the cause of the nation's financial decline. If our currency was still convertible to gold, the thinking goes, the system would never have allowed the vast pile of debt to accumulate.
The problem with this line of thinking is that it is disconnected from the real-world mechanisms of capital flows and the way money is created in our financial system.
This article explains why Nixon took the USD off the gold standard: since the U.S. was running trade deficits, all of America's gold would have been transferred to the exporting nations. America's gold reserves would have disappeared, leaving nothing to back the dollar. The U.S. Empire Would Have Collapsed Decades Ago If It Didn’t Abandon The Gold Standard.
The problem to sound-money proponents is trade deficits: if the U.S. only had trade surpluses, then the gold would not drain away.
But Triffin's Paradox explains why this doesn't work for a reserve currency: a reserve currency has two distinct sets of users: domestic users and global users. Each has different needs, so there is a built-in conflict between the two sets of users.
Global users of the USD need enormous quantities of dollars to use as reserves, to pay debts denominated in USD and to facilitate international trade.
The only way the issuing nation can provide enough currency to meet this global demand is to run large, permanent trade deficits--in effect, "exporting" dollars in exchange for goods and services.
This is the paradox: to maintain the "exorbitant privilege" of a reserve currency, a nation must "export" its currency in size; a nation that runs trade surpluses cannot supply the world with enough of its currency to act as a reserve currency.
And any nation running large trade deficits will soon empty its gold reserves as international holders of the currency choose to convert their currency into gold, which is exactly what happened in the late 1960s in the U.S.
OK, so a nation can't back a reserve currency with gold. How about backing a non-reserve currency with gold? There are still problems with backing currencies with gold.
Number 1 is convertibility--without it, you don't have a gold standard, you have an illusion of a gold standard. If the gold-backed currency isn't convertible to gold, it's simply another form of fiat currency.
An example illustrates why. Let's take the fictional nation of Slobovia, which has accumulated $10 billion of gold to back its currency, the quatloo.
To protect its reserves from being drained away, the quatloo isn't convertible to gold; the Slobovian central bank simply declares the currency is "backed" by gold.
But consider what this entails. The price of gold globally is set by the market (setting aside manipulation by major players), not by the central bank of Slobovia. This means the value measured in gold of the quatloo is fluctuating as the value of gold fluctuates.
If the global value of gold plummets, so does the purchasing power of the quatloo. This peg to the price of gold becomes consequential if the quatloo loses purchasing power.
Problem 2: what happens to the purchasing power of the quatloo when the central bank issues more currency? If the central bank issues an additional $10 billion in currency, if it doesn't add $10 billion in gold reserves, the purchasing power of the quatloo measured in gold declines by 50%.
So the quatloo is supposedly "backed" by gold, but its purchasing power can drop in half as the central bank issues more fiat currency? Then what value is the supposed "backed by gold" claim?
Problem 3: consider the case of well-connected investor Mr. PM. Mr. PM has friends in high places in the government and banking sector, and so he borrows $100 million to buy choice parcels of land that have government-approved development rights.
He develops the parcels with the $100 million, and some years later sells the properties for $1.1 billion to other investors. He pays off his $100 million loan and pockets $1 billion in cash.
Note that the bank created the $100 million out of thin air when it originated the loan to Mr. PM. Did the Slobovian central bank acquire an additional $100 million in gold to back this new money? No--because in a fractional reserve banking system, this new money is lent into existence for the term of the loan, and disappears when the loan is paid off.
You see the problem: the $100 million Mr. PM borrowed to develop the land has been paid back, i.e. gone to money Heaven, but the $1 billion in cash he now has is "real money." It's as real as if he saved $100 million a year for a decade or extracted $100 million in profits from a mine for 10 years.
This expansion of quatloos wasn't the result of the central bank issuing more quatloos, or the central bank buying more gold reserves: it was created by the fractional reserve banking system.
Mr. PM transfers his $1 billion in quatloos overseas. If the quatloo is convertible to gold, Mr. PM demands the central bank of Slobovia trade his $1 billion in quatloos for $1 billion in gold. 10% of Slobovia's gold reserves are transferred to Mr. PM, and the outstanding pool of quatloos instantly loses 10% of its value measured in gold.
If the quatloo isn't convertible to gold, the existing pool of quatloos still loses 10% of its value because the pool of outstanding quatloos just expanded by 10%.
It doesn't matter if the $1 billion in quatloos was borrowed into existence or issued by the central bank: it still dilutes the purchasing power of all quatloos by 10% unless the central bank adds $1 billion gold reserves to "back" the new money.
The way out of this is to revalue the quatloo's value measured in gold. l Let's say Slobovia initially issues its currency, the quatloo, at 100 to an ounce of gold. If gold is $1200/ounce, each quatloo is worth $12. So far so good.
But then the government encounters a spot of fiscal bother, and the central bank announces, without warning, that the exchange rate is now 1000 quatloos to an ounce of gold. Oops. Now the "gold-backed" quatloo is worth only $1.20. Holders of the "gold-backed" quatloo just took a 90% haircut on the purchasing power of their "gold-backed" currency.
So either a currency is convertible into gold, or it isn't gold backed. If the conversion rate is set by the government, then it's subject to sudden revaluations, just like any other fiat currency.
If the issuing nation maintains a fractional reserve banking system, then the quatloo is constantly devalued by the issuance of new quatloos in excess of the gold the central bank adds to its reserves.
When people talk about China backing its currency the yuan with gold, what does that mean given that China has issued $30 trillion in new credit-money in the past decade?
It doesn't matter that the money is "borrowed into being"; as the example of Mr. PM illustrates, the money created is as real as money that was earned or saved or mined; the money created in China's vast credit bubble is real enough to buy homes in North America for those lucky few who can get their yuan converted into dollars.
In a true gold-backed currency, every new $1 in currency must be backed by the addition of $1 of gold to reserves. If the gold supply remains constant but the supply of currency constantly expands, the value measured in gold of the outstanding currency declines accordingly.
Any currency is only truly "backed by gold" if it is convertible to gold. Why hold a "gold-backed" currency that can be diluted 10-fold overnight by the issuing government/bank?
Any nation issuing a gold-backed currency can't control the global price of gold, and so that nation's currency is hostage to fluctuations beyond its control. If the issuing nation sets a peg to gold, that peg is subject to the whims of the central bank and state--in other words, the peg is simply another flavor of fiat currency.
Simply put, there is no way to back a reserve currency or a fractional reserve banking system with gold. It's easy to say that a world with very little credit would be a good world, but it would be a world with limited debt-based consumption, i.e. a world with little "growth." And without "growth," the system implodes.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, Alex V. ($5/month), for your monstrously generous subscription to this site -- I am greatly honored by your steadfast support and readership.
Thank you, Pamela B. ($50), for your outstandingly generous contribution to this site -- I am greatly honored by your support and readership.

Read more...

Tuesday, February 21, 2017

The Criminalization of Financial Independence

Independent enterprises are a source of political and financial independence--and any independent class is dangerous to the ruling elites.
Just as the "war on drugs" criminalized and destroyed large swaths of African-American and Latino communities, the "war on cash" will further criminalize the few remaining avenues to financial independence and freedom. The introduction of "entitlement" welfare in the 1960s generated a toxic dependency on the state that institutionalized worklessness, a one-two punch that undermined marriage and family in America's working class of all ethnicities.
The "war on drugs" launched in the 1970s turned millions of American males into felons with severely restricted rights and opportunities in mainstream America.
Now we see the same destructive pattern repeating with "disability" being the new "welfare" and "legal" synthetic heroin (oxycotin etc.) being the new street-smack that lays waste to entire communities. Once you're dependent on the state for disability and synthetic smack, you are owned by the government, lock, stock and barrel.
When the temptation to sell your $3 Medicaid prescription for synthetic smack for a quick $1000 becomes too much to resist, bang, you've got a one-way ticket into the Hell of America's criminal "justice" system. Do you see the pattern? Offer the blandishments of "free money" and nearly free synthetic smack, and the vulnerable populace is quickly reduced to a dependent state of worklessness and addiction.
Needless to say, an addicted, ill, workless populace that is herded into the grinder of the criminal justice system isn't going to create any political resistance. They have their hands full just trying to stay alive and avoid being sucked into the voracious maw of the criminalization meat grinder.
This is the context for the upcoming "war on cash" and the criminalization of financial independence. Every conventional means of remaining financially independent of the state-cartel-banking system is being restricted and criminalized, the better to herd everyone into centrally controlled institutions.
Those attempting to escape the political-financial pen are threatened with the other pen--the penitentiary.
Any form of resistance draws punitive criminal sanctions. If you attempt to resist the unfettered search of your property, your resistance is instantly criminalized.
If you resist the seizure of your property on some trumped up charge, your resistance is instantly criminalized.
If you resist being hassled for "driving while black," your resistance is instantly criminalized.
If you resist being shunted off public spaces while staging a political protest, your resistance is instantly criminalized.
Three charts help explain the criminalization of financial freedom. Wages as a percentage of economic activity (GDP) have been falling for decades. Wage earners are under pressure, and this generates dissatisfaction that eventually finds political expression. This is dangerous to the ruling elites, so criminalizing dissent, resistance and financial independence become essential tools to cow and control the masses.
Independent enterprises are a source of political and financial independence--and any independent class is dangerous to the ruling elites. The "solution" to the ruling elites is to crush independent enterprises with burdensome regulations that carry punitive penalties, raise junk fees (licensing fees, permits, etc.) to levels that make it difficult to remain compliant, and criminalize cash-only and home-based enterprises.
No wonder new business growth is a shadow of its former robustness. If you try to launch a legally compliant enterprise, the costs crush all but the most successful. Any less than fully compliant enterprise has been criminalized.
The upper 20% of wage earners are the tax donkeys that must be corralled so they can't escape higher taxes. Whatever wealth they've accumulated must also be available for taxation, for this reason: as the super-wealthy sequester their immense wealth in legal tax dodges such as philanthro-capitalist foundations, this leaves the lion's share of taxes to be paid by the upper-middle class / professional / technocrat / entrepreneur tax donkeys.
The coming War on Cash is also designed to bring in black-market cash from the bottom 40% who use cash businesses as a tax avoidance tactic. The state will leave no stone unturned in its campaign to close off any escape routes--except of course for those available to the super-wealthy and corporations which contribute the big bucks to the politicos' re-election campaigns.
There won't be any legal assets that will not be exposed to taxation. As for precious metals--imagine a "wealth tax" that is first imposed on millionaires. Who will say that "taxing the rich" is a bad idea?
Then the definition of "rich" will be adjusted downward. Anyone owning gold is "rich," correct? So laws will be passed requiring all forms of wealth must be declared.
Anyone who fails to declare their wealth and pay a "wealth tax" on it will face punitive criminal charges.
The "wealth tax" will start small, and high up the food chain. Then it will quickly move down to include everyone with any assets of any kind. If you reckon this farfetched, check back in 2020, if not sooner.
The problem isn't taxation per se--it's preserving the freedom to become financially and politically independent that's increasingly at risk. Once it becomes too complicated, costly and onerous for a working class household to start and operate an enterprise, small-scale capitalism is dead--strangled by the state at the behest of self-serving bureaucrats, elites and corporate cartels.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, Jerzy W. ($5/month), for your monstrously generous subscription to this site -- I am greatly honored by your steadfast support and readership.
Thank you, Christine L. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

Monday, February 20, 2017

Over-Regulation Has Criminalized the Practice of Medicine

This criminalization of everyday life is not just insanely costly and insanely counter-productive--it's insanely punitive.
The average person has little exposure to the criminalization of everyday enterprise in America via over-regulation and outsized penalties for even accidental violations of rules and regulations. One field that continues to be burdened with excessive/counter-productive regulations and outsized penalties is the practice of medicine.
I received the following email from a physician correspondent:
"As you will see, physicians have to deal with the federal government's increasingly crazy and copious rules (like which patients they can screen for disease and how often).
The following is an email ad I received for an expensive service that provides no benefit to the ill and injured of America. It's bureaucratic nonsense."
Here is the email ad:
Can you afford a $1.1 million penalty and a 50-year exclusion from Medicare? That's what one New Jersey provider is facing. And he's not alone. In the last couple of months a facility in Utah is now under a 30-year exclusion, and a New York physician is now excluded from Medicare for five years.
These penalties and exclusions not only affect those providers that are intentionally fraudulent. Even an innocent mistake can land you in serious legal and financial hot water. Being tagged as "excluded" by the Office of the Inspector General (OIG) can crush your practice -- especially considering the new guidelines that went into effect just a couple of days ago (on Feb. 13th).
Tomorrow, a leading healthcare attorney will walk you through the new exclusionary rules that just took effect so that you can really understand what will keep you off of the OIG's hit list.
Here are just a few of the practical, easy-to-implement tactics you'll receive by attending this 60-minute online training:
--Determine specifically who you should screen (individuals and entities) and how often
--Avoid being placed on the list for lack of compliance if there is a match on your team
--Find out what other legal actions can have collateral damage resulting in exclusion
--Learn how to get reinstated onto Medicare after an exclusion period expires
--Head off the top "flags" that lead to exclusions
--Master documentation requirements making your files audit-proof
--And so much more...
To make matters worse, if you employ an excluded employee (even accidentally), any funds paid to them must be paid back to Medicare/Medicaid promptly, and if you don't take action quickly enough your entire practice could be at risk. Are you really ready to lose serious revenue by getting thrown out of Medicare and your other private insurers?
Don't take the chance. Invest just 60 minutes of your time and attend this step-by-step, plain-English online training session that will provide you with the tools you need to protect yourself, your staff and your practice. Don't wait, sign up today.
This is just the tip of the iceberg of healthcare compliance costs and penalties that are far more punishing that the "crimes." If you wonder why America pays the highest cost per person for uneven healthcare coverage and care, take a look at this chart of the administrative system that has mushroomed into an incredibly costly bureaucratic monster that provides zero care.
Add layer after layer after layer of new complex regulations to the practice of medicine, and soon enough you need millions of paper-pushing employees to monitor compliance, enforce compliance, pursue administrative and criminal charges of non-compliance, file claims and counter-claims, defend the innocent from false accusations, write hundreds of pages of new regulations, and so on.
Yes, there is a place for common-sense regulations, and procedures to vet caregivers and track standards of care, etc.
But the system is now so onerous and out of control that the practice of medicine now requires far more attorneys and compliance-regulatory-paper-pushers than it does doctors and nurses.
This is but one example of America's obsessive penchant for criminalizing and over-regulating everyday life. No wonder America has over 20 million people with felony convictions, many for drug-related offenses that should have been treated as medical conditions (such as addiction).
In America, every "crime" deserves a heavy and often-life-destroying penalty--even non-compliance "crimes" committed by overworked innocents.
This criminalization of everyday life is not just insanely costly and insanely counter-productive--it's insanely punitive. It is the output of a sick society, a sick culture and a sickness-unto-death system of governance.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, John K. ($50), for your monstrously generous contribution to this site -- I am greatly honored by your steadfast support and readership.
Thank you, Kristen B. ($25), for your superbly generous contribution to this site -- I am greatly honored by your support and readership.

Read more...

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:
Correspondents' email is strictly confidential. The third-party advertising placed by Adsense, Investing Channel and/or other ad networks may collect information for ad targeting. Links for commercial sites are paid advertisements. Blog links on the site are posted at my discretion.


Our Commission Policy:
Though I earn a small commission on Amazon.com books and gift certificates purchased via links on my site, I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP