tag:blogger.com,1999:blog-8524070301101240472.post3773342161881283540..comments2023-09-28T08:13:11.489-07:00Comments on Only In It For The Gold: Is Debt Conserved?Michael Tobishttp://www.blogger.com/profile/08229460438349093944noreply@blogger.comBlogger52125tag:blogger.com,1999:blog-8524070301101240472.post-90546672892695751282011-10-08T18:15:26.833-07:002011-10-08T18:15:26.833-07:00guthrie --- Mere speculation. I've been to Ch...<b>guthrie</b> --- Mere speculation. I've been to Chinon.David B. Bensonhttps://www.blogger.com/profile/02917182411282836875noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-51633383226813369552011-10-08T05:08:25.167-07:002011-10-08T05:08:25.167-07:00Umm, anyone saying "it seems unlikely" h...Umm, anyone saying "it seems unlikely" has already given up any hope of reaching a sensible conclusion. <br />For example, the Chinon fortifications may well at first have been made of wood, cut and carried by locals under the command of the big bloke sitting on a horse. Or by the soldiers themselves. Thus very little finance is needed at all, just the right by feudal obligation or force of arms to compel people to work for you. <br />Stone fortifications could have come later, financed by saving up taxes, theft, grants from the king<br />I am sure that borrowing did occur in that period, but it would have been between the very richest people in the top of society.guthriehttps://www.blogger.com/profile/17992984293423290387noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-61815917872370994322011-10-07T07:57:58.356-07:002011-10-07T07:57:58.356-07:00s/field/fields/s/field/fields/Kooiti Masudahttps://www.blogger.com/profile/15709237727441869109noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-89377654229167696312011-10-07T07:51:53.051-07:002011-10-07T07:51:53.051-07:00I have started reading Soddy (1926) "Wealth, ...I have started reading Soddy (1926) "Wealth, Virtual Wealth and Debt", but I am not sure when I finish.<br /><br />Its epigraph is interesting.<br /><br />"That which seems to be wealth may in verity be only the gilded index of far-reaching ruin; a wrecker's handful of coin gleaned from the beach to which he has beguiled an argosy; a camp-follower's bundle of rags unwrapped from the breasts of goodly soldiers dead; the purchase-pieces of potter's field, wherein shall be buried together the citizen and the stranger."<br />-- John Ruskin, Unto this Last, 1862.<br /><br />By the way, Ruskin was also a member of the Meteorological Society and he wrote something there as shown <a href="http://www.readbookonline.net/read/18521/53694/" rel="nofollow">here</a>. Hence the title of Paul Edwards' book (2010) "A Vast Machine".Kooiti Masudahttps://www.blogger.com/profile/15709237727441869109noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-56155195883505097832011-10-06T20:25:02.070-07:002011-10-06T20:25:02.070-07:00Dollars are bosonsDollars are bosonsEliRabetthttps://www.blogger.com/profile/07957002964638398767noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-42892805394524872552011-10-05T20:29:16.104-07:002011-10-05T20:29:16.104-07:00guthrie --- I agree. But the political changes di...<b>guthrie</b> --- I agree. But the political changes didn't stop in 1066 CE nor did people's lot much improve until a somewhat arbitrary date of 1440 CE. Nonetheless one suspects there was some level of borrowing against the future even during the "dark ages" from 410 CE to 1066 CE. For example, <i>the mount of Chinon was first fortified as a stronghold by Theobald I, Count of Blois in the year 954</i> from<br />http://en.wikipedia.org/wiki/Ch%C3%A2teau_de_Chinon<br />How did Theobald I finance that? Out of pocket seems unlikely.David B. Bensonhttps://www.blogger.com/profile/02917182411282836875noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-29687548515902578192011-10-05T08:05:19.618-07:002011-10-05T08:05:19.618-07:00Hmmm, coincidentally, I just bumped into another K...Hmmm, coincidentally, I just bumped into another <a href="http://www.energybulletin.net/media/2011-10-01/debunking-economics" rel="nofollow">Keen video</a> at the Energy Bulletin.<br /><br />I am just noting it, and giving a listen. It looks interesting from first bit.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-52335937599992478422011-10-05T07:37:45.312-07:002011-10-05T07:37:45.312-07:00@ mt: "What economists should I be reading to...@ mt: <i>"What economists should I be reading to validate and build upon this point of view? In particular, do any of them accept long-term limits to growth?"</i><br /><br />As another commenter suggested, I think you should take a look at Steve Keen.<br /><br />Here is a good intro/primer <a href="http://video.google.com/videoplay?docid=-7412012211449610973#" rel="nofollow">video</a> (not well: this lecture was made well prior to the Lehman collapse.)<br /><br />Maybe this <a href="http://www.youtube.com/watch?v=E0YC2PLnWRA" rel="nofollow">short 3-part series</a> as well.<br /><br />I think he gets a little too cute when he describes credit as driving deposits, but generally good.<br /><br />I the comment I made above about the paper presented at Jackson Hole, the concluding quote was <i>"On the fringe were theoretical papers in which debt played a key role, and empirical papers concluding that the quantity of debt makes a difference... The latest crisis has revealed the deficiencies of the mainstream approach and the value of joining those once seen as inhabiting the margin."</i><br /><br />As far as I can tell, that refers to "people like Steve Keen."<br /><br />As to the current discussion, the key takeaway is not that there should be no debt, but that the current economic/financial system is biased towareds creating "too much" debt, and has done so.<br /><br />I am not sure where he stands on absolute physical limits to growth. He does reference climate change and peak oil in one of those presentations, but it is more in the context of those constraints having a mitigating effect on deflationary pressures, which he sees as a consequence of the inevitable deleveraging.<br /><br />Speaking of which (deleveraging), here is another <a href="http://www.youtube.com/watch?v=HaNxAzLKegU" rel="nofollow">economist video</a> that is tangentially related.<br /><br />I must say that these two seem to make a scary amount of sense. Which leaves me a little uneasy. How can so many other experts see things so differently? What am I/are they missing?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-6012635554131907672011-10-05T05:38:21.344-07:002011-10-05T05:38:21.344-07:00David - another comment I'm afraid!
Surely you...David - another comment I'm afraid!<br />Surely you would be more accurate to say "relatively unchanged technologically", since there was a great deal of political upheaval, with the invasions, tribal movements, rise of the feudal system etc. Probably more than during the last 4 centuries of the Roman empire anyway.<br /><br />Technological change was certainly much lower in the period, and often consisted of rediscovering or re-importing older stuff, such as the manufacture of brass, which the Romans did but it died out and was rediscovered in the 800's or so in Germany. Pattern welded Viking swords were also around, but that sort of thing fell out of use over time. <br />History of technology is a very interesting subject. Why did something get invented at a certain time, how come it fell out of use at other times, etc. <br /><br />My personal understanding (from reading books, academic papers etc) is that in western Europe, material culture and trade etc didn't quite reach the capabilities or volume of the busiest Roman period until the 15th century, but at that time it was already surpassing the Romans in dissemination of technical knowledge, complexity and depth of knowledge and technical skill.guthriehttps://www.blogger.com/profile/17992984293423290387noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-42222827504071389512011-10-04T20:37:48.455-07:002011-10-04T20:37:48.455-07:00AK --- Thanks again. After checking a bit regardi...<b>AK</b> --- Thanks again. After checking a bit regarding the horse collar, I would now propose 410 CE to 1066 CE as relatively unchanged in Europe. Not only does your comment about windmills tend to put paid to that, but my European history course over 50 years ago <i>began</i> with the latter date. So I haven't the slightest how matters of debts were treated over that interval [which might be termed Early Midieval?]David B. Bensonhttps://www.blogger.com/profile/02917182411282836875noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-21764945481546448972011-10-04T10:50:33.425-07:002011-10-04T10:50:33.425-07:00@David B. Benson...
You're welcome. One of m...@David B. Benson...<br /><br />You're welcome. One of my fantasies is to get enough time (&energy) to create a history of the Industrial Revolution. My current thinking carries the deepest root back to the Carolingian Empire.<br /><br />Something else to consider: the growth of wind and water power, which by the 15th century was very widespread. From <a href="http://en.wikipedia.org/wiki/Medieval_technology" rel="nofollow">Wiki</a>:<br /><br /><i>The development of water mills from its ancient origins was impressive, and extended from agriculture to sawmills both for timber and stone. By the time of the Domesday Book, most large villages had turnable mills, around 6,500 in England alone.[3] Water-power was also widely used in mining for raising ore from shafts, crushing ore, and even powering bellows.</i>AKhttps://www.blogger.com/profile/10905636789614137068noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-58773750059552436722011-10-04T08:26:23.650-07:002011-10-04T08:26:23.650-07:00Peter T., thanks enormously!
It is always both re...Peter T., thanks enormously!<br /><br />It is always both reassuring and frustrating to have one's original thoughts validated. Reassuring, because one knows that he has not gone completely round the bend, and frustrating because one knows he will not get credit for breaking new ground. <br /><br />If there is one person who sees it the way I do, might there be more? What economists should I be reading to validate and build upon this point of view? In particular, do any of them accept long-term limits to growth?Michael Tobishttps://www.blogger.com/profile/08229460438349093944noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-70673327553839757192011-10-04T06:01:01.931-07:002011-10-04T06:01:01.931-07:00On second thought Michael, this scene is probabl...On second thought Michael, <a href="http://www.snotr.com/video/2453/Gimme_the_cash" rel="nofollow"> this scene </a> is probably more germane to the discussion...Marlowe Johnsonhttps://www.blogger.com/profile/06497415494967921609noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-88832633219719600272011-10-03T21:51:47.083-07:002011-10-03T21:51:47.083-07:00The two schools of "lets pretend the economy ...The two schools of "lets pretend the economy runs on barter" and the Austrian "banks create money, this is wrong, lets go back to gold" have just about everyone confused. All it would take is a short course in ancient history - credit, interest and most of the other apparatus of finance appear well before there was gold or silver coinage or even a standard unit of account (actually, some thousands of years before). It is, as MT notes, all about time.<br /><br />Money is a debt, differing from private debt only in that it is a "debt" on the general community rather than on some particular person or institution. Anyone can create debt, just by promising to pay at some future time and having that promise accepted. Private debts are translated into money all the time, and vice versa (I create a company, issue share - ie promises to pay some fraction of future earnings; shareholders use the shares as collateral with a bank - voila, money. Or I simply use my credit card - my private debt has become card company money or general money (all denominated in the same unit).<br /><br />As MT notes, in a low growth or steady state economy, it's difficult to issue as much debt. Part of the path to such a state involves writing off much present debt. But this is no different in principle from writing off private debts, just larger scale and much more disruptive.Peter Thttps://www.blogger.com/profile/13289172253358199028noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-26092014299957215432011-10-03T21:23:49.563-07:002011-10-03T21:23:49.563-07:00guthrie & AK --- Thank you. I'll point ou...<b>guthrie</b> & <b>AK</b> --- Thank you. I'll point out that the books on the history of libraries I read were quite clear on the point of the decline in the number of books. According to those sources the monks did not copy as fast as books disappeared. But I had forgotten about the advances in agriculture; indeed my grandfather's mule wore a rigid collar when pulling a moldboard style metel plow. [But a #2 spade has been a #2 spade and a nail hammer a nail hammer for at least 1600 years.]<br /><br />Other things took a long time to recover, at least in the decorative arts.David B. Bensonhttps://www.blogger.com/profile/02917182411282836875noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-91625410653385092842011-10-03T17:46:15.361-07:002011-10-03T17:46:15.361-07:00Wow! I go away for a while and MT is digging into...Wow! I go away for a while and MT is digging into economics. Well, IIRC he said he was going to.<br /><br />@guthrie & David B benson...<br /><br />There were many changes between the end of the Empire and the invention of the printing press, but the most important wasn't on guthrie's list: the rigid horse collar, which allows a horse to do around twice as much work with the same amount of food. Traditionally, an ox and a horse ate five times as much as a man, and could do five times the work. With the introduction of the rigid horse collar the horse could do twice the work while still eating five times as much as a man. AFAIK the rigid horse collar spread throughout the Carolingian Empire, along with improved plows that depended on it, starting around 800CE.<br /><br />@MT...<br /><br />The ultimate basis of money is confidence. If nobody believes in anything but gold, then the amount of gold present in the economy is the amount of money. If you (or the king, or a central bank) start writing notes that people have confidence in, so that they don't come back to you for gold, then the notes you write represent an expansion of the total money supply. Every time somebody signed a mortgage, that's what happened.<br /><br />The mess we're in now was fueled (IMO) by two problems: a housing bubble meant that more money was being created as housing prices increased, while the value of these high LTV loans was being increased too far due to unrealistic confidence: anybody who couldn't pay could always resell for more.<br /><br />The other problem was that with 2nd derivatives those loans were being treated as worth more than even the Fed knew, so the money supply had gotten out from under their control.<br /><br />When the bubble stopped growing, defaults started growing, risk was re-assessed, and the whole house of cards came tumbling down, causing a massive shrinking of the money supply.AKhttps://www.blogger.com/profile/10905636789614137068noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-18267918942702530892011-10-03T15:14:33.667-07:002011-10-03T15:14:33.667-07:00My comment, continued:
Transportation, at least in...My comment, continued:<br />Transportation, at least in the ex-empire, was probably actually better in the earlier part of the medieval period. The records we have suggest, especially in places such as England, that merchants etc found it easier to travel in the 12-14th centuries than later, because Roman roads and such still existed, but as traffic increased they became increasingly worn out and there wasn't a central authority to keep them up in the old style. <br /><br />The style of drawing a line in the sand and saying "this is the decisive point" is very old and not very accurate. In the case of the developments of medieval europe, it is totally inappropriate. For instance, the type used for printing involved a special alloy with antimony in it. 3 centuries before, people weren't even very sure exactly what antimony was, but the developments over that time isolated it and meant that skilled craftsment knew what it was and what it was good for. <br /><br />Now, the role of banks in the high and late medieval period was basically to lend money and get it back. They often went bankrupt due to bad debts. It was a comparatively simple system, but by the 13th century we had paper drafts on banks, and a network of couriers taking important information from Italy to the low countries and into Germany and France and Spain. Or was that the early 14th? I can't recall right now. <br />Anyway, the other part of the story about the high and late medieval periods is the increasing use of money - at least in England, a great many more peasants were involved in the money economy in the 13thC than people give credit for; the pure feudalism was pretty much dead. So you had a lot of silver in circulation, and some gold, but it was more directly under the control of the Kings, rather than private institutions. If inflation occured, it was likely because the king was adulterating the coinage, not because banks were lending as much money as they could to all and sundry.guthriehttps://www.blogger.com/profile/17992984293423290387noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-71460548296290431242011-10-03T15:14:09.608-07:002011-10-03T15:14:09.608-07:00David B benson - this is a bit of an essay, but I ...David B benson - this is a bit of an essay, but I see no need to apologise because your post re. the middle ages is rather in error.<br /><br />For starters, farming practises changed a fair amount across western europe from around the 9th cnetury AD onwards, with the introduction of the 3 field system and improved ploughs, not to mention changes in breeding such that sheep became better wool producers enabling a better more modern wool industry. Clearance of forests came and went of course, but the simple fact is that that to compare the thousand years to as near a steady state as possible is wrong. Perhaps you could take the 400 years or so after the fall of Rome and during the rise of feudalism as being the steadiest period, at least with regards to technological and social development. <br /><br />Now, more specific points to back up the mere 400 years of slow change - the use of stone was almost certainly spurred by foreign examples, its greater utility for defensive and show off purposes, and so on, not because of lack of timber. Especially in England, where lack of timber can be seen in houses seveeral hundred years after they began building stone castles. In all this sort of thing, the limiting factor is not so much raw materials, as people who know how to manipulate them and a ready market for their products that is not already filled, hence the general rarity of glassblowers in England before the 16th century. <br /><br />The number of books in Europe probably did decline in the 400 years or so after Rome fell, but with feudalism being established and the spread of monasteries in the 9/10th centuries, with their scriptoria, many more books were produced. Literacy as well spread amongst the more educated and mercantile parts of the community, such that by the 15th century books of instruction were being produced for more normal people on everyday things, let alone books of secrets and suchlike. <br /><br />The 13th century in particular sees the invention of the mechanical clock, and spectacles, both with their attendant social changes. It is also the first great period of pan-western european trade, with the invention of a variety of new bookkeeping methods, and of course the introduction of lost knowledge from the east through Spain, although a lot of that stuff began in the 12th century.guthriehttps://www.blogger.com/profile/17992984293423290387noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-31902646500426006092011-10-03T13:25:53.063-07:002011-10-03T13:25:53.063-07:00hmmm i see what you mean....can you make the font ...hmmm i see what you mean....can you make the font smaller next time? Still, I think my quote is more apropos the subject of this post, but whatever. Far be it from me to criticize anyone from your generation who has the geek chops to quote the Fifth Element. Bravo sir.Marlowe Johnsonhttps://www.blogger.com/profile/06497415494967921609noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-29641504639255099572011-10-03T13:05:53.033-07:002011-10-03T13:05:53.033-07:00But that IS a quote from Oldman's character, ...But that IS a quote from Oldman's character, which explains the image...Michael Tobishttps://www.blogger.com/profile/08229460438349093944noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-12203376380918147962011-10-03T09:21:49.351-07:002011-10-03T09:21:49.351-07:00Michael,
Given your choice of graphics, I'm s...Michael,<br /><br />Given your choice of graphics, I'm surprised you didn't end your post with a quote from Gary Oldman's character in the Fifth Element...to whit:<br /><br />"You see, Father, by creating a little destruction, I'm actually encouraging life. In reality, you and I are in the same business. Cheers."Marlowe Johnsonhttps://www.blogger.com/profile/06497415494967921609noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-82640174843017144972011-10-03T05:29:34.278-07:002011-10-03T05:29:34.278-07:00A couple of quick thoughts:
1) Sustainable does n...A couple of quick thoughts:<br /><br />1) Sustainable does not mean steady-state. Neither human-beings in their own self nor their societies nor the species as a whole exists in a steady-state.<br /><br />2) Americans, even post-911, take security for granted. Security is a prerequisite for production. If your crops are raided, your churches and storage looted, and your factories and libraries burned, the economy is set back. If small in scale, the society might be able to absorb them. If the raids increase in frequency or scale, the economy is lost.<br /><br />3) We tend to think of history as the expansion and contraction of political entities and the wars between them. Economic history is just as important if not more so. I've been toying on the edge of it. <br /><br /><em>What was the role of debt (and maybe even banks) during this time?</em><br /><br />Speculatively, I will point towards the payment of taxes in some combination of cash, labor, crops, or animals. So debt would likely be structured as 'future obligations.'Ron Broberghttps://www.blogger.com/profile/00360356366869878444noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-13666002692133507482011-10-02T20:35:21.842-07:002011-10-02T20:35:21.842-07:00Ron Broberg --- Yes, deforestation is and was a fo...<b>Ron Broberg</b> --- Yes, deforestation is and was a form of energy and materials extraction. However, farming practices changed almost not at all from a nominal date of 410 CE (for the fall of the western Roman empire) to 1440 CE (the invention of the printing press). [I'm sure of this because the farming tools on display in the British Museum dating from about 410 CE are exactly the same in form and materials as those used by my grandfather on his 40 acres.] During that thousand plus years the number of books in Europe declined and possibly transportation became more difficult. The first sign of positive(?) change was in about 1140 CE with the construction of the first Gothic Cathederal. Of course some stone fortresses in Europe are probably older, but the lack of timber helped spur the use of stone around then.<br /><br />I suggested contemplating this interval because a fair amount is known about it, despite the decline in books, and it is as close to steady state as I know about. [I know almost nothing about history in Asia.] Of course the steady state ended with printed books and literacy.<br /><br />What was the role of debt (and maybe even banks) during this time?David B. Bensonhttps://www.blogger.com/profile/02917182411282836875noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-40785002336592491552011-10-02T19:31:04.077-07:002011-10-02T19:31:04.077-07:00What we need is economic models that assume the pl...What we need is economic models that assume the players behave like they actually behave, for as long as they can get away with it, and profit.<br /><br />Where are the models that handle kleptocracies?<br /><br />http://www.bloomberg.com/news/2011-10-02/koch-brothers-flout-law-getting-richer-with-secret-iran-sales.htmlHank Robertshttps://www.blogger.com/profile/07521410755553979665noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-83892214341639571972011-10-02T19:27:59.247-07:002011-10-02T19:27:59.247-07:00"... The 2007-2008 financial crisis is very m..."... The 2007-2008 financial crisis is very much a case in point, at least as I understand from my recent reading of Michael Lewis' account, "The Big Short: Inside the Doomsday Machine". A number of people became enormously wealthy while bankrupting their own companies, their customers, or large swathes of the general public. The ways in which they managed this was through exploitation of a handful of real "bugs" in US and international systems of finance. Some of these bugs have been addressed; some I'm less confident will be, exhibiting further bugs in our political and media systems...."<br /><br />http://arthur.shumwaysmith.com/life/content/bugs_in_the_systemHank Robertshttps://www.blogger.com/profile/07521410755553979665noreply@blogger.com