Debt unsustainable says Daily Telegraph

Jeff Randall writing in the Telegraph (what could be more mainstream?) points out that the people of Britain owe £1.5 trillion in mortgages, loans and credit card debts. He says if the Bank of England was not holding down the base rate at 0.5% "borrowers would be going to the wall in droves" but also that the BofE can't hold rates down for ever. "So why aren't politicians raising the alarm? Because the Chancellor wants people to keep spending to boost the stalling economy." "Consumers should be in no doubt though: a 'day of reckoning' is coming." [Derived from an article in The Week, 5 November 2011].

Clearly a lower interest rate is better than a high one when you're in debt, but the money to pay back interest has to be borrowed and can only be borrowed at interest. So debt can never be paid back by everyone - some have to go bust - it's just arithmetic.

And how are we going to keep spending without eventually consuming all the resources that the planet has available? To some extent consuming services will help, if those services are trying to be more materials efficient (more service for less stuff - especially waste and pollution).

But because £ has been put beween real resources and the meeting of human need, meaning that we have to meet human need indirectly by the acquiring of money, which bears interest, we have to work to get £, and then spend the £ so that others can be in work. Cyclic consumption it's called. We need to be meeting human need directly from real resources, sustainably. If £ facilitates this, so be it, but money must be the means, not the end.

Dr Giles Fraser, who resigned as Canon Chancellor of St Paul's Cathedral because of his concerns over the way the Cathedral was treating Occupy the London Stock Exchange protesters, said on Thought for the day on BBC Radio 4 this morming that markets produce wealth and jobs. This depends on what you mean by markets and wealth. If you mean financial markets, ie gambling institutions, well yes people, though not everyone, can make £ by such gambling. Wealth - if it is to be truly relevant - has surely to be gauged as the means to meet human need, a means that money cannot be as it cannot be eaten, drunk, breathed, lived in, or used to move things.

Markets first evolved as a means of distributing goods. The true wealth creators would take their produce to a place where they could sell it and money fulfilled its classic role as a means exchange, a store of value and a unit of accounting. A farmer doesn't want to swap the sheep (say) that he has raised for physical goods, especially not persishables, so he takes tokens which he can use later to acquire the means to meet his human need.

So because £ can be used to acquire goods and services as and when required, it takes on the semblamce of actually being a commodity, rather than just tokens. Money markets logically follow,  but people quietly forget that just because there is more £ there is not more actual directly useful stuff. Only science and technology can take the credit for actually increasing yields of directly useful stuff.

Nowadays, the advocates of an RBE hold that science and technology can sustainably help the planet yield enough directly useful stuff to meet our human needs, and with moderm communications, there is no need (or less need) to take physical things to a physical space for the exchange/transfer to take place. (The farmer just puts his sheep on e-bay, so to speak, and whoever wants them buys them.)

So if we were organising our planet today from scratch, using what we know and can do today, the pull of money on our economy (lit. household management) wouldn't be the driving force. If there isn't scarcity there's no need to use money as a store of value, means of exchange or store of value. If we use human need as the driving force, we immediately see that we don't need to do any more work than is necessary to facilitate our human needs being met and that if we can reduce that work by technology and mechanisation, that would be good, not bad (as we already accept at household level).

So there, again, is the train of thought that leads to an RBE. The use of the scientific method via technology, to sustainably meet human need.

Britain's Trillion Pound Horror Story

http://www.guardian.co.uk/tv-and-radio/2010/nov/12/britains-trillion-pound-horror-story-tv-review

The Guardian (link above) has a discussion about this TV programmed and an article about it in the guise of a TV review.

Presenter Martin Durkin set up the private sector good, public sector bad dichotomy early on, and said more than once that the public sector is now BIGGER [his emphasis] than the private sector, as if that was inherently bad/wrong/stupid. He made repeated reference to 'the productive economy', giving me the impression that it was identical with the private sector, but later in the programme he visited the NE for a nostalgic look at how it was an industrial powerhouse in the 19C. He was appealing for a manufacturing led recovery.

He didn't address the point that the technological advancements of the 19C and since have increased productivity wildly, reducing the need for work. We can't possibly as a planet keep consuming more and more to generate enough work for people to do so they can get money to spend on consumption. This isn't a moral imperative - there is a physical upper limit to the planet's resources.

The documentary's cartoon, parodied civil servant was seen taking money out of a restaurant's till to pay his wages, and then using the same money to buy himself food in the restaurant. Thus taxation was demonstrated as being 'theft' - one of the refrains of the programme is that government is spending OUR money. But this is just money circulating. It has to do that to work. In the private sector you may go into a coffee shop (these seem to be held up as the pinnacle of private sector achievement) and pay for your coffee. Some of the money will go to workers in the shop and some to the owners. The people who receive that money will go to other shops to spend it by the same process and so on. Why no shouts of "they're spending MY money" here?

I think we're supposed to be quite happy handing over money in the private sector as we do it willingly and have a choice, but this is disingenuous. You might have a choice of where to buy your food, but you have no choice but to buy food. You'd rather not have to pay it - free would be better - but you accept (grudgingly perhaps) that you have to. Rather like taxation, in fact.

I'm not saying tax couldn't be simpler, fairer, or lower, but paying for goods and services is part of the system we live in.

Durkin's point that pretty much everyone should have a job in the "productive economy" is standard fare, but let's examine it. You need to have a job to earn money so that you can buy things to keep companies in business so they can employ people. This is the cycle of consumption and it's one of the big problems of the monetary system.

Another key problem Durkin didn't really touch on is where "our" money comes from. The answer is that it is created by banks, and as you know they don't give it away, they want it back with interest - ie more money - but as they are the sole purveyors of money (ultimately) you can only ultimately get the money to pay the interest from them - at more interest. It is of course impossible to pay this back.

The programme's contributors mention "creating wealth", without really explaining what wealth is. We might understand it as making money, but  as the programme commented, creating money ("printing money") is pointless and wrong if there are no goods and services behind it. Exactly. This applies to all money in both sectors, not just the public sector.

Wealth is not money. Wealth is the beneficial resources we have available to us.