No Awake, of course not. Can you PLEASE stop reading things into what other people say.

The problem with usary is that it doesn't reward work, innovation, technology, invention, or entrepreneurship. It simply rewards having money with more money. Concordantly, it punishes those without money by forcing them to give some of the money they have to those with money. In effect it is inverted socialism for the rich.

A very simple example:

I am a chemist and I have invented a fantastic new painkiller, better than asprin, no side effects. I need a lot of money to get this into production and take it to market. Luckily, I already have lots of money so I can do this myself and reap the benefits of my actions.

Now I am the same chemist, with the same drug, but I have no money to start out with. I need to go to someone to get this money, and that means a bank. This bank then writes the money I need into existence. In doing this for me, I have to sign over my house, posessions, and whatever else as collateral. If my drug fails they get all that, if it succeeds they effectively part own it. They have done nothing to actually create the product or help me with production, yet are taking a significant portion of earnings, which means less money for me to reinvest in new drugs and less money for my workers to buy products. Due to me needing collateral they've not even assumed any risk.

The entire financial "economy" is simply a tax on the actual part of the economy that matters Awake. It is corporate socialism, but it benefits nobody but the stakeholders and owners of those corporations.

Daniel Taghoff
Is it possible that inflation comes about by increase in demand for finite amounts of raw materials due to rising population?
Yes, the system is skewed towards the rich, and focus on growth is all part of the confidence trick of stealing wealth via inflation by PRINTING money- that adds to inflation also.
Nothing to do with interest rates or pricing risk WHATSOEVER. U can't create inflation by charging interest anymore than u can push a brick with a piece of string- However, if inflation is high, then it's reflected in rates to protect capital.

I didn't say that it would allocate resources better than the private sector. That isn't the function of the financial system. The function is to allow others to gain enough resources to function.

If the financial services were owned by the state, with profit not being the primary function of those services, the absurd disparity between what has been written into existence by banks and what actually exists in real wealth was insane. This is a problem which STILL hasn't been grappled with because it is a bomb waiting to go off.

If the state lent at 0% then it doesn't matter how the resources are allocated, what matters is that they were allocated at all. Money sitting in the digitized wallets of financial organizations is money which is not being used to stimulate the economy or create jobs.

Usary is an inherently vile system. It can't be defended on any level, ethically or economically. Eventually the bubble bursts, and the many poor have to pay for the greed of a rich few. We've done it before, how many times more must we endure it before it is dealt with?

Yes awake the money is doing no good but that's not the point. The money supply hasn't altered. Goods are not any more expensive. People haven't got to produce and consequently consume more merely to keep the system going.

You are seeing this as a left-wing/right-wing or state vs private sector polemical issue when it has nothing to do with that. The point is having a system which is sustainable. This isn't possible if it is possible to simply make money out of money. Therefore all banking and financial systems need to be state controlled.

sir M
'Money sitting in the digitized wallets of financial organizations is money which is not being used to stimulate the economy or create jobs. '
your words earlier. Then,
'yes awake the money is doing no good but that's not the point'
Every 5 lines u change your mind!! We're discussing economies and jobs, like u say- now it's not the point?!?!?!?!?!!?!?

THEN, u talk about money supply not changing and goods not inflating in price, which I introduced the post before!!!!!!! Remember debt increasing, tha's money supply friend...
polemic!! u think this a polemic??
How can it be? You end with a SECOND U-turn on banking and financial systems!!! I mean u END on it
hahaHSHHSHHAHAHAHAAH

If a AAA rating means anything at all - which I strongly doubt - then the UK will be losing its shortly.

This useless "how long is a piece of string" credit-worthiness test were it applied properly would look at the UK economy as a wizened shitake mushroom which is unlikely to be rehydrated anytime soon. What bigger impediment to credit-worthiness is there than economy that's on the skids?

We are in a cycle at the moment where unemployment begets an increase in expenditure, a decrease in income and a rise in the deficit, the corollary of which, is more of all three.

The UK government needs to get investing in some serious infrastructure projects PDQ before the industrial and economic decline of this country becomes terminal. What this government understands about the importance of investment, the economy and industry is summed up in its totally inadequate support for industrial investment, regional development, its dim-witted treatment of Bombardier (i.e. it can't see past the open tender to the strategic importance of industry to the wider economy and national well-being) and its rejoicing in piffling successes like supplying a few bits of steel for the new Forth Bridge when the lion's share of the contract has gone to the Spanish and Chinese.

This is Thatcher Mark II. Don't be surprised if we're all working in B&Q, Morrisons, McDonalds etc. after this latest instalment. It never occurs to these dumbarses that an impoverished people don't buy much, don't borrow much and don't spend much. Welcome to Poundland!

sir m
YOU WROTE
''If the state lent at 0% then it doesn't matter how the resources are allocated''
PLEASE EXPLAIN- I've never heard of this, and now your saying that it's me whose economiucally illiterate??
Seriously, ask ANYONE if they think that lending at 0% means it dosen't matter how the resources are allocated. I'm keen to see why they are even linked!!
Are you even aware of how childish that sounds?
And you still maintain that banking isn't about allocating resources?

and ure last example... really shocking, its so naive.
The economy grows to satisfy the consequences of usary?? er, commodities, raw material, technological and manufacturing processes spring to mind!
The boom and bust is precisely because resources were misallocated- subprime, Brown's vote buying, red tape... oscillations in economic outputcan be moderated, certainly, but you (and Brown) who clearly know zero mathematics believe that governing laws of nature can be overcome.
The ego of it.
P.S.
And u still refuse to justify your original claim that
'reforming the banking industry so that any financial services are entirely state owned and not for profit would both prevent the kind of things that created this problem'
Why is it that public sector would allocate resources better???

They aren't linked, that's why it doesn't matter how resources are allocated. If money is lent by the state as a part of citizenship, as opposed to private corporations for a profit, then it doesn't matter does it? You are waffling on about complete nonsense.

The only thing that would be different is the interest rate (set at a little above zero to cover risk) and what happens to any profit which is yielded by this system (spent on infrastructure for the population and not put into profit).

"P.S.

And u still refuse to justify your original claim that

'reforming the banking industry so that any financial services are entirely state owned and not for profit would both prevent the kind of things that created this problem'

Why is it that public sector would allocate resources better???"

I did justify it but you simply don't understand it. The financial system created the problem because they were persuing profits, not running a service. Subprime and bad debts would not have been a focus for them, only real things of real economic value would be invested in if anti-usary laws were in place.

Do you actually know what "usary" means?

Everybody accepts that George Osborne is a Triple A. It's a given.
OK, so some credit rating agency has thrown a moody. However, this is merely a warning to George - the fear being that the Chancer is devious enough to steal Labour's solution and claim it for his own.

Gnomes of Zurich

Awake! is obviously still half Asleep! given that he's managed to misread "Eaton" as "Blanchflower".

credit agencies need dicrediting

economies need credit at 0%

On negative outlook because of the eurozone crisis and they say the fiscal consolidation is necessary.

You lefties are really getting desperate now - if Ed Balls took over tomorrow it certainly wouldn't be negative outlook it would be kiss goodbye to AAA and high borrowing costs here we come.

But hey who cares headline GDP would be about 0.3% higher. The new economic maxim kick the can down the road Blanchflower style.

Oh my god it's pathetic.

The reason it doesn't matter is because resources are still allocated by the private or public sector depending on the industry that utilizes them.

The ONLY differences are;

1. The state is responsible for lending funds to business which it reasonably believes can cover them later.

2. Any profits from this action are circulated back into the real economy as either welfare payments or tax cuts. There is to be no profiteering from simply having money.

HOW businesses use money to build cars, repair lawnmowers, construct buildings, mine raw minerals, or produce steel is completely unchanged.

Usary. Making money from money. That's ALL I am talking about here. Now you can disagree with the point, but going on about points I didn't in fact make is getting tiresome.

( ==== http://www.vogue7.us/ ==== )

'The reason it doesn't matter is because resources are still allocated by the private or public sector depending on the industry that utilizes them.'
I dont understan this sentance.
U originally said it would be better if public sector did the allocating, then that banking wasn't actually allocating resources, U-turned on that in the end, then said there should be more than 0% interest(another U turn), it goes on... and u still maintain that it dosen't matter how resources are allocated;
'The reason it doesn't matter (that resources aren't allocated properly is because resources are still allocated by the private or public sector depending on the industry that utilizes them' Now we get another u turn from u because u concede that some allocation from private is allowed...
Your mind is like a grasshopper. U REALLY need to try meditation, i mean that with sincere love...
Again, for you... making money from money IN ITSELF is not evil... it's the people who hold it who commit the crimes. The reason ancient texts bang on about it is because 'the flrsh is weak'. However, an evolved being acts morally always.

"France and the US have seen little rise in their borrowing costs since losing their AAA ratings."

It is the other way around. The intrest rates are not caused by the rating, but the rating is caused by the intrest rates, which are caused by talk in the news media, who are the prime mover.

To be clear: the news media determine the intrest rates and the intrest rates determine the ratings. That's all.

I always assumed junkstatus would be the best thing for Osborne. Labour would never have a chance then.

Osborne - like his European counterparts - is clueless. Having started off worrying that we were in danger of being like Greece, he is doing his level best to make this a reality.

Keynes was right about what to do in a slump - and despite evidence to contrary - Osborne and the saps in the European Union are driving down their economies. Ireland, Greece, Spain and Portugal are already dead ducks and Britain, Italy, France... are about to join 'em.

It isn't just Osborne who needs to rethink things. The ECB better start issuing bonds before it is too late. The present policy envisaged for the eurozone is totally untenable.

What is really bewildering is that Osborne prides himself on not being part of the eurozone whilst pursuing the same policies needlessly.

I yield to none in my scorn for the rating agencies, which passed all those subprime lenders all those years, and whose bias towards the United States is surpassed only by their bias towards the socially liberal, globally adventurist Wall Street wing of the Republican Party.

But I am neither a member nor a supporter of the Coalition: I am not a Conservative, I am not a Lib Dem, and I am not a Blairite. Unlike George Osborne (who ought to be too posh to be a Thatcherite neocon, but instead seems to be earning his Bullingdon nickname of "Oik"), or Danny Alexander and the Orange Bookies, or David Miliband and his flame-keepers, I do not have a bias towards the United States surpassed only by my bias towards the socially liberal, globally adventurist Wall Street wing of the Republican Party.

On this of all days, what a tragic thing is unrequited love. It would take a heart of stone not to laugh.

sir m
the reason we have REAL growth, as i've already pointed out to you, is because of the value added of taking commodity out the ground, putting it through some manufacturing process and making something useful- it's not easy to drive around in iron ore and raw oil/plastic. That VALUE ADDING process is where REAL growth comes from.
Then, governments, in order to win votes via spending splurges (FAKE GROWTH), then use this growth as a justification to BORROW/ create debt more debt than is affordable, on the grounds that the income stream from tax revenues ad infintum , AND factoring in NEW SUPPOSED growth, means that the debt is credible i.e. it will be repayed. Growth then becomes key, and econometrics becomes overly focused on it, to the detriment of common sense e.g. remainINg structurally competitive, education,TRADE IMBALENCES, etc...
Look at economists such as Krugman. A nobel winner, overly focused on a minute area relating to global trade flows...but didn't see the looming storm. His work gathers dust...
You're arguing that goods and services increase so as to make up for the fact that money supply has had to be increased because people are hording it? And that therefore risk shoudn't be priced? seriously? Is that 'theory' based on the fact that there are poor and rich people in the world, because in your earlier example of the wonder drug, once your man gets his money, well, he might just sit on it...(it was a really poor example)
Your throwing out the babe with the bathwater.
'How can a planet with finite resources support infinite growth?'
It can't. The answer is in the very meditation you ridicule. The final stages of man's evolution will not be mental, economic, political... they will be in the spiritual domain, the understanding of the silence of the inner self and resulting contentment.
It will be hard for many English, their egos are still inflated from empire, but a few have a truly generous heart- hopefully they will carry the day!

oh, and just a final word, AIG never "collapsed". Indeed, it never lost its investment-grade rating from Moody's.

MOODY'S actual quotes.
'The primary driver underlying Moody's decision to change the outlook on the UK's Aaa rating to negative is the weaker macroeconomic environment, which will challenge... These challenges, reflecting the combined effect of a commodity price driven hit to real incomes, the confidence shock from the euro area and a reassessment of the lasting effects of the financial crisis on potential output'
So, erm, nothing on cuts yet. In fact on cuts they say they are necessary. Which is the REAL reason why the hardcore lefties including Blanch now dismiss the rating agencies. See that wonderful logic?
GETTIT folks!!! because the agencies made mistakes in the past and are now trying to be whiter than white, we must not listen to the army of economists, analysts, accountants and lawyers who get INDEPENDANTLY paid by those who invest in the bonds, no no no, we must listen to Blanch, anton jury and other economic illuminaries.
More.
'A combination of a rising medium-term debt trajectory and lower-than-expected trend economic growth would put into question the government's ability to retain its Aaa rating. The UK's outstanding debt places it amongst the most heavily indebted of its Aaa-rated peers...'
Outstanding debt note, outstanding, yet didn't Eaton recently write it's not a problem, the 1 trillion we have of debt?
Then moody's bang on again about the euro area.
'The second and interrelated driver of Moody's decision to change the UK's rating outlook to negative is the fact that the weaker environment is also, in part, a by-product of the ongoing crisis in the euro area.'
When was it NS started writing about Europe, or did Anton Jury or Hasan, when did these econmomists start warniung us re Europe?
Who banged on about Europe here 6 months ago- relentlessly beating that drum regarding Europe? ME!
I actually had to write NS staffers and ask if they were ever going to adress the defining issue of our generation, and slowly the articles came.
Why slowly? cos, erm, the issue of europe is fairly clearcut (they are arch clowns), so it coudn't be argued against, so in turn the thinking was that this was a gift to coalition. Why? Because , once again, the left were wrong to back Europe.
When will the left start listening to people again??

@Awake

Posting to get the last word in. Because I know that will really upset you if you ever find this.

And Sir M is spot on.

Financial institutions abuse the privilege of being close to money supply and demand growth to sustain themselves. The real economy *always* suffers at their hands.

sir michael
'so that any financial services are entirely state owned and not for profit would both prevent the kind of things that created this problem'
is taht because state sector workers are better than private sector workers, Sir Michael?