Nu-Economics and Perpetual Motion

[Hotblack Desiato]

Looks like we've run out of spinning wheels with eggs hanging off one side
to attach to our economic perpetual motion machine. Like all perpetual
motion machines, it was little more than a confidence trick from the outset,
sold to the masses by manipulating their insatiable appetite for an
easy-ride.

Given another 20 years, despite the suffering this unfolding will inevitably
cause, I'm sure we'll be repeating this exercise once again. You can't grow
an economy by sitting around shaking money from side-to-side and investing
in each others real-estate values. It doesn't matter how numerous, devious
in complexity or convoluted the debt devices involved, it's still destined
for failure.

Nu-economics, old-economics, Arthurian-economics, it all makes no odds. The
complexity, convolution and spinning eggs on spoons, are only there to
obfuscate reality. With any luck we'll take notes this time.

But as my history teacher once told me during one of her more candid moments
''History' has to be the most useless subject known to mankind. No one, save
a few eccentrics, takes any interest in it.' To which I said I really didn't
think my homework was quite that bad. She replied with a detention slip.

All of which just goes to show, the fundamentals of economic principle
remain the same and always will, there is no such thing as perpetual motion,
either in notional, virtual or real terms. And lastly, don't ever use the
word 'dick' in your history homework

http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=555149&in_page_id=1770&ct=5

[A Monkey]

Post by Hotblack Desiato
Looks like we've run out of spinning wheels with eggs hanging off one
side to attach to our economic perpetual motion machine. Like all
perpetual motion machines, it was little more than a confidence trick
from the outset, sold to the masses by manipulating their insatiable
appetite for an easy-ride.
Given another 20 years, despite the suffering this unfolding will
inevitably cause, I'm sure we'll be repeating this exercise once
again. You can't grow an economy by sitting around shaking money from
side-to-side and investing in each others real-estate values. It
doesn't matter how numerous, devious in complexity or convoluted the
debt devices involved, it's still destined for failure.
Nu-economics, old-economics, Arthurian-economics, it all makes no
odds. The complexity, convolution and spinning eggs on spoons, are
only there to obfuscate reality. With any luck we'll take notes this
time.

Your post is just a rant and doesn't say anything. I'm guessing you
don't approve of any kind of debt, and that you think the economy has
experience some sort of "false" growth based on house price growth??
Could be wrong though - what are you trying to say?

[Andy]

Post by A Monkey

Post by Hotblack Desiato
Looks like we've run out of spinning wheels with eggs hanging off one
side to attach to our economic perpetual motion machine. Like all
perpetual motion machines, it was little more than a confidence trick
from the outset, sold to the masses by manipulating their insatiable
appetite for an easy-ride.
Given another 20 years, despite the suffering this unfolding will
inevitably cause, I'm sure we'll be repeating this exercise once
again. You can't grow an economy by sitting around shaking money from
side-to-side and investing in each others real-estate values. It
doesn't matter how numerous, devious in complexity or convoluted the
debt devices involved, it's still destined for failure.
Nu-economics, old-economics, Arthurian-economics, it all makes no
odds. The complexity, convolution and spinning eggs on spoons, are
only there to obfuscate reality. With any luck we'll take notes this
time.

Your post is just a rant and doesn't say anything. I'm guessing you
don't approve of any kind of debt, and that you think the economy has
experience some sort of "false" growth based on house price growth??
Could be wrong though - what are you trying to say?
--
A monkey
"Monkeys are superior to men in this: when a monkey looks into a mirror,
he sees a monkey."

I think its important for economists to look for a new system of trade
to replace the capitalist one- one which retains a low government
input but is more socially and environmentally concious. A problem
with capitalism is indeed the high level of debt on a personal ,
corporate and state level.

The problem with debt is is takes away your freedom. You have to pay
your debtor whether you want to or not. This a plies to politics in
the following way. What happens when there is a pretty obnoxious
regime, but we own them a lot of money for their materials or
products? Answer: You end up with a foreign policy that is completely
bent. Compare Zimbabwe with China or Saudi Arabia. Zimbabwe actually
has the best human rights record of the three. Zimbabweans might not
get completely free and fair elections, but at least the opposition
get a shot at it. Opposition leaders are routinely beaten up or shot,
but most remain alive and out of jail. For the Saudi or Chinese
dissidents, not even the most basic rights are afforded. A good
example of just how loudly money talks.

[abelard]

On Sat, 5 Apr 2008 07:19:43 -0700 (PDT), Andy

Post by Andy

Post by A Monkey

Post by Hotblack Desiato
Looks like we've run out of spinning wheels with eggs hanging off one
side to attach to our economic perpetual motion machine. Like all
perpetual motion machines, it was little more than a confidence trick
from the outset, sold to the masses by manipulating their insatiable
appetite for an easy-ride.
Given another 20 years, despite the suffering this unfolding will
inevitably cause, I'm sure we'll be repeating this exercise once
again. You can't grow an economy by sitting around shaking money from
side-to-side and investing in each others real-estate values. It
doesn't matter how numerous, devious in complexity or convoluted the
debt devices involved, it's still destined for failure.
Nu-economics, old-economics, Arthurian-economics, it all makes no
odds. The complexity, convolution and spinning eggs on spoons, are
only there to obfuscate reality. With any luck we'll take notes this
time.

Your post is just a rant and doesn't say anything. I'm guessing you
don't approve of any kind of debt, and that you think the economy has
experience some sort of "false" growth based on house price growth??
Could be wrong though - what are you trying to say?
--
A monkey
"Monkeys are superior to men in this: when a monkey looks into a mirror,
he sees a monkey."

I think its important for economists to look for a new system of trade
to replace the capitalist one- one which retains a low government
input but is more socially and environmentally concious. A problem
with capitalism is indeed the high level of debt on a personal ,
corporate and state level.
The problem with debt is is takes away your freedom. You have to pay
your debtor whether you want to or not.

that is not so....much debt is not repaid

Post by Andy
This a plies to politics in
the following way. What happens when there is a pretty obnoxious
regime, but we own them a lot of money for their materials or
products? Answer: You end up with a foreign policy that is completely
bent. Compare Zimbabwe with China or Saudi Arabia. Zimbabwe actually
has the best human rights record of the three. Zimbabweans might not
get completely free and fair elections, but at least the opposition
get a shot at it. Opposition leaders are routinely beaten up or shot,
but most remain alive and out of jail. For the Saudi or Chinese
dissidents, not even the most basic rights are afforded. A good
example of just how loudly money talks.

[A Monkey]

Post by Andy

Post by A Monkey

Post by Hotblack Desiato
Looks like we've run out of spinning wheels with eggs hanging off
one side to attach to our economic perpetual motion machine. Like
all perpetual motion machines, it was little more than a confidence
trick from the outset, sold to the masses by manipulating their
insatiable appetite for an easy-ride.
Given another 20 years, despite the suffering this unfolding will
inevitably cause, I'm sure we'll be repeating this exercise once
again. You can't grow an economy by sitting around shaking money
from side-to-side and investing in each others real-estate values.
It doesn't matter how numerous, devious in complexity or convoluted
the debt devices involved, it's still destined for failure.
Nu-economics, old-economics, Arthurian-economics, it all makes no
odds. The complexity, convolution and spinning eggs on spoons, are
only there to obfuscate reality. With any luck we'll take notes
this time.

Your post is just a rant and doesn't say anything. I'm guessing you
don't approve of any kind of debt, and that you think the economy has
experience some sort of "false" growth based on house price growth??
Could be wrong though - what are you trying to say?
--
A monkey
"Monkeys are superior to men in this: when a monkey looks into a
mirror, he sees a monkey."

I think its important for economists to look for a new system of trade
to replace the capitalist one- one which retains a low government
input but is more socially and environmentally concious.

But there's massive govt intervantion in trade already, 1) in varying tax
rates 2) in interest rates 3) in de facto price controls 4) in general
red tape 5) in selective regulation by sector.

What would your replacement for capitalism look like?

Post by Andy
A problem
with capitalism is indeed the high level of debt on a personal ,
corporate and state level.

I don't follow you. Personal debt isn't a problem of capitalism in the
classic meaning of capitalism, it a problem of managing risk. Corporate
debt is needed to invest for future returns. And I don't see why state
debt has to be a problem, although it obviously is too high in some
countries. The credit problems at the moment boil down to one question
which we can't answer at the moment - how can you make the cost of debt
transparently reflect its value? Answer that question, and you've solved
future credit crunches.

Post by Andy
The problem with debt is is takes away your freedom. You have to pay
your debtor whether you want to or not.

Sometimes you do, sometimes you don't. If you're a ltd company, you can
default quite easily. If the government prints money, your income rises
and your debt doesn't seem so bad. Are you saying people should be
stopped from going into debt? How will they be able to afford a house or
a car? How will they start new businesses or expand existing ones?

Post by Andy
This a plies to politics in
the following way. What happens when there is a pretty obnoxious
regime, but we own them a lot of money for their materials or
products? Answer: You end up with a foreign policy that is completely
bent. Compare Zimbabwe with China or Saudi Arabia. Zimbabwe actually
has the best human rights record of the three. Zimbabweans might not
get completely free and fair elections, but at least the opposition
get a shot at it. Opposition leaders are routinely beaten up or shot,
but most remain alive and out of jail. For the Saudi or Chinese
dissidents, not even the most basic rights are afforded. A good
example of just how loudly money talks.

[Hotblack Desiato]

Post by A Monkey
What would your replacement for capitalism look like?

I don't think Capitalism is the problem per-se. If you look at the concept
of creating services and goods in exchange for currency, everyone benefits
from wealth creation. The purchaser's wealth increases as he gets the
obiect/service he wants, and the seller gets money, allowing his business to
expand in whatever direction or allowing him to buy whatever
services/objects he wants .. win win. Everyone gains wealth, this is why
it's so succcessful

Secondly of course, if those ojects/services are over-priced, competiton
will rapidly trim down any advantageous margins being gained by the seller

However, these concepts don't apply to the real-estate market, and this is
where it goes a little wrong. And this is why housing booms often preceed
economic down-scaling.

If we go back to the classic trade example (humour me here). I make black
plastic widgets. It costs me 10 pence to make one and I sell them to you for
50 pence. What you get in exchange for that 40 pence on top of my costs is
the lack of agravation of having to source the rubber, create injection
molds, carry out the process, test, employ staff etc etc.

So I'm charging you for this service and my charge is at a level that it's
worth your while purchasing from me, rather than starting up your own black
widget factory. Everyone gains, the wheels of commerce keep turning and
expanding

If we try and apply this to the real-estate market, it doesn't quite fit. If
you purchase a house for say £100,000, you live in it for six months and
gain all the privileges asssociated with living in a house. You then sell it
to me for £150,000. You can see that the wealth exchange dynamic of our
above example, simply isn't taking place. I'm giving you an extra £50,000 on
top of your costs, for which you are providing me with absolutely nothing.
No goods, no services .. zippo.

In this example, the wealth exchange dynamic clearly only works in one
direction. The seller's. The purchaser is not getting anything for his
£50,000 that will enhance his ability to create wealth, make him more
efficient, help him relax during non-work periods and make him feel the
daily drudge isn't a totally pointless waste of human existance..

All these things which I wouldn't be getting for my £50,000, come under the
heading 'Wealth'. It's difficult to think of another form of trade where
this one way wealth exchange is true.

The secondary aspect to the classic trade example, is that of competition
slimming down any potential advantageous sales margins. This also doesn't
apply to the real-estate market, which is why; failing some sort of economic
down-turn, the cost of housing only goes up

Going back to widgets, I could charge you £1 or £2 per widget, my production
costs haven't increased. It's still 10 pence. But someone will come along
and undercut me and if I want to remain in business I have to bring my
prices down

If the cost of housing goes up, the cost of land which you can produce
houses on, goes up correspondingly... there is no undercutting through
swamping the market with new housing stock because, as the value of houses
increases, so does the value of the land usable for creating houses.

So we come to the debt dynamic
It's easy to see that the more people are paying for housing, the less they
have for economic activities like consumerism, which drive the economy. But
to live a civilised existance in our society, certain things are the
accepted norm. Tidy clothes, a house that isn't falling to bits, food, fuel,
white-goods, transportation; and although not essential, most would have
trouble living without tv etc.

So irrespective of what you pay for your house, you still have to consume
anyway. It's no coincidence that as house prices have increased, people's
personal debt (excluding mortgage) has also increased. But now we're nearing
the point where the consumer simply can't shoulder any more debt.
Consumerism slows, and with it the wheels of the economy.

The downward spiral of job losses leading to even lower consumer demand
doesn't need explaining but at the very root of all this, we have
real-estate and the fact that I didn't get any wealth for the £50,000 I gave
you. That, is actually the antithesis of Capitalism and the real-estate
market, from what I can make out, is totally unique in this way

[abelard]

On Sat, 5 Apr 2008 11:32:12 +0100, "Hotblack Desiato"

Post by Hotblack Desiato
Looks like we've run out of spinning wheels with eggs hanging off one side
to attach to our economic perpetual motion machine. Like all perpetual
motion machines, it was little more than a confidence trick from the outset,
sold to the masses by manipulating their insatiable appetite for an
easy-ride.

what do you want which you can't have?

meanwhile a major function of government is continual thieving
from those that have and giving it to those that haven't....
that is the trick that tends to keep the perpetual motion machine
functioning....

Post by Hotblack Desiato
Given another 20 years, despite the suffering this unfolding will inevitably
cause, I'm sure we'll be repeating this exercise once again. You can't grow
an economy by sitting around shaking money from side-to-side and investing
in each others real-estate values. It doesn't matter how numerous, devious
in complexity or convoluted the debt devices involved, it's still destined
for failure.
Nu-economics, old-economics, Arthurian-economics, it all makes no odds. The
complexity, convolution and spinning eggs on spoons, are only there to
obfuscate reality. With any luck we'll take notes this time.
But as my history teacher once told me during one of her more candid moments
''History' has to be the most useless subject known to mankind. No one, save
a few eccentrics, takes any interest in it.' To which I said I really didn't
think my homework was quite that bad. She replied with a detention slip.
All of which just goes to show, the fundamentals of economic principle
remain the same and always will, there is no such thing as perpetual motion,
either in notional, virtual or real terms. And lastly, don't ever use the
word 'dick' in your history homework
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=555149&in_page_id=1770&ct=5