Originally Posted by spence
QE can certainly enable organic growth,
So we have established it's NOT organic growth. My point was that money is not wealth but a medium which enables one to trade wealth. Your goods for my labor, or your goods for my goods, represented by the buyer with money. It is a convenience.
But money itself is not wealth, and if it were wealth it could be produced in infinite quantity and distributed "equally" to all who would then be equally infinitely wealthy.
On the contrary, as I posed, which you ignored, "If wealth is material commodity with intrinsic value, and if there is absolutely a finite amount of material commodity, then wealth is not infinite." It is at this finite trading of material commodity for other commodity or labor, that "organic" economy and organic economic growth occur. Growth can occur by greater labor productivity matched by greater consumption of the larger amount of commodity produced, and/or by expanding population to create more labor requiring production of more goods.
I'm not sure what you meant by "there's organic growth and the transfer of wealth." It seemed that you were saying they went together. If by "transfer" you meant "trade" I would agree. If you simply meant transfer from one to another without equivalent return, I would say that was not organic or any other kind of economic growth. If anything, it would be economic shrinkage. In your next sentence you posited that much of our economy is based on transfer "where wealth is not created as much as siphoned off." I would agree with that, because in the siphoning there is no trade, so wealth is diminished, given away for no return. Which is anti-growth and anti-sustainable except at lower levels.
but infinite quantitative easing would invalidate the premise of currency.
What invalidates the "premise" of currency is treating it as wealth rather than the medium for an exchange of wealth. And its premise is also invalidated by giving it away without receiving something of value in return. Redistribution of wealth by mere transfer of money invalidates the premise of currency as a medium of exchange since no exchange is made in the distribution. And when such money is spent it is not a medium of exchange but is at best, merely RETURNED without productive value to the organic economy, or, if it was not taken from the economy as a tax to be redistributed but was merely printed for the purpose of distribution, then it is ADDED to the organic economy without the corresponding added production which that money is supposed to represent--and so, it is a surplus of money and therefor inflationary. And the siphoning to which you refer can occur either in social welfare schemes or in transferring public money through borrowing or security purchases from financial institutions or other countries.
That assumes a growing economy and it also ignores the fact that "adequate income" isn't distributed evenly.
No, what I said doesn't assume that. The top 1% can only gain money by transfer or trade. If by trade, then the buyers would have to have produced in order to gain the money to buy whether the economy grew or not. If by transfer, then either through government subsidy directly, or indirectly by first transferring money to the buyers. And a good percentage of that top 1% are in financial markets which treat money as commodity, or as wealth. They "trade" that money (invest it) for greater money returns. That is why they are at such risk. Their money or securities can lose value in an instant. And since the cause of that devaluation is often some government intrusion, that is why the "money" people have to maintain close contact with politicians and regulators, especially through campaign contributions. Trading money, speculating, is artificially removed from the "organic" economy, and gaining "money" wealth can occur without a growing, and even with a stagnating, economy. As witnessed by present economic conditions.
Also, what I said didn't ignore adequate income not being distributed evenly. I implied very strongly that the actual organic wealth that the super wealthy have in excess of their ability to use or consume would only be economically useful to them if they could sell or rent it at a proper return and the buyers would need adequate income to pay, that is, to trade. In an organic market, income isn't evenly "distributed," it is earned by means of differing abilities. "Even distribution" implies equitable transfers such as in welfare schemes. Money from such distribution does not add to nor is it a part of an organic economy. It is inflationary currency not derived from production, and is a means of devaluing the currency making it more difficult for those participating in the production which maintains or grows an "organic" economy.
Which certainly exists. Decentralization of power may be attractive here...or inefficiencies created by a lower economy of scale may just make up the difference.
We have a common ground for agreement here . . . the specifics might differ. Certainly decentralization of political power is a constitutional theme which I "harp" about.
Let's dissolve the lobbying industry and enact term limits.
That can't be done without dissolving the lack of virtue in our political class. Lobbying is only effective if the pols allow influence, especially "money" influence. Certainly, the bigger the government, the greater the stakes, and the more centralized, the smaller the number of targets, and the more convenient the access. The pols can ban lobbying and establish campaign finance reforms on top of finance reforms, but until they honor their own words and honor their duty, their oath of office, especially to the Constitution, it will all be a bag of political wind.
And when it is a contest between virtue and power, the ruling class will always choose power. The very nature of a ruling class is the wielding and maintenance of power. Term limits would be a check against a ruling class, but our politicians are not disposed to be merely "one of us." They have long ago given up the mantle of fellow citizen, and have created a morass of governance which requires long standing experience and expertise. Newbies have to be trained on how to navigate through and manipulate the procedures. It is for our good that they sacrifice a normal life to dedicate theirs to "public service."
In other words, they love the power too much to give it up.
What would a McCain do with himself after a political eternity of being one of the most important and powerful men in the world if he were to give it up? So long as the internal juices flow, the lust to rule will have its way.
Well, it also can provide beneficial normalization. A healthy economy trickles up and down. Given that it "takes money to make money" a lack of regulatory forces would result in faster consolidation at the top that we're even seeing today...I don't think over-regulation is the problem, we need the right regulations and apply them consistently.
-spence
|