Download Document 8878459

Survey
yes no Was this document useful for you?
   Thank you for your participation!

* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project

Document related concepts

Financialization wikipedia, lookup

Global saving glut wikipedia, lookup

Household debt wikipedia, lookup

Debt wikipedia, lookup

Bank wikipedia, lookup

Quantitative easing wikipedia, lookup

Interbank lending market wikipedia, lookup

Interest wikipedia, lookup

History of the Federal Reserve System wikipedia, lookup

Securitization wikipedia, lookup

Credit card interest wikipedia, lookup

Present value wikipedia, lookup

Debtors Anonymous wikipedia, lookup

Interest rate ceiling wikipedia, lookup

History of pawnbroking wikipedia, lookup

Transcript
Goals for Ecofinance
 Compatible with steady state economy (no growth in
throughput)
 Cannot require continuous exponential growth or liquidation of
NK
 Must finance most important investments
 Green technology
 Ecological restoration
 Public goods
 Eliminate speculation
 Seigniorage for public sector, not banks
 Countercyclical, stabilizing
 Cannot promote short term thinking
Current System
Vertical money
• Gov’t forces us to pay
taxes; we must accept
money or go to jail
• Our economic production
backs money supply
• Gov’t spending limited
only by biophysical
constraints
Horizontal Money & Industrial
Capitalism
 If central bank (CB) targets interest rate, no limit to
lending; If CB enforces fractional reserve, firms use
commercial paper (higher interest)
 Where do i (interest) and p (profit) come from?
 More loans or more vertical money required.
ECONOMIC GROWTH
 What if p<i? Must liquidate assets, including NK
 Procyclical system
What do people invest in
(USA)?
 ~$14 trillion in mortgages
 Economist: The repurchase revolution
 “Companies have been gobbling up their own shares at an exceptional
rate.”
 “Since interest paid on debt is tax-deductible, whereas interest earned
on cash is taxable, by increasing its net debt to finance buy-backs or
dividends, a firm cuts its tax bill.”
 Major buybacks in NYT THIS WEEK: Google, Whole Foods, Visa,
Alston, KKR, CVS, Samsung, IBM
 NYT: Record margin debt poses risk for bull market
 “The amount of money investors borrowed from Wall Street brokers to
buy stocks rose for a seventh straight month in January to a record
$451.3 billion”
 Most money is borrowed to buy existing assets, not to create new
wealth
Actual system: Financial Capitalism
and Asset Inflation
 NYT: Despite Drop in
Commodity Prices, Farmland Values
Rise
 Inflating asset prices outcompete
returns on real investment
 Credit availability determines asset
prices
 Financial sector captures all rent
Interest Bearing Debt in US
updated
Growth and Inequality or
Collapse
 Debt is 360% of GDP and growing faster than GDP
 5% interest? 18% of GDP?
Credit market debt,
net of gov’t
Current System: Financial Capitalism &
Asset Inflation
 Bubble busts, asset sales make prices
plunge; banks capture assets, stop
issuing new money
 Industrial economy (Hedge investors)
must also collapse
Re-inflating Bubbles:
interest rates and QE
Desired System
Ecofinance: Vertical money
finances needed
investments; tax pollution,
extraction, rent
100% fractional reserve
100% Reserve
 Demand deposits
 Money belongs to investor, not bank
 Can’t be loaned
 Investor pays bank
 Investment accounts
 Time deposits
 Loaned at interest: Bank is intermediary between borrowers
and lenders
 At risk: no insurance
 Banks accounts
 Banks own money
 Loaned at interest
Transition
 Gov’t time deposits (huge creation of vertical
money) to back current loans
 Interest payments to gov’t and withdrawals reduce
money supply for private sector, free up biophysical
space for gov’t spending
 i.e. reallocate between investments in private and
public goods
 Requires controls on shadow banking, commercial
paper
Advantages
 Countercyclical
 Restores gov’t control over interest rates