Posted To RWER Blog Regarding Free Trade 03/01/2018

Me:  Trade wars historically rhyme with actual war. Second rate conservative and neo-liberal thinking about trade is…second rate, and third rate populist “intellects” like Trump do not have a clue of course either.

If you implemented a 50% discount/rebate at the point of retail sale and a sufficient universal dividend to everyone 18 years of age and older you’d be able to eliminate the transfer taxes that both individuals and enterprises pay for welfare, unemployment insurance and probably quite quickly Social Security, and their associated bureaucracies as well…and you wouldn’t have to worry about unemployment either which means you could dispel the financial wet dream of globalization, re-industrialize America in the most efficient and ecologically sane way possible and thus have no need for tariffs and trade wars.

The heterodox had better quickly rise above the nit witery of Trumpism and the coalescing power of finance dominated neo-liberalism…or the war that destroys modern economy’s productive potential may “happen” and then in the pain and confusion Finance will be happy to lend us the money to re-build.

JB:  I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel–these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national. Yet, at the same time, those who seek to disembarrass a country of its entanglements should be very slow and wary. It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction. (“National Self-Sufficiency,” The Yale Review, Vol. 22, no. 4 (June 1933), pp. 755-769.)

Me:  This is largely a good assessment, however, Keynes like everyone else apparently, thought finance was a legitimate private business model. It isn’t. It isn’t a legitimate public one either unless its based on, and its primary ethic is monetary grace as in gifting. That doesn’t mean that you should give business start ups money as a gift, but as a new publicly administered paradigm that ends private finance’s monopoly paradigm of Debt ONLY and enables the economy to become integratively free flowing….it’s a no brainer…when you look at it just a little… if you want to evolve economics and the money system….don’t you dare look at it.

RR:  Economics is a social science and is embedded within human social networks and societies social institutions — which includes the political realm. It is a false dichotomy that thinks economics can be separated from the political and that somehow doing so is true “science.” This is really scientism masquerading as science and attempting to treat the social science of economics with the same assumptions of methodologies as those used in the physical sciences. It is referred to within the literature as physics envy (p-envy) for short 😉 Such naïve philosophical reductionism won’t sit well with the younger generation I suspect.

Me:  The paradigm change I advocate in economics and the money system would not be physics envy, but it would be a huge stabilization and evolution of both systems by virtue of the fact that it would resolve the economy’s chronic problem of inflation and the money system’s monopoly paradigm of Debt Only…at the same time. The realization that the natural concept of grace denotes and is by definition a fundamental integration of the static and dynamic, of philosophy-thought and policy-action ends the arrogance of the mindsets of both science Only and religion Only, but there will be no end to history and change may succeed that paradigm…..hopefully by further acculturating into the ethic-zeitgeist of grace.

RR:  I was not referring to your vision at all. I find your ideas clearly transcending current paradigms.

Me:  Ah, yes, I should have understood that with your use of the words “philosophical reductionism” which indeed tends to be a problem, at least until one fully understands the natural philosophical concept of grace in its many aspects probably the highest of which is unity-oneness, and others which are aligned with economic thinking like dynamic balance, integration and flow/free flowingness.

JK:  Hey Craig…

I thought I’d make another attempt to explain to you why your gifting proposal would be far more inflationary than you’ve been hoping it would be.

I base my argument on the observation that suppliers in most markets will charge the highest price that the market will bear, period. In contrast, you are arguing that sellers will not do this, but will for some unexplained reason choose to limit their price increases to only a 2%-3% rate of increase.

How is it possible to tell if the sellers in a limited-quantity-available market are selling their product at the highest price the market will bear? You simply look to see if there are any lines/queues/waiting lists that buyers in that market must deal with.

If there is a l/q/wl associated with some market, it is only because that seller is choosing to keep his price lower than the market will actually bear. More people can afford the thing being sold than there are things available. The seller ‘sells out’ quickly and cannot obtain sufficient quantities to satisfy the demand at the chosen price.

Only if/when the seller then raises her prices sufficiently to the point where the l’s/q’s/wl’s disappear, then we can say that the seller is charging the highest price that the market will bear. It’s really quite simple.

You advertise that your gifting proposal will increase the purchasing power of individual demanders, but that can only be true if those individuals are able to buy items that they could not afford to buy previously.

The day before your proposal gets enacted, the BMW dealer will have a certain quantity of autos available for sale. If the day after the gifting initiative takes affect, the same number of BMW’s will be available for sale, but many more people will believe they can now afford them IF the price that is being charged for them has not been changed.

The dealer will quickly sell out if she has not increased her prices sufficiently to price all the extra buyers out of the market. Being advised that it would be best for the economy if the price increases are limited to a 2%-3% range would be meaningless.

The only other possibility that could limit the price increases is if only a few of the beneficiaries of the gift choose to try to buy any of the things they previously could not afford. Such a possibility would be in defiance of everything we know from observation of human economic behavior.

I’m afraid that your hopes that inflation as a consequence of the gift would be limited in the medium- to long-run are ultimately unrealistic.

It is true that at the first iteration, when the purchasing power gift is first ‘bestowed’ on buyers and sellers, prices would not increase (since the government would be paying/subsidizing to keep them low)…but thereafter, buyers would find themselves with more disposable dollars/pounds/euros to spend and that is what sellers would respond to, when the rather dramatic burst of inflation would kick in…

Me:  Some of what you say may well occur….if you allow the paradigms of profit, power, control and “free” markets ONLY to remain in force. I reject that idiocy. The wise realize that in the temporal universe there is only freedom amongst known barriers, and that the above paradigms are a fundamental confusing of freedom with chaos wherein nothing resembling a genuine sense of ethics is enforceable and even recognizable.

As I have said certain regulations and structural changes will need to be made in addition discovering the new paradigm of monetary gifting and the significance of monetary policy tied to the point of retail sale.

Grace as in benevolent monetary and economic policy, but utterly just and ethical power to reward and punish would be the conscious expression of sovereign political and economic authority…and the leaders and owners of enterprise would need to bow to that paradigm and ethic….and despite the fact that they would greatly benefit from the policies of gifting and grace they would be FREE to reject or try to undermine it…until they were forced to get their best competitive price without the benefit of the 50% discount/rebate.

DT:  Hence, Craig, the need for the Copernican revolution of making it costly to make or hold money. Sellers or financiers ripping folk off gives them no reason to be grateful and hence react gracefully, but ssafeguarding the ecology by living economically, and having your debts written off because you’ve done your job, gives you at least satisfaction.

Me:  Yes, the idiotic private monopoly on credit creation must end….after 500 years of trying to make it work and behave it’s getting to the point where we must recognize that effort as the definition of insanity. Public monopoly of course is potentially equally dumb…unless it’s guided by the new paradigm of direct to the individual gifting and the ethic-zeitgeist of grace.
Also, a public monetary utility and authority has no need for profit as it creates money ex nihilo. As finance for large assets like mortgages, autos etc. is post retail sale which is the terminal end of traditionally productive economics it exposes the fact that that private finance is fundamentally parasitical and anti-economic.

I don’t really care very much whether people would hold money because the Gordian Knot of inflation (supposedly) being tied to the supply of money will have been exposed as not the operative reason for such, and would be cut and resolved by tying monetary policy to retail sale with the discount/rebate.

Hence, the more people save the less they’ll need to borrow, even from the sovereign monetary authority, when they inevitably want to purchase a large asset, and so finance rather than the government guided by graciousness will tend to “wither away”. Of course investing in something actually productive is always an option for them. Pooling it in a savings account at 0% would still be available…just not profitable and no longer an economic vice.



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