Paradigm Change Thread On RWER Blog

KZ:  As they say, proof is in the pudding. How do you suggest we find out if your suggestions have any chance of working when put to the test?

Me:  Just play out the discount/rebate policy in your mind. The policies I advocate are so basic and are implemented at such a powerful economic point in time (the ending point of the entire economic process for every consumer item, the summing point of all costs and prices for every consumer item and the terminal expression point for all forms of inflation) namely retail sale. No one is saying you wouldn’t need additional regulations in a world not entirely rational or ethical, but along with the dividend policy and the national and central banking system the effects are so beneficial for both individuals and commercial that lesser reforms pale to insignificance.

KZ:  Craig, mark me down as thick (but not as a brick). I still don’t see how your proposals fix the problem that the bottom 90% of the income and wealth scale have little influence on how property is owned and controlled.

Me:  Well, if a two adult household was getting $1000/mo/$48,000/yr worth of potential purchasing power in dividend payments ($1000 x 2 adults x 2 with the 50% discount x 12) and they both had part time jobs making $25,000/yr that would give them $148,000/yr in potential purchasing power to invest, consume and undoubtedly be able to purchase a home that with a national bank that charged 0% interest on notes for a $200k home that has been discounted to $100k at retail sale and $50k at note signing because finance has now been enabled to become the new end of the economic process instead of an incredibly expensive exterior parasite to it….I’d say that was a lot better deal for the 90% than they’ve ever been given before.

P:  Can we at least advance to agreeing the problem is really in two parts. One: get total private debt to GDP down to about 0.7 from its current value near 2. If and only if we accomplish that (and quick is better than slow), then:
Two: we debate the best way to keep it there long term ie to break the destructive long term build up of private debt that periodically threatens to destroy our civilization. I view Craig’s proposal as a candidate for number two. Steve Keen seems to suggest a saw tooth periodic ramp punctuated by Jubilees is another idea.
If we can’t get past step one gracefully, the second step won’t matter.

Me: I’ll second that. Keen’s “modern debt jubilee” could be a fast way to reduce private debt, but doing that only and without concurrently ridding ourselves of the paradigm of Debt Only would only enable Krugmanites to claim the problem was solved….when it was merely palliated. We need to be smarter than the ancients who utilized debt jubilees. Turn a page on financial and economic history. The one we’re on has been gathering dust and disintegrating civilizations for 5000 years.

Keen is smart and economically insightful. He deciphered the problematic fact that we’re caught between the “necessary” rock of debt build up and the hard place of economic recession. C. H. Douglas came to the same conclusion from a business cost accounting perspective by doing the calculus on total individual incomes created in ratio to total costs and so prices simultaneously produced. I told Keen 4-5 years ago that Douglas was the first disequillibrium/financial instability theorist not Minsky.

All it took to extend and innovate Keen’s, Hudson’s and Douglas’s policies and insights from my study of all of them was an open mind and my paradigm/pattern perception skills honed from interests in science (specifically quantum physics), history, philosophy and the world’s wisdom traditions.


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