Australian (ASX) Stock Market Forum

Capitalism's intrinsic flaw

Jump to new
craft said:
That was succinct. What is it about Fiat currency that requires perpetual growth? I can see how it accomodates growth but how does it require perpetual growth?
Click to expand...

To service the debt of printing money---to create more debt---and handing out IOU's (Bonds).
 
moXJO said:
While socialists waste our money on the next dumb$hit feel-good idea that achieves nothing.

Capitalism is a big part of the reason new technologies are developed. America has brought about some of the greatest technology to date due to capitalism.
Click to expand...

bahaha ...

so i guess its capitalism that funds NASA ?

capitalism that funds the CSIRO ?

capitalism that funds CERN ?

did you think apple or microsoft invented the computer ? :eek:

All these things came about due to government/public spending. Not corporate capitalism.
 
tech/a said:
To service the debt of printing money---to create more debt---and handing out IOU's (Bonds).
Click to expand...
Debt creates the original capital but not the funds for the interest payment – they come from new debt issues and set in motion the need perpetual growth. All true with a positive interest rate. But the growth requirement disappears on a physical level with a negative ‘real’ interest rate (which a lot of the world has now) and disappears on a financial level with a zero (Japan) or negative nominal interest rate. Nil growth is not incompatible with Fiat currencies but it is incompatible with positive interest rates.

If growth exists at the financial level but not the physical level you will eventually get inflation. If you get neither physical growth nor inflation then nominal valuations need to adjust accordingly.

I don’t see so much see a intrinsic flaws in Capitalism as just adaption and revaluation process to recognise physical growth and inflation expectations.
 
I don’t see so much see a intrinsic flaws in Capitalism as just adaption and revaluation process to recognise physical growth and inflation expectations. craft
Click to expand...

You have to go back to the original story to see what Jeremy Grantham describes as the critical flaw. Essentially it involves the (profitable) destruction of resources in the pursuit of profit until the resource base itself collapses.

It's worth the read. IMO
 
IFocus said:
Closet Greeny?
Click to expand...

I have always been 'out' as a greeny, but I have never been a Greeny and never will be. But I am primarily speaking here of the monetary system, not the environment, even if the same principle applies to the the environment. ;)
 
basilio said:
You have to go back to the original story to see what Jeremy Grantham describes as the critical flaw. Essentially it involves the (profitable) destruction of resources in the pursuit of profit until the resource base itself collapses.

It's worth the read. IMO
Click to expand...

Hi basilo

No argument that Gratham is a good read.

No issue that there is a limit to the carrying capacity of the human population – I suspect we have already passed it.

Just thinking about where the capitalist system fits in. Remove the positive interest rates and you also substantially reduce the discount rate in deciding whether you consume resource now or in the future. You remove the incentive to profitably plunder because resource available in the future is just as valuable as resource available now. In fact if there is no unnatural storage of wealth (ie money with positive interest) then there would be an incentive to preserve resources and moderate current consumption.

Fiat currency is not the problem positive interest rates may be and that doesn’t seem on the surface to be to inadaptable to a no/low growth world
 
wayneL said:
But I am primarily speaking here of the monetary system, not the environment, even if the same principle applies to the the environment. ;)
Click to expand...
..... +2

An even bigger problem lies in the "democratic" principle that everybody can make demands, ensure - by lobbying, threats, and manipulation of the almighty "public opinion" - that these demands are met, without regard of justification, costs,and consequences.

And the puppets voted into Parliament can assign themselves special rights, perks, and privileges, but will never be held accountable other than - possibly - voted out at the next election.

If all those, who make demands for special Rights, had to foot the tab and share Responsibility as well, none of this "fiat" and "lost business confidence" would be a problem. It simply wouldn't be there.
 
RandR said:
bahaha ...

so i guess its capitalism that funds NASA ?

capitalism that funds the CSIRO ?

capitalism that funds CERN ?

did you think apple or microsoft invented the computer ? :eek:

All these things came about due to government/public spending. Not corporate capitalism.
Click to expand...


Birth of the First Computer
In the year 1837, Charles Babbage was the first to think about something that would function like a computer and ended up designing a programmable mechanical computer that he called "The Analytical Engine" but because of limited finance, and an the inability to stop himself from trying to upgrade it and find some innovation with the design, Babbage could never actually built his Analytical Engine.

Then Konrad Zuse came in the whole arena in the year 1941. He also wanted to make something that would be like a computer hence was created electromechanical "Z machines," the Z3, which was the first working machine, which featured binary arithmetic, including floating point arithmetic and a measure of programmability. Zuse also started the first Computer start up company, which was established in 1946.
Click to expand...

Capitalism fosters an environment that develops the tech, and then makes it cheap and accessible to the masses.

Hasn't Virgin developed flights that take us into suborbital space a whole lot cheaper?

And um capitalism does fund all those things, through taxes:p:

Social market economy is still capitalism I thought, I just don't like leaning too far into the red.
 
craft said:
What exactly is it in the current model that requires perpetual growth?
Click to expand...
Fiat money is the first problem. Tomorrow's growth is collateral for today's debt...

The second problem is the notion that it makes more sense to replace something every 10 years than to spend a little more and build it to last centuries. It's ridiculous in the extreme when you realise that even something as basic as a kitchen bench now has a typical lifespan measured not in decades, but is just a few years. Statistically, if you put in a new kitchen when the Sydney Olympics were on then you've already replaced it since then and you're due for yet another one right now. That's a ridiculous waste of natural resources and human effort.

There is something seriously wrong with a system that views making things so that they rapidly fail as desirable. It is not creating real wealth, it is destroying it, and it isn't doing the environment much good either. Fair enough where there is genuine innovation perhaps, but there's not a lot of innovation to be done in cupboard doors, sinks and ovens.

I'm no Green according to traditional measures of such, but I absolutely refuse to have anything to do with this nonsense of throwing out perfectly good items (like a kitchen sink) just because someone's decided that it is fashionable to have one that's a different shape or brand. No thanks...
 
Capatalism seems to be the best of an imperfect hand for a blind race of individuals unable to act with enough courage to act beyond their own wallets for the whole.
There is no politcial solution or economic model that works in a world full of beasts like that.
So nature takes it's course, could be a plague, a volcanic eruption, a meteorite, a warming, warming less dimming = boiling = carbon ok for the short term = boiling medium term = ice age for grandkids grandkids. Hopefully we have grown out of world wars.

Whatever reboots the growth switch will help keep the model.

Certainly won't be a political or economic model, unless we havea spiritual renaissance and all become selfless saints devoted to the higher good in all that we do.
Then marxist socialism and Platos repuplic become feasable.
 
Smurf1976 said:
The second problem is the notion that it makes more sense to replace something every 10 years than to spend a little more and build it to last centuries. It's ridiculous in the extreme when you realise that even something as basic as a kitchen bench now has a typical lifespan measured not in decades, but is just a few years. Statistically, if you put in a new kitchen when the Sydney Olympics were on then you've already replaced it since then and you're due for yet another one right now. That's a ridiculous waste of natural resources and human effort.

There is something seriously wrong with a system that views making things so that they rapidly fail as desirable. It is not creating real wealth, it is destroying it, and it isn't doing the environment much good either. Fair enough where there is genuine innovation perhaps, but there's not a lot of innovation to be done in cupboard doors, sinks and ovens.

I'm no Green according to traditional measures of such, but I absolutely refuse to have anything to do with this nonsense of throwing out perfectly good items (like a kitchen sink) just because someone's decided that it is fashionable to have one that's a different shape or brand. No thanks...
Click to expand...


The emerging economies are doing things differently. More due to necessity at the moment, but the world is changing.
http://edition.cnn.com/2011/BUSINESS/08/02/dayo.olopade.africa.innovation/index.html


In a fat economy, a bicycle is just a bicycle, or a cell phone is just a cell phone; in a lean economy, I've seen men in Kenya making phone chargers using their bicycles, where it's double use. Where electricity goes out and you have a cell phone that's out of juice, you can then plug your cell phone into a bike and peddle away and also charge your phone.
So it's about recombination, recycling, innovative use of existing objects. I actually just heard about something here in South Africa which is a woman who created a washing machine using the vuvuzela, where she poked holes in it and it was something that could be used as a washing machine.
CNN: What is somebody reading this book when it is published, sitting in London, going to take from a vuvuzela washing machine? They're not going to take the practicality of that -- what's going to make them say 'wow, I didn't know that?'
DO: Well I think what it is, is a sense of individual responsibility and a sense of entrepreneurship ...
Click to expand...

I know people that ship our used tyres overseas for re-use at a profit. And kitchens do get recycled at auctions. Same goes for most building materials, mattress, and computers/ ewaste. If you dig a little deeper you can always find someone that recycles most goods. People don't often look, or are unaware though. I had an artist come and take some rusted sheets for artwork that would have otherwise been given to the local scrap metal guy to make his bit, there are recycling websites where people will come and take a jar of rusted nails. And there is also money to be made with a little effort from it.

I know your problem is with the throwaway society and durability of goods but imo the mindset has already shifted towards longer lasting product and reuse of goods. Quality will come back online at a cheaper price as well (already happened on the net) imo.

There is no chance of starving in this country so innovation will remain low amongst the population of un-driven. I have been working with a lot of refugees lately and their drive/ work ethic and hunger to get ahead leaves westerners looking fat and spoilt in comparison.

As to fiat there are a couple of choices that will stop the growth. None very palatable for general pop though.
 
Starcraftmazter said:
This explains it pretty well:
http://video.google.com/videoplay?docid=-2550156453790090544
Click to expand...

Heard about this previously but took the opportunity to see it this morning.

Excellent, excellent explanation of how the banking system works. The program is called Money as Debt. There have been 2 subsequent releases - Money as Debt 2 and Money as Debt 3. Also a website that provides references for the quotes and discusses criticism and comments on the information.

Key question it asks is "How can we have so much personal, national and international debt ? Where did it all come from and how will/can we ever pay it back ?" (Seems pretty topical at the moment..) Under the current banking system we will be collared for these debts either individually or nationally. And it is these debts that theoretically underpin the nominal value of our deposits in banks.


References

http://paulgrignon.netfirms.com/MoneyasDebt/references.htm
http://video.google.com/videoplay?docid=5352106773770802849 (Money as debt)
http://www.youtube.com/watch?v=rCu3fpg83TY (Money as Debt 2)
http://paulgrignon.netfirms.com/MoneyasDebt/MAD3.htm
 

Similar threads

basilio
The age of Scarcity
Replies
5
Views
4K
jonojpsg
J
Top