Wednesday, August 29, 2012

Moving Up/Moving Out

Once you look at things from the other side of capitalism, you realize just how out-of-control the rich really are.  It is in the nature of being really rich.  If you try to compel them, they will pick up their marbles and go where you cannot punish them.  See the following recent articles.

Companies move away.
Individuals move away.

Note that these are not just U.S. companies and citizens.  They are also residents of very oppressive regimes  from which one might think there is no escape.  Yet the rich are able to escape anyway.  Again, it is in their nature.

The rich can be disciplined, but only by the market.  For example, not all the regulations from the last four years was able to keep JPMorgan from making poor bets in derivatives that led to billions in losses.  However, losing billions is its own punishment.  If JPMorgan learned anything, it was from the losses, not from the regulations.

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Tuesday, August 28, 2012

Rain in Spain

Things are getting gloomier in Spain.  There is no rain-making, just storm damage.  A Reuters report says that individuals and corporations are taking their deposits out of Spanish banks, as much as 5% of the total deposits so far.  This is similar to what happened in Greece.  Spain is not leaving the euro zone.  The euro zone is leaving Spain.

Europe is providing such good examples why multiple currencies are needed.  Germany and Sweden do not need the same monetary and fiscal policies that Spain and Greece need, yet the rigid nature of the single currency, the euro, mean that the ECB could not put the right policies in the right places even if its mandate allowed it to do so.  Because of the politics, the economic policies are "stuck on stupid."  There are no solutions so long as the thinking about the currencies is stuck inside the box.

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Saturday, August 11, 2012

We Need More Currencies

It should be clear from previous posts that from the other side of capitalism, we see that there are not enough currencies available to implement the correct economic policies for so many diverse types of economic persons. In the sense that we mean on the other side, this has never been tried before because the technology was not available. Always in the past, the vast majority of people used physical tokens of some kind to represent units of money. Whoever possessed the tokens had the money, and anyone could possess any token.

It is different on the other side. On the other side of capitalism, not everyone can possess the currency tokens. Transactions between persons in different markets take place through a central clearing house set up by the government. If the buyer uses currency A, then the clearing house takes payment in currency A. If the seller uses currency B, then the clearing house pays in currency B. Generally, it would be illegal for the buyer to possess currency B and illegal for the seller to possess currency A.

This mechanism prevents those in more-competitive markets (richer persons) from using the currency to jerk around those who are in less-competitive markets (poorer persons). If the rich use the same currency as the poor, then the currency acts as a chain controlled by the rich and wrapped around the poor.

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