Asset value reset?

[farming101]

None in the world right now. That's the problem. The very idea of honest money and the notion that debtors should honor their debts is very unpopular. People want lots of free stuff because they actually believe that it's free. Now they are finding out that it is not.

Agreed.

[AlbertaFarmer5]

Within a couple of years, they won't be getting funding in any case. We can either achieve this with deliberate planning or just let the whole system implode on its own and we wind up like Zimbabwe.

I agree with that. We either do nothing, and wait for the system to collapse under its own weight sooner or later, or take the initiative and get to the same result sooner, and have something constructive come out of the other side. Except one could have made that same argument at almost any time throughout the history of our nation. And somehow we muddle through, and add more debt with no expectation, or possibility, of paying it off, and it works, and those that bet against the trend get run over every single time, until the one time they won't.

In one of the Alberta separation threads, one of the usual lefty cheerleaders paraded out the usual list of social programs we benefit from, and would potentially lose by joining the US. But what they failed to grasp, is that the unsustainability of those programs( and the fact that only AB and SK are likely to be subsidizing the entirety of the programs) means that they will cease to exist whether we remain in Canada, or leave, except by remaining, we will be paying for their legacy for much longer.

[AlbertaFarmer5]

Does anyone care to address, or refute my premise that the incredible gains in productivity, technology, automation and the seemingly limitless energy and resources mean that growth is no longer limited by Malthusian physical constraints, but instead by artificial and arbitrarily imposed economic limitations? And that the only way out of this self limiting dead end, is a different financial system?

To use a really simple example. The energy industry and all of its supporting infrastructure is one of the biggest employers anywhere. That leads to high employment with good paying jobs that makes the economy go around. Say we invent a technology that allows nearly infinite and passive(meaning very few permanent jobs required) energy to power our civilization, putting all those people out of work, by our current system, and by measuring economic success by full employment, we would have a depression of epic proportions, when we should be enjoying unprecedented prosperity and leisure with our new found freedom.

[tmyrfield]

Does anyone care to address, or refute my premise that the incredible gains in productivity, technology, automation and the seemingly limitless energy and resources mean that growth is no longer limited by Malthusian physical constraints, but instead by artificial and arbitrarily imposed economic limitations? And that the only way out of this self limiting dead end, is a different financial system?

To use a really simple example. The energy industry and all of its supporting infrastructure is one of the biggest employers anywhere. That leads to high employment with good paying jobs that makes the economy go around. Say we invent a technology that allows nearly infinite and passive(meaning very few permanent jobs required) energy to power our civilization, putting all those people out of work, by our current system, and by measuring economic success by full employment, we would have a depression of epic proportions, when we should be enjoying unprecedented prosperity and leisure with our new found freedom.

this is a very interesting idea, the same can be said with ag productivity, so few people are needed now and fewer in the future likely.
the only problem I see is with the hypothetical idea of cheap free energy. oil co's and govs will not allow this.
So sorry, no star trek like society without the need for money where personal growth is the new currency.

[AlbertaFarmer5]

this is a very interesting idea, the same can be said with ag productivity, so few people are needed now and fewer in the future likely.

I tried to have this conversation about the productivity gains in ag in a post grassfarmer started where he posted a graph from NFU showing total farm profits declining along with the number of farmers, as is to be expected with productivity gains, and the NFU members tried to present that as a crisis, instead of progress and opportunity. Needless to say, my view wasn't popular, and the conversation went sideways and died.

I'm afraid we take the same approach to every aspect of society. Employing people in meaningless jobs as a drain on society, just to claim full employment. Look at China building ghost cities just to keep the masses employed.

[AlbertaFarmer5]

https://www.agriville.com/threads/39561 https://www.agriville.com/threads/39561

The thread I was referring to regarding productivity gains in ag, where I am arguing that this doesn't constitute a crisis.

[farming101]

Does anyone care to address, or refute my premise that the incredible gains in productivity, technology, automation and the seemingly limitless energy and resources mean that growth is no longer limited by Malthusian physical constraints, but instead by artificial and arbitrarily imposed economic limitations? And that the only way out of this self limiting dead end, is a different financial system?

To use a really simple example. The energy industry and all of its supporting infrastructure is one of the biggest employers anywhere. That leads to high employment with good paying jobs that makes the economy go around. Say we invent a technology that allows nearly infinite and passive(meaning very few permanent jobs required) energy to power our civilization, putting all those people out of work, by our current system, and by measuring economic success by full employment, we would have a depression of epic proportions, when we should be enjoying unprecedented prosperity and leisure with our new found freedom.

In a sense the future has been pulled forward. Innovation does not necessarily rely on government to fund it, but it is one way to do it. Part of Government debt reflects that investment in, and also benefit from, innovation and developments that might have otherwise not have happened till some future time.

A nation is a nation only if they decide what kind of government the citizens show they want and go along with it. No nation lasts very long if there is no agreement.

Then there is policy. You discuss a very important concept. Full employment. What is that? When does a nation(and each is unique) decide they have full employment? What work is there to do? What can be called work worthy of compensation? What form should compensation take?
Decision about policy can help people thrive or it can lead a nation off course.

The Federal Reserve was created to guide monetary policy so as to attain full employment and stable prices. It's been around for over 100 years. Time for a change in policy? Quite possibly

One thing is for sure. Balance is needed. Pretty obvious we are far from that now.

Another thing. Limitless energy and resources are not available for humans to harness and consume. Even 2% growth compounded is not sustainable.
Here is what 2% compounded since US independence looks like. 1776 being 100. Some of that growth was the result of resources brought in from outside its borders. How is that accounted for? Ask an accountant? I think it's on the ledger somewhere.
If resources and energy are indeed limited, then the decisions about what to invest in and develop are also limited by the cost of failure and damage. Wisdom is needed. Something that at times is also in short supply.
What you speak of reminds me of the concept of Utopia. https://en.wikipedia.org/wiki/Utopia https://en.wikipedia.org/wiki/Utopia Ask the billions on earth what Utopia is to them. Would any two answers be exactly the same? And yet there is only one planet earth.....

[AlbertaFarmer5]

In a sense the future has been pulled forward. Innovation does not necessarily rely on government to fund it, but it is one way to do it. Part of Government debt reflects that investment in, and also benefit from, innovation and developments that might have otherwise not have happened till some future time.

A nation is a nation only if they decide what kind of government the citizens show they want and go along with it. No nation lasts very long if there is no agreement.

Then there is policy. You discuss a very important concept. Full employment. What is that? When does a nation(and each is unique) decide they have full employment? What work is there to do? What can be called work worthy of compensation? What form should compensation take?
Decision about policy can help people thrive or it can lead a nation off course.

The Federal Reserve was created to guide monetary policy so as to attain full employment and stable prices. It's been around for over 100 years. Time for a change in policy? Quite possibly

One thing is for sure. Balance is needed. Pretty obvious we are far from that now.

Another thing. Limitless energy and resources are not available for humans to harness and consume. Even 2% growth compounded is not sustainable.
Here is what 2% compounded since US independence looks like. 1776 being 100. Some of that growth was the result of resources brought in from outside its borders. How is that accounted for? Ask an accountant? I think it's on the ledger somewhere.
If resources and energy are indeed limited, then the decisions about what to invest in and develop are also limited by the cost of failure and damage. Wisdom is needed. Something that at times is also in short supply.
What you speak of reminds me of the concept of Utopia. https://en.wikipedia.org/wiki/Utopia https://en.wikipedia.org/wiki/Utopia Ask the billions on earth what Utopia is to them. Would any two answers be exactly the same? And yet there is only one planet earth.....
[ATTACH]5743[/ATTACH]

Thanks for responding, I was hoping you would share your valued view points. Lots to digest.
When I refer to abundant energy resources etc, I am more referring to them from a price perspective, than in the literal sense. Right now with Western Canadian oil in the single digits, it is essentially free relative to the amount of work it can do, even at hundreds of dollars per barrel, the work it can do compared to what that work would cost at any other time in history still makes it almost free.
What low prices of commodities, and energy( even well below COP) tells me, is that we are no where near our potential, due to consumers or businesses, even governments( can't believe I said that) not having the means to put those resources to use. That didn't come across the way I intend it to, does it make sense at all?

But as for the impossibility and unsustainability of exponential growth, I am a strong advocate of teaching those very concepts, and made a post on CF the other day about that. That said, growth doesn't necessarily have to mean more resource consumption, when efficiencies, technologies, and productivity gains are factored in. We can all be wealthier in terms of our standard of living while simultaneously using much less resources. In fact, that has been occurring in recent decades. I can't remember where I read it, but Britain has seen declining use of resources in absolute terms, not just per capita or per GDP point, while experiencing economic growth in recent decades.

Your first comments about agreeing on governance and policy is what likely will keep from ever changing the system. Somehow we would need to collectively agree that it is in the best interest of society to allow the most ambitious, hardest working, most innovative, most risk averse, smartest individuals to reach their greatest potential, without punishing them with digressive taxes and regulations, even though that means huge wealth disparity, while simultaneously allowing, or even encouraging the least productive or least capable to just stay out of the way and be content with that inequality in exchange for bread and circuses. Physically it is possible, to provide for a high living standard for everyone with only a few highly productive people producing that, just look at the modern food production industry, from farms to processors etc.

Funding it all is obviously where it all breaks down, when you consider money in its current form, it is impossible. Printing(at least in isolation) to fund would destroy the confidence in the currency and collapse the system, taxing the few would destroy the incentive, but any other means of redistributing their production is essentially the same thing as taxing them, taxing the masses is futile if they don't have meaningful wealth creation to tax. No matter what, it looks a lot like the dreaded socialism that I spend so much effort on here to discredit( although the resident socialists do a pretty good job of that all by themselves).

I really don't have an answer as to how it could be done, or if it could be done, just that it should be possible.

At very least we should start measuring economic success by labour productivity, and resource efficiency rather than the exact the opposite. How many articles have we seen touting how solar and wind energy will create more jobs than the fossil fuel industry they replace, what completely backwards thinking.

[farming101]

Regarding printing money. That is not a problem. But really it is not needed. The central bank only has to credit the lending institutions and the game continues....Notice though that only the amount needed should be created

[Austrian Economics]

Regarding printing money. That is not a problem. But really it is not needed. The central bank only has to credit the lending institutions and the game continues....Notice though that only the amount needed should be created

[ATTACH]5747[/ATTACH]

No. Otherwise, Zimbabwe would be the richest nation on earth.

Credit with what? An empty promise to pay at a later date? That is not credit.

Credit is when I lend you the use of a tangible capital good for a period of time. You employ the capital good to produce items for which there is actual consumer demand. At the end of the period, the ownership of the capital good returns to me with interest generated from consumer sales.

Paper promises should not to be equated with a factory.

[farming101]

Thanks for responding, I was hoping you would share your valued view points. Lots to digest.
When I refer to abundant energy resources etc, I am more referring to them from a price perspective, than in the literal sense. Right now with Western Canadian oil in the single digits, it is essentially free relative to the amount of work it can do, even at hundreds of dollars per barrel, the work it can do compared to what that work would cost at any other time in history still makes it almost free.
What low prices of commodities, and energy( even well below COP) tells me, is that we are no where near our potential, due to consumers or businesses, even governments( can't believe I said that) not having the means to put those resources to use. That didn't come across the way I intend it to, does it make sense at all?

Reasonably priced raw commodities and energy are usually necessary for a nation to support a complex economy. The more expensive and unreliable their supply the less likely it is that there will be good stability in the economy. For a population to spend all their income just to stay housed clothed and fed does not fit with the vast majority of national economies today. (Doesn't say much for grain ever being worth a lot does it?)
On the other hand, when such a widely valued commodity such as energy or grain is so cheap that continued production is in jeopardy there is a big problem. ( See Venezuela where fuel is 10 liters for one US cent and production is about 17% of 1998 levels)
There was also this famous saying: Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country-WILLIAM JENNINGS BRYAN, so maybe there is hope that ag will be appreciated again.

Anyway, my point is that cheap commodities and energy don't in themselves make for prosperous people. Right now the incentive rather than the means is lacking.

[farming101]

No. Otherwise, Zimbabwe would be the richest nation on earth.

Credit with what? An empty promise to pay at a later date? That is not credit.

Credit is when I lend you the use of a tangible capital good for a period of time. You employ the capital good to produce items for which there is actual consumer demand. At the end of the period, the ownership of the capital good returns to me with interest generated from consumer sales.

Paper promises should not to be equated with a factory.

If you have the time could you give a detailed example.

Credit issued by a nation is backed by the nation and the sum total of all of its activity, assets and even intrinsic value.

It is no different with a bond backed by gold. No one ever sees the gold or even really knows if it is actually in the vaults of the nation or not. They have confidence that it is so they buy the bond and trust that the full amount plus interest will be returned to them in the future.

It is an absolute convenience and a way to standardize the business of the nation to issue credit in the currency of the nation. Only when a nation has absolute control of the standard of accepted currency do you have control of the economy. No currency, no control. It could be tiddly-winks if you can make them free from forgery

[AlbertaFarmer5]

Reasonably priced raw commodities and energy are usually necessary for a nation to support a complex economy. The more expensive and unreliable their supply the less likely it is that there will be good stability in the economy. For a population to spend all their income just to stay housed clothed and fed does not fit with the vast majority of national economies today. (Doesn't say much for grain ever being worth a lot does it?)
On the other hand, when such a widely valued commodity such as energy or grain is so cheap that continued production is in jeopardy there is a big problem. ( See Venezuela where fuel is 10 liters for one US cent and production is about 17% of 1998 levels)
There was also this famous saying: Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country-WILLIAM JENNINGS BRYAN, so maybe there is hope that ag will be appreciated again.

Anyway, my point is that cheap commodities and energy don't in themselves make for prosperous people. Right now the incentive rather than the means is lacking.

Thanks you explained that better than my attempt.

What I am really trying to say, is that we could easily become similar to Venezuala, being rich in energy, resources, agriculture, forest products, educated and skilled people, but in abject poverty due to all of our people being unemployed, and government taking all of the income we do make, so no one can afford the products no matter how cheap, in a vicious circle. Yet taking a big picture view, it is inconceivable, that we would end up in that state only due to economic constraints, rather than physical. Even if we were to be completely cut off from exports or imports, we should be the richest nation on the earth(in terms of standard of living), all we need to do is develop the assets we already have.

And technically, it doesn't require money, it requires labour and knowledge, we can't throw dollar bills ( or loonies) into a copper deposit, or an oil formation and expect finished goods to come out. Those laborers, and technical experts ultimately need to be compensated by some means that makes it worth their while, not suggesting we should end up equal to the former eastern block countries where government met only those workers basic needs, and nothing more was available, and no incentive was provided to go above and beyond the bare minimum.
But not letting them get to work to develop the resource because we can't pay them in a specific currency makes even less sense.

[AlbertaFarmer5]

If you have the time could you give a detailed example.

Credit issued by a nation is backed by the nation and the sum total of all of its activity, assets and even intrinsic value.

It is no different with a bond backed by gold. No one ever sees the gold or even really knows if it is actually in the vaults of the nation or not. They have confidence that it is so they buy the bond and trust that the full amount plus interest will be returned to them in the future.

It is an absolute convenience and a way to standardize the business of the nation to issue credit in the currency of the nation. Only when a nation has absolute control of the standard of accepted currency do you have control of the economy. No currency, no control. It could be tiddly-winks if you can make them free from forgery

I am of the camp that thinks that as long as you can maintain confidence in your currency, it doesn't matter what, if anything it is backed by. If your economy is growing, and productivity is increasing, there is no reason why currency cannot be increased out of thin air, to match the increased value of the

activity, assets, and intrinsic value.

The problem comes when we attempt to increase the supply of currency as a band aid for our mismanagement of those same assets and activity, which leads to loss of confidence, requiring printing of more currency.

Alternately, if nations agreed to collectively print our way out of the current debt deflation, and no single currency declined relative to another, could it be done without destroying confidence, or leading to hyper inflation? If there is no better alternative currency, could it be done in an organized manner? Yes, it will destroy the savers, and the pensions, but that seems like the inevitable outcome either way?

[farming101]

I am of the camp that thinks that as long as you can maintain confidence in your currency, it doesn't matter what, if anything it is backed by. If your economy is growing, and productivity is increasing, there is no reason why currency cannot be increased out of thin air, to match the increased value of the

The problem comes when we attempt to increase the supply of currency as a band aid for our mismanagement of those same assets and activity, which leads to loss of confidence, requiring printing of more currency.

Alternately, if nations agreed to collectively print our way out of the current debt deflation, and no single currency declined relative to another, could it be done without destroying confidence, or leading to hyper inflation? If there is no better alternative currency, could it be done in an organized manner? Yes, it will destroy the savers, and the pensions, but that seems like the inevitable outcome either way?

It may be too simple but it seems likely that the sum total of all economic activity including the mismanagement, corruption and outright theft somehow ends up being reflected in the GDP. So, if GDP starts to shrink and the government is still sending out money with wild abandon things could go south in a hurry. Probably not if only one sector was affected. That could be put on life support by the rest of the economy.
I think if there is a worldwide effort by the world's economies that have influence it could be done. Inflation takes off when there is a lot of money chasing too few goods. It could happen under the scenario we are facing now.
Right now most are wanting to be made whole, receive assistance or relief with money. So money is still in favor. I think it will be a shortage of goods that could trigger the greater problem.