Universal Basic Income

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Re: Universal Basic Income

Postby Michael on Wed Jul 24, 2019 3:40 pm

Steve, enjoyed your post. Not trying to nitpick, but I never said redistribution if that was what you were referring to. I said distribution, which is a basic mechanism of any monetary system and really has no political connotation, such as socialism. It just means that money is artificial, must be created, and therefore must be distributed arbitrarily at its inception. Much of monetary distribution today is done by federal reserve member banks when they implement fractional reserve banking: they distribute the money to themselves. There used to be a guy on here who knew this better than I do (not Teaser, the other one who posted rarely) and he would probably correct the details of my last sentence, but I think I have expressed the concept adequately.

King Leopold? What a perfectly relevant story. Emmet Till was buying gum. That's economics. Slavery was about cash crops of an agrarian aristocracy. That's economics. Perfectly relevant to debt slavery in a monetary system with digitized derivatives into the quadrillions. Let's focus on these examples. ::)

So, what do we want?

Individual and familial accumulation of wealth so that families and communities can be financially independent enough to be immune from the political persecution that is rampant today against people who expresses views contrary to establishment orthodoxy. In other words, enough wealth from moral sources so that if you don't agree with your multinational corporation, you can change jobs without losing your house and the health care for your children.
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Re: Universal Basic Income

Postby Steve James on Wed Jul 24, 2019 4:12 pm

Individual and familial accumulation of wealth so that families and communities


:) 1) How would individuals and families accumulate "wealth"?
2) Why would they owe any of it to their "communities" --which are simply collections of other individuals and families.

King Leopold was a response to the earlier post about "civilizations" and taxes. I.e., how taxes are simply imposed and that forces people to work. Actually, I thought that agreed with your idea of wage slavery. Whereas, today, individuals and families are able to accumulate wealth. That is, unless you feel you're a victim and something is holding you back.

You talk about health care, but I'm waiting for a suggestion. How can people change jobs without losing their homes? Who guarantees anyone a job? It's nice to be in favor of those things and not favor universal --health, education, welfare, or anything.

Btw, yeah the old Emmett Till joke again. Sorry to victimize you. People can look up the tale if they're interested.
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Re: Universal Basic Income

Postby Michael on Wed Jul 24, 2019 5:10 pm

1) How would individuals and families accumulate "wealth"?


Debt slavery makes accumulation of wealth difficult to impossible, especially by moral means. Change the monetary system to a moral one and the value of labor would be translated more equitably to money, money would be translated to wealth, such as real estate or business ownership, and the wealth would be accumulated over time and shared with family instead of spent paycheck to paycheck, squandered on compound interest payments, or over-taxed.

2) Why would they owe any of it to their "communities" --which are simply collections of other individuals and families.

I'm looking at it as an opportunity, not an obligation. I think communities can do a lot to foster the health of families within them. For example, Korean and Muslim communities loan money, usually without interest or little interest, to people within so they may become small business owners. It's beneficial. Wealth accumulation by wager earners would promote benefits for the groups they belong to.
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Re: Universal Basic Income

Postby Steve James on Wed Jul 24, 2019 5:50 pm

Change the monetary system to a moral one


Ok. I'm game. What system is that? How do we change this one specificially?

I'm looking at it as an opportunity, not an obligation. I think communities can do a lot to foster the health of families within them.


Morality always implies obligation. A nation is a community, and individuals have an obligation to it, no? Does it have an obligation to its citizens. Still, describe the moral system that you'd suggest. What change in this system would the current wealth owners accept? What if they don't agree?
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Re: Universal Basic Income

Postby Michael on Wed Jul 24, 2019 6:35 pm

Change the monetary system to a moral one


Ok. I'm game. What system is that? How do we change this one specificially?


Presently, money is created as debt by a private banking system connected to international banking systems. Instead of this, the government should be much more protective of its nation's economy and also create money without it starting as debt. It can be created as free or positive money by spending it into the economy as infrastructure with things such as roads, bridges, hospitals, schools, etc. The risk of doing this is creating too much inflation too quickly, which also exists In the current system and has the added detriment of creating debt at the same time. My suggestion creates transparency and removes the debt aspect.

Instead of private banks using fractional reserve banking to increase the money supply in a mostly opaque system, the government would control the creation and distribution of money, maintain a balance of liquidity to total value (I do not know the industry standard jargon, but I think this terminology can do) and make it completely transparent. The government would also have a protective attitude toward its money system from being influenced improperly by international banking.

Compound interest would be illegal, so this debt trap simply wouldn't exist, but there would still be enough liquidity for economic stimulus. Personal income tax would be abolished because it exists out of need for a cash flow to the unsustainable debt trap of the current monetary system. The wealth that people would keep because of the absence of income tax would be completely game changing. It is likely that many other taxes would not be needed, such as sales tax and fuel tax, but now it sounds like a fantastic proposition, although it is not and it existed this way for about 150 years before the Federal Reserve Act and the 16th amendment were passed in 1913 under Wilson's wife's administration.

Exotic financial instruments like CDO's and others that led to the 2008 financial crisis would be illegal. Stock exchanges would not be allowed to make money from pure speculation nearly to the extent as they do now, but of course actual investment would be allowed. Unlike today, accounting of derivatives or any other financial instrument would be required. A transaction tax or value added tax would be imposed on speculation or "making money from money".

I'm looking at it as an opportunity, not an obligation. I think communities can do a lot to foster the health of families within them.


Morality always implies obligation. A nation is a community, and individuals have an obligation to it, no? Does it have an obligation to its citizens. Still, describe the moral system that you'd suggest. What change in this system would the current wealth owners accept? What if they don't agree?


Yes, there is reciprocal obligation. In regards to a monetary system, identifying these obligations is not the issue because money is merely a tool. I am suggesting that the economy itself should be constructed as a moral system that would be much, much more equitable for most people. Obviously, my specific suggestions are from a layperson, so they are mostly a hypothetical starting point, but they do serve to illustrate the mutability of the money system itself, and I hope to emphasize that its current structure is immoral because it concentrates too much wealth and power in too few hands and it is designed to do so.
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Re: Universal Basic Income

Postby everything on Wed Jul 24, 2019 6:50 pm

I'm not really caught up to all of the discussion now, but it seems like we mostly agree that:

- debt may be ok / helpful
- people want to enjoy some disposable income
- slavery is bad and immoral
- it would be more moral to have some way for more people to avoid slavery or lock-in to bad situations

It's not clear to me (I know we are just laypeople so having the solution come just from rsf chat won't happen) how to go about it, but maybe just one question for now:
- make compound interest illegal
I don't quite follow here. Compound interest is helpful in 401k accounts for example. So you mean compound interest on credit cards or something else?

After the subprime crisis, they passed some legislation such as the Dodd-Frank Act, but (according to wikipedia), experts aren't really in agreement how much help it turned out to be.

Studies have found the Dodd–Frank Act has improved financial stability and consumer protection,[2] although there has been debate regarding its economic effects.[3][4] In 2017, Federal Reserve Chairwoman Janet Yellen stated that "the balance of research suggests that the core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth." Some critics have argued that the law had a negative impact on economic growth and small banks, or failed to provide adequate regulation to the financial industry. Many Republicans have called for the partial or total repeal of the law.
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Re: Universal Basic Income

Postby Michael on Wed Jul 24, 2019 7:58 pm

Debt is a useful part of a money system and it can be helpful, but if excessive it is harmful. For example, the harm of excessive debt is recognized in USA bankruptcy laws where a person can escape from debt that can not be repaid because it is immoral to be in a situation where you are a debt slave. These laws were enacted because of literal debt slavery or debtors prisons in the UK that the US founders wanted to prevent.

There are many laws now and historically that recognize that lenders have inherent advantages and greater responsibilities than lendees, meaning there are laws that prevent certain kinds of loans between consenting adults because they are inherently harmful. These are usury laws.



https://www.youtube.com/watch?v=PZEcOoElMOI

Compound interest is a mechanism of increasing profit through "money making money" that often creates an unfair result for the lendee. While an individual may benefit in their 401k from compound interest, just because it works in your favor doesn't change the fact that it is being used to unfairly create a debt burden somewhere down the line.
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Re: Universal Basic Income

Postby Steve James on Wed Jul 24, 2019 8:50 pm

Compound interest is how saved money increases in value. I'm not sure how one'd debt interest is compounded. In fact, there were laws enacted to protect consumers from usury (i.e., charging too much interest). The current administration has removed some of those protections. So. for example: re: usury:

In other cases, usury refers to charging excessive interest.

Perhaps this definition from William Blackstone’s Commentaries on the Laws of England best captures the debate:

When money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for the use, the increase is called interest by those who think it lawful, and usury by those who do not.

In the U.S. today, the term usury generally refers to lending money at interest rates that exceed state law. And, yes, it apparently still exists.

New York Attorney General Eric T. Schneiderman, for example, recently cracked down on several out-of-state lenders who allegedly violated New York’s usury law by charging residents interest rates ranging from 89% to more than 355%.

While states can and sometimes do cap interest rates that can be charged for certain types of loans, they can’t stop out-of-state national banks from selling higher-rate products to their citizens. Not to mention the fact that many states have repealed usury laws or raised interest rate limits for lenders within their borders.

In addition, 38 states have laws allowing small short-term loans, known as payday loans, according to the National Conference on State Legislatures. Some cap rates, but others don’t. As a result, rates on these loans can be very high — 300% to 1,000% or even more. There are efforts in some states to limit the rates on these loans to something more affordable to borrowers.


I agree that those practices should be illegal, though the problem is that lenders want one thing and loaners want another. However, it has nothing to do with compound interest. Eliminating it would mean there was no point to saving money in a bank. Removing compound interest essentially means removing interest altogether. "Compound" interest is the result of the accumulative effect of applying the same rate of interest to an ever increasing amount. I.e., if you save $1 and .10 interest per year, after year one you'll have $1.10, next year it'll be .10 x 1.10 and so on. If you start young, you can be a millionaire in 30 years if you save a small amount regularly with compound interest.

Otoh, low interest rates at banks are what make speculation in the stock market attractive. Of course, banks are a critical part of the stock market. Low interest rates discourage people from putting money in banks. That means they have to make a profit elsewhere, usually through fees and credit cards. I mean. Why have banks?

Anyway, like I said, there are only goods and services. Those are what are traded for money, either through buying or selling. The functional alternative is a barter system where people exchange their goods and services directly. Oops, except if I want to eat pineapple, I have the trucker and grocer in between me and the farmer. So, the first thing you have to do is change the medium of exchange. It's not going to be gold. Even if it were, you have to have something to trade for it. It's not about the government.

I don't know what fractional reserve banking is, but I know it's necessary to have a job. And, I think that if banking were done differently, we still need to have jobs to care of the necessities.
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Re: Universal Basic Income

Postby oldEurope on Thu Jul 25, 2019 5:28 am

Hey Michael,

thanks fort the response. I think I did not explain my main points well enough.

What I wanted to illustrate was:

1.) There is no way to create money without debt. The debt is what creates the pressure for people to produce a surplus, and without this pressure there is no economy and no civilization forms. You are “stuck” in subsistence farming/hunting & gathering (which I don´t mean in a negative way).

2.) What gives the “money” (grains, metals, paper etc.) worth is no intrinsic value of the medium of exchange itself or a fixed value of “labor”. The value is created through the looming punishment by the ruling class if you fail to deliver it on tax collection day, which forces you to work and overproduce to acquire it. If you don´t produce said currency yourself (e.g. you raise pigs but tax has to be delivered in x kg of wheat), you have to trade for it ---> the economic cycle starts.

3.) Labor has no fixed or stable value, which is why a currency cannot be based on it. If I dig a hole and fill it back up, I created nothing of worth that others would trade for. Or more realistic, if I manufacture bicycles by hand and my neighbor invents an automated production line, my labor loses its value dramatically, as his bikes are much cheaper than mine. The value of labor is always depending on demand, which can change quickly (outside of subsistence farming etc.).

4.) If the government just “spends money into existence” through infrastructure investments etc., the people are not under pressure to overproduce and innovate (to not become debt slaves, or nowadays just go bankrupt). This also assumes that there “just is” a government and a society, but there would be none without the debt/civilization cycle already in place beforehand.

5.) China is a good example, as it was communist before. What allowed the Chinese economy to develop so rapidly was the introduction of private property and debt expansion. But they reached the limits of expansion too, just much faster than the West. As you have lived in China, you know how high the pressure/competition in the society is currently.

6.) The USA is also a good example, as it is basically a subsection of the British population splitting off from an existing civilization and conquering new territory as explained in my last post. They just reset the debt clock and started over again, but this is just the rise of a new civilization/society, which runs into the limits of expansion later on (no more Wild West to conquer/claim). Then you can either decline or get conquered if you don´t find new ways to grow ---> Fractional Reserve Banking, wars, Quantitative Easing etc.


What I also didn´t make clear was that I am not advocating for FRB or think that it´s “good”, I just wanted to show that our current level of technological advancement etc. relies on it and wouldn´t exist without it.

There is no way out that keeps our civilization at its current level of advancement, as you can see every time a country becomes communist:

The debt pressure is gone, the economy slowly declines and the country cannot compete any longer with the countries that keep the pressure up.

Which means there is no moral way to run a society or economy, as they both are reliant on forced debt by a ruling class to function/exist in the first place. You can just make sure that you as an individual or your family don´t fall into the avoidable debt traps (loans, credit cards etc.), but in the end you will have to pay taxes (which might go back soon to being mandatory without being based of your income/spending).

Just noticed this answer turned into another Wall of Text…

Hope this one was clearer than the first ;)
Last edited by oldEurope on Thu Jul 25, 2019 5:32 am, edited 2 times in total.
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Re: Universal Basic Income

Postby Steve James on Thu Jul 25, 2019 9:54 am

Well, I agree that debt is inevitable but credit debt is not always voluntary and can lead to debt "slavery." The oldest saying in the book is that "the only things certain in life are death and taxes." People work to live and to pay taxes. If they have an excess, they use it for whatever they want or they save it. Both are methods of accumulating "wealth," which is simply surplus income plus the value of property.

There is no "moral" value in accumulating property (imo). It's just a matter of justification. Kings said that it was their "Divine Right" to levy taxes. (Remember Ol' King George 2). Some of their colonists said "F-that, we're supposed to get something back for what we give." Divine rights were not given to kings, but to men. (See US founding documents, 1776, p.1 :)).

That was similar to what had happened in England when Henry 8 created his own church, and later when Cromwell offed a king's head. In the new US, a new political religion was created based on economics. Adam Smith's "Wealth of Nations" had been published in March of 1776, and Smith was a moral philosopher. He thought "self-interest" led to national wealth, and was criticized. However, Smith also wrote that governments need to discipline unbridled self-interest. Anyway, Smith thought that the colonies should be able to operate freely and a big question was "debt," specifically war debt.

As the American Revolution continued, the money for prosecuting the war had to come from somewhere. So, should the people in England and her other colonies be taxed? Should they sell the Crown Jewels? Or, should the nation go to the bankers!!! Yep. Borrow that money. Now, this should sound very similar to what's happening today. It's why the budget goes up and the national debt rises. Taxes may, in fact, go down for some, but that only means that debt has to go up for all.

The borrowed funds are then used to pay arms manufacturers who create jobs. That's the old military industrial complex identified at the end of WW2. I.e., since "not" winning wars is much more profitable than winning them. In any case, we have an economy in which war is at the center. Oh, putting God on the currency doesn't imply any holiness. It's said that you can't serve God and Mammon at the same time.

Yeah, I know, so says you. Actually, it comes from someone we were taught to believe was a "higher authority." Matthew 6:24

“No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.
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Re: Universal Basic Income

Postby everything on Thu Jul 25, 2019 11:00 am

That was an interesting history of the world from a lens of debt!

I still view the positive side via Dalio's explanation, though.

In the near term, my spending power is multiplied.

This isn't that money is created. It's borrowed from the future.

That helps whomever I am paying.

They get to sell more, so earn more, so spend more.

In normal circumstances, it's useful.

But we are talking about the extreme cases and the growing gaps and what if anything can and should be done about it.

Recently my employer offered an ESPP. It's self interest for all parties.

This essentially ties up people's money for a speculative and highly risky return (but at a discounted price). It's not debt but it is basically because there is a time value of money at the heart of any investing. Because once we reach some stability, we try to plan for the future and even for future generations.

Is UBI like an ESPP?
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Re: Universal Basic Income

Postby Michael on Thu Jul 25, 2019 2:21 pm

Compound interest is how saved money increases in value. I'm not sure how one'd debt interest is compounded.


I can not really elaborate much further in economic terms and so I will use philosophical ones. Excuse me if it comes off as moralizing, but I simply can't say it better than Shakespeare and none of us here are actually that terribly well-versed on the mathematical details of the topic in order to communicate purely in those terms.

I recognize something as immoral when there is a power without a limit. For example, one of the better features of the US Constitution is that power is limited through checks and balances between the three branches of government. Another example is when a person recognizes a higher authority, such as God, he acknowledges a limit to his own power.

Compound interest has no theoretical limit. The interest and fees can be rolled back into the principal and it will increase, which will increase the amount of interest payments, which will be added to the principal ad infinitum. For example: loan sharks who turn their "clients" into debt slaves. This is the moral dilemma illustrated by Shakespeare in "The Merchant of Venice" and Shylock's greed for a pound of flesh represents the visceral immorality that occurs when you accept the premise of an immoral monetary system or immoral credit arrangement.

Eliminating it would mean there was no point to saving money in a bank. Removing compound interest essentially means removing interest altogether.

I think that's an assumption based on existing factors within a system that I am arguing should be fundamentally changed. In a new system, simple interest could be moral and effective for both lenders and savers.

I don't know what fractional reserve banking is, but I know it's necessary to have a job. And, I think that if banking were done differently, we still need to have jobs to care of the necessities.

Fractional reserve banking is the mechanism for banks to loan money they don't have, but doing so within the pre-ordained limit of a ratio of the loaned money to their actual reserves. For example, in the US Federal Reserve Bank system, which is a private banking cartel that is not a government agency, in that system branch banks can loan $9 for each $1 they have in reserve. Also, the reserve doesn't have to be physically in the bank, but merely within the Federal Reserve system that branch belongs to, and it's all digital anyway and inadequately federally insured, so who's to know.

For example, if City Bank of Boise loans $100 to John Smith, and that $100 gets deposited back into the bank through John Smith's commerce in town, that action allows them to create $900 additional dollars, which can also be loaned and the process repeated. This is not perfectly mathematically accurate, but close enough. You have to get into calculus to perfectly measure how the process plays out over time, which I can't do.
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Re: Universal Basic Income

Postby Steve James on Thu Jul 25, 2019 2:43 pm

Okay, Polonius, neither a "borrower nor lender be." But, afa compound interest, without it there'd be no reason to save money in a bank. If you want banks only to loan money that they have, then where would they get the funds except from savings? Just curious.

Anyway, compound interest is purely mathematical, not moral. You can save your money and not receive compound interest. But, I'll be perfectly happy to earn 5% interest on my money. Jmo. It's your choice.
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Re: Universal Basic Income

Postby Steve James on Thu Jul 25, 2019 2:46 pm

"A man is rich when he has time and freewill. How he chooses to invest both will determine the return on his investment."
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Re: Universal Basic Income

Postby oragami_itto on Thu Jul 25, 2019 2:51 pm

Yep it's working exactly as intended.

And after refunds, the IRS collected about $93 billion more from individual American taxpayers than it did in 2017. Interestingly, that number stands close to the tax break amount that corporations received from the TCJA in 2018.
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