Universal Basic Income

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Re: Universal Basic Income

Postby Steve James on Tue Jul 23, 2019 9:51 am

A trend that's kind of hard to reverse without first having a functioning economy, along with a functioning government. Hopefully after the 2020 election the government part will be addressed.


Ah, so the debt and deficit is rising because of the government, and if the 2020 election goes well --it will keep rising. However, if the administration changes in 2020, then the blame will be on the new administration. Otoh, if it continues to go up, well, that's inevitable.

Anyway, I trust Factcheck.org. And, so I'm going to post the rest of the quotation you cited.

But even under accrual accounting, the annual reports showed surpluses of $69.2 billion in fiscal 1998, $76.9 billion in fiscal 1999, and $46 billion for fiscal year 2000. So even if the government had been using that form of accounting the deficit would have been erased for those three years.


That'd be the honest way to cite. I.e., finish the f-in sentence.
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Re: Universal Basic Income

Postby windwalker on Tue Jul 23, 2019 10:09 am

The bottom line it happened, things are getting better hopefully will continue to get better as the Administration continues after 20 20.
Should it not, considering the present policies being put forth by the those running for the office its hard to see how it would.
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Re: Universal Basic Income

Postby everything on Tue Jul 23, 2019 10:52 am

The other way to get revenue when income tax and payroll tax doesn't prove to be enough (remember that corporate tax is low) is to issue debt.

That creates the deficit. Who owns this debt? Well China for one.

Foreigners own 39% of the publicly owned debt.

Includes China and Japan at over 1 trillion each.

There are various risks such as crisis, inability to invest in programs, and many more associated with this debt increasing to extraordinary amounts.

Is this good or bad? Most experts see this as bad, but no one knows for sure where the line is (from bad to very bad or terrible). Experts do not agree on the political risks.

To put it simplistically, the pyramid scheme cannot go on forever.
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Re: Universal Basic Income

Postby Michael on Tue Jul 23, 2019 11:18 am

Well I like your rant because someone has to help the little guy and the "elites" shouldn't get away with whatever they want.

Thanks. I'm glad someone enjoys a good rant once in a while.

For debt in general, the opposite of debt is credit.

Do you think there is a finite amount of money at a given time and that debt and credit have a proportional or near-proportional relationship that stays somewhat in balance? This is not the case. Not even close, which is the essence of it being immoral because there is no limit and it is a tiny few people incorrectly using the power of money to effectively steal by using money alone, without labor, in order to create more money to steal value from laborers. It's like borrowing gold and repaying with tin so to speak. It's a very complex system of debasement of the currency.

If used well (or morally as you put it), it's very good because adding borrowing (such as with a mortgage you actually do qualify for) means you can go ahead and spend something more. That spending is essentially someone else's income (like the homebuilders), so if this all goes well, it helps everyone (the economy can expand faster/more).


No, not really. It appears that you may not know how money is created and distributed, and I think you are probably making some assumptions that there is a balance between debt and credit. There is some benefit to society from the credit or economic stimulus resulting from the debt that is used to actually create money from nothing (strongly suggest you watch the 45 minute video I linked if you aren't familiar), but that balance is not in sufficient proportion as to be sustainable. The imbalance is so great that it can only be sustained through near-infinite growth, forcing more money creation through indebtedness, which is why Wall Street created those derivative instruments and why they sold them to people who were completely unqualified.

War is another way to force indebtedness. Create conflict, capitalize the arms race, loan money to create an imbalance of power for whoever wants the best weapons, then, oops! another war out of nowhere, purely by accident. Just look at all that debt to maintain standing armies and the latest weapons technology. Can't let there be a warhead gap!

Look at the past 100 years since we've had this system. If technology has enabled laborers to create much more value in a work day, value that is many, many times more than before the use of cars, assembly lines, computers, etc.,, why has indebtedness increased so much since then? Why is there a necessity to pay compound interest and pay thrice the loan principle for something like a house? It is an arbitrary part of our monetary system that uses debt to steal value from laborers.

An incredibly great video on credit/debt is "how the economic machine works" by Ray Dalio:
https://www.bridgewater.com/research-li ... ine-works/


So I'm supposed to listen to perhaps the person most influential for removing the firewall between investment banking and insurance that was put there in response to The Great Depression (Glass-Steagall), and who then went on to prevent merely the counting of derivatives that led to the 2008 financial collapse? Sorry, can't do it. It's like listening to the Devil explain the fine print in your soul sharecropping agreement.
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Re: Universal Basic Income

Postby Steve James on Tue Jul 23, 2019 11:44 am

Voodoo economics never worked. The stock market looked good when Bush took office and crashed more than half by the time he left. When Obama left it had more than doubled. Now, it's gone back up, based on lower taxes and regulations, and of course low interest rates and higher real estate values. Sound familiar?

Trump predicted that there'll be a market crash if he loses in 2020. He's probably right. Wall Street is bullish (tending toward buying) because the of low taxes and fewer restrictions. Any change of administration will bring uncertainty. There'll be a greater chance that taxes will be raised. A new administration might be more amenable to keeping national parks, reserves, and forests, rather than selling them to logging, oil, and gas companies. They'll fear anything that can endanger profits. So, they'll take what they've earned.

Hey everything, there's a movement on to switch back to the gold standard. You can almost tell because you'll rarely see ads for buying gold now like you did during the recession. Then, there were plenty of people recommending gold as an investment. Unfortunately, the only time people advertise gold for sale is when they can make a profit. People buy thinking that the price will keep going up. Yeah, only if more suckers buy it from you and you've made a profit. Most of the people who bought gold from those ads simply lost money, if they'd try to sell their gold today or if they sold it. If you're in your 30s, buy some now and just hold on. If you like James Bond movies, buy some Sovereigns and slide them in a suitcase somewhere. :)
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Re: Universal Basic Income

Postby Michael on Tue Jul 23, 2019 1:09 pm

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Re: Universal Basic Income

Postby everything on Tue Jul 23, 2019 3:45 pm

still catching up.

maybe we can separate basic concepts.

I'm with Dalio on how this basically works at the base case level (let's ignore the extreme cases for a sec). If I couldn't have a mortgage and a car loan and a credit card and advanced degrees, then things could be at least more inconvenient and maybe I wouldn't have as much income. So my credit=debt, which also = extra (temporary) spending power, which also = more money into the economy, which = income for some others. Otherwise, if I used gold or cash or barter, I wouldn't own a house and maybe wouldn't own a car, probably wouldn't have the same education. Would that be better because I'm not indebted? It depends.

If I go and trade some stocks because I bought low and sold high, I didn't really "steal" that money from someone. Yes, maybe I make money from volatility and not underlying value. But it's not a zero sum game where I made money and therefore labor or the poor lost it in the general case. In the extreme subprime crisis case, the effect really, really, really seems like that, yes. The Fat Cats got fatter, some speculators maybe took on risk willingly, others suffered via ignorance and irresponsibility/greed, and most normal working people suffered because it led to the Great Recession, which caused "austerity" measures in various countries, with less funding available for healthcare and retirement. I'm sure there are many more effects that lasted to the present day that I haven't read about.

Still, I don't think I'd say "debt is bad" as a general statement and it only exploits labor and the poor so that the rich just get richer. As a middle class worker, neither extreme really applies to my case. But if you get super rich like Gates and Buffett did, do you have some moral responsibility like spiderman to help the world? I think they think that, and we all seem to agree. Does UBI seem like a good or viable solution to some of these problems, and the automation killing jobs problems? I don't know. It's a good discussion we got going here on RSF, home of internal and fixing the economy, at least.
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Re: Universal Basic Income

Postby Michael on Tue Jul 23, 2019 5:25 pm

I agree, debt is not always bad, but debt slavery is always bad.

The premise of all my prior street preaching is based first on the particulars of our monetary system and leading to a conclusion that it is a system of debt slavery. It is not some kind of generalized, benevolent, mutually beneficial money lending that creates economic opportunity that you imagine it to be, and it has only been this way in the USA since 1913. The 45 minute video I linked is the best way to learn how it works; I can't explain it in text here without several pages.

Local bank branch managers know this stuff, know how money is created and know the multiple levels of fraud/usury involved: (1) money created as debt, (2) fractional reserve banking (arbitrarily multiplying the amount of money), and (3) compound interest, but certainly the public at large does not, and probably some economists do not.
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Re: Universal Basic Income

Postby everything on Tue Jul 23, 2019 7:07 pm

I'll try to go back and watch it ... might take a few days, but will try
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Re: Universal Basic Income

Postby Michael on Tue Jul 23, 2019 8:03 pm

Hope you enjoy it if you have time.
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Re: Universal Basic Income

Postby oldEurope on Wed Jul 24, 2019 7:22 am

Hey Michael,

Your current position on the way to understanding the monetary system is where I was stuck for a few years as well, but it misses a few key points (kinda like IMA, where you think “Now I got it!” – and then you find out there is another, deeper level to it…).

The part about fractional reserve banking is true, but the bad news is: Money, debt and civilization are interlinked since the beginning and there never was a civilization without debt slavery/forced debt or an economy based on “labor”.

--- WARNING: Wall of Text coming ---

Fractional reserve banking is just a more powerful tool and faster in creating the side effects that happen in all monetary systems/civilizations.

The short version of how civilization, the economy and debt come into being simultaneously is:

War lord / charismatic leader assembles a group of warriors ---> subdues a population/tribe ---> forces taxes on population (in the beginning of civilization grains/animals, later metal for weapons and even later gold) ---> everybody except leader and warriors is in debt and has to start producing a surplus to pay taxes (first debt) ---> people who produce anything other than the tax-“currency” (grains, metal, gold and today paper/digital money) have to start trading to get said “currency” or face harsh punishment ---> the economic/civilization cycle has begun!

Without the initial debt (tax) there is no economy as people have no surplus to trade and the whole cycle is dependent on the establishment of agriculture (without agriculture no storable surplus ---> subduing people brings no gains as they can only hunt/gather enough to survive themselves).

And as people have to constantly produce a surplus (to pay tax) and rely on agriculture, they produce more children to ease the labor burden ---> leads to overpopulation and as land is limited ---> children have to either borrow existing land from previous generation (= go into debt with steep interest rates around 30%) or clear new land / conquer new territory. If they fail to pay back interest on borrowed land, they become debt slaves to the creditor ---> huge pressure to expand.

The civilization expands and grows and competes with others ---> has to advance weapons/technology or gets conquered ---> more and more specialization of labor force ---> economic growth and increasingly more refined “achievements”/high culture ---> reaches high point of expansion ---> slow decline OR sudden collapse OR gets conquered OR invents fractional reserve banking to kick the can further down the road ---> expands economic system/rule over ever bigger chunks of the globe or if not, faces gigantic collapse.

In the past the big collapse was often prevented through a general debt forgiveness/freeing of the debt slaves whenever there was a new ruler or every fixed number of years, but that also meant the civilization never became as “advanced”/refined, as the pressure to invent and produce was relieved/reset to a lower level.

Here are some nice graphs that show societal rise/fall and debt/interest rates throughout history:

Image

Image

The whole process was first discovered/explained by Gunnar Heinsohn (Prof. of War Demography at NATO Defense College) and Otto Staiger in “Eigentum, Zins und Geld: Ungelöste Rätsel der Wirtschaftswissenschaft” (Property, Interest and Money: Unsolved Riddles of Economics). They trace the development of civilization/debt throughout history and rely on empirical/archaeological evidence beginning in Babylon and even further back.

Building upon their findings, the whole concept was further refined and put into a complete theory of economics by Paul C Martin in “Der Kapitalismus: Ein System, das funktioniert” (Capitalism: A System that Works) – the title is ironic ;) The book, published in 1986, already predicted our current situation and the behavior of the central banks/governments in the 2008 crisis and has a “nice” outlook for the coming future as well.

Unfortunately, this information is unavailable in languages other than German, but if you are interested, here is a link to a nice PDF summary of the concepts by another German author (in German, but maybe you can use Google Translate or something similar):

https://www.docdroid.net/mX5uquo/ein-buch-fur-keinen-der-kapitalismus.pdf#page=8

--- End of Wall of Text ---

TLDR: No debt = no civilization/economy. There unfortunately never was an economic system based on labor. (At least none that we know of at this point)
Last edited by oldEurope on Wed Jul 24, 2019 7:34 am, edited 1 time in total.
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Re: Universal Basic Income

Postby everything on Wed Jul 24, 2019 8:07 am

ahhhh ok I'm starting to follow this idea. if I follow you correctly, it's not debt or the associated fractional reserve banking that is the issue. It's power (from wealth, might, knowledge, birth, etc.).

when I was watching the rich dad poor dad video, he specifically said you should try to do this:
1. lower your taxes
2. taking on debt (mortgages) will allow you to do that.
3. apply that to generate wealth, while rent pays for some or all of your debt.
instead of this:
1. take out massive student loan
2. try to get high income job
3. invest in 401k if you can (which is by and large a great idea)
4. keep up with the Joneses and stupidly buy an expensive car, whether via financing, lease, or cash.
5. get a big house using a big mortgage.
though you may be high income, you just CHOSE your own debt slavery.

The first method is not only for the "rich". I know various people who have followed this method on a modest scale (beach rental), and others who've dabbled with AirBnB and Uber/Lyft, which is like this method on a small scale (or large scale in the case of the NYC license-less "hotel scam"). The limits for deductions on second homes have gone down recently, though, I think because of changes following the crisis. The FIRE crowd says to own but not use, which is essentially this strategy but for very normal levels of wealth.

To some extent (if you have some modest power, knowledge, money), you can choose whether or not you have debt slavery or use one of these strategies like FIRE to get out of it. Of course, most people know none of the above.
Last edited by everything on Wed Jul 24, 2019 8:08 am, edited 1 time in total.
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Re: Universal Basic Income

Postby Michael on Wed Jul 24, 2019 8:26 am

Hi Old Europe,

Very interesting. I agree that debt is a normal part of the economy, but I am concerned with how much of it that there is and how that can influence people's ideas outside of the money system; I am concerned with debt slavery.

I agree that money creation is good, but who does it and how is at question. Your wall of text, lol, doesn't address most of the particulars I've talked about, except to say fractional reserve banking is good. In the sense that FRB is part of money creation it is good and also prevents deflation. In the sense that FRB can be overdone, inflation is bad. When it is almost totally unregulated, uncounted, etc., which were particular problems of the 2008 financial crisis, it is harmful and evil.

There are hundreds of trillions, possibly quadrillions of $USD of derivative financial instruments generated by Wall Street that led to the 2008 financial crisis. Are they real? Do they have value? Is there that much value on the planet earth? This is money creating money. It is artificial, harmful, and unnecessary. The alternative to this is not trading your cow dung for your neighbor's beans or having 10 children to work the fields. I gave one suggestion earlier that the government could create money by spending it into the economy as infrastructure. China is basically doing this now.

My main point is about the harmful side of the system and proposing what should happen. I say that the money system should first and foremost be thought of as a moral question. I give a simple practical basis for this, that labor creates value and should be respected. Money can not create money without affecting value or "stealing" from labor. I don't have a chart or graph from the Bank of England for this because it is self-evident.

(1) Money does not need to be created as debt and we don't need income tax. The history of the USA from 1790 - 1913 proves this.

(2) Fractional reserve banking is a mechanism to create additional money, and money needs to be created, but it should not be in the hands of private, international bankers who hide or obscure the process. It should be established and protected as a vital national interest and made as transparent as possible. The destructive tendencies of capitalism seen in globalization prove this.

(3) Compound interest is not a necessity. It can go away and we can still have debt, just less of it and the economy will still function.
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Re: Universal Basic Income

Postby Michael on Wed Jul 24, 2019 8:47 am

everything wrote:ahhhh ok I'm starting to follow this idea. if I follow you correctly, it's not debt or the associated fractional reserve banking that is the issue. It's power (from wealth, might, knowledge, birth, etc.).

Yes. I think the monetary system is structured to funnel wealth and power to a tiny group of people, but its fundamental structure could be changed and the results would be that wealth and power would more evenly distributed. Part of the proof is that our economic system was much different before 1913, and prior to that time we had no income tax.
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Re: Universal Basic Income

Postby Steve James on Wed Jul 24, 2019 1:37 pm

Redistribution of wealth would be called socialism. Equal redistribution would be unfair --even to Marx. But, I really wanted to say that "Debt" and "wage slavery" aren't really the same thing. There are plenty of people who don't have debt. However, they are generally forced to work in order to survive, even if they don't owe anyone money. If it's true that there's no "free lunch" and "you can't get something for nothing," then our culture demands that one must work (provide some goods or services).

If you don't work, you won't eat. In fact, in the US, some people would say that you didn't deserve to eat --especially if they have to work. The idea of wage slavery was coined to contrast its opposite: i.e., slavery or "unpaid labor." Unpaid labor was central and crucial to agricultural and economic development in the US until the mid 19th century. Obviously, the Southern economy changed when/if every worker had to be paid for his labor. A gent named FItzhugh predicted that it would result in "wage slavery" for those who had to replace the slaves.

It wasn't about debt then. That came much later in this society, probably after the Great Depression when people began participating in the credit economy. For example, in the 60s, people didn't buy much on credit --except cars and homes. They used lay away (pay a little down and a little more until it's paid).

Today, we use credit cards and buy unnecessary things, and it's not hard to let debts outweigh income. So, what we have are millions of families that live paycheck to paycheck. It's not they don't make enough. They just can't miss one or two checks, or the rent won't get paid, or worse. Yeah, you could call it slavery or you could call it the need to work. I agree that some people become enslaved by their debt. Otoh, unless you can retire, you're going to have to work; debt or not.

I do agree that empires (and powerful people) impose debts on peop.es in order to make and keep them subservient. The Belgians wanted to build a railroad in the Congo, but the Congolese didn't want or need one. So, King Leo 2 just imposed a tax that had to be paid. Oops, they didn't use Belgian currency, and the only way to get it was to work. They didn't want to work, so they were forced (and had the hands of those who resisted working cut off, or their children).

Of course, "taxation without representation" was allegedly one of the reasons the British colonies rebelled. Anyway, I agree with the premise is set up to encourage people to conspicuously consume products that are designed with planned obsolescence, and that leads the to use credit. But, I'm not blaming the consumers. They only live once, and they want to enjoy the life they see on tv.

So, what do we want? Everybody able to buy a computer like the one we're using? What do we change? Nobody wants to make "just enough to survive." Otoh, not everyone can get rich lik JayZ or Gates. I don't think it'd be right to stop someone from buying that $30K Porsche on his $30K salary. He'll be enslaved to that car, yes. But, if he gets a big raise, he'll still have the debt.

I think that the majority of the time, people with debt default because something drastic happens. Debt is "good" when it increases one's ability to buy what one wants. You can't have a good credit rating unless you've shown you can borrow and reliably pay back. Then, during the years you have to work, you can live as well as you can. Debt is definitely "bad" when you have it and don't have a job.
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