To quote Eric Crampton on twitter, “…The Standard has always been a bit nuts. But wow:”
This means money must become a means of exchange only.
We must remove the time value of money. No interest, no financial derivatives and no charges for use of money.
Remove the means of using money to make money. Accumulating more wealth can then only happen if you work or buy something which has value in the future. A productive business, education, health, (Future labour force) land, energy or other resources. Not through owning money.
This is a big step and very hard to do politically and unilaterally.
The protests from banking interests and those who have managed to accumulate most of our wealth will make the last 30 years of fight back from the financial burglars seem like a playfight.
As much as I’d like to repeat my reply to Eric on twitter, this isn’t quite like trying to turn off gravity.
But it’s pretty close. And it won’t make bankers that worried. More worried would be the millions of people wanting to retire on monetary assets they’ve built up over their lives. Removing financial derivatives would seriously affect farmers, who won’t be able to purchase currency hedging.
This sort of thing actually annoys me. Trump and Buffett don’t simply have money in the bank, they’ve purchased assets like buildings and companies that return a profit on their investment due to keeping incommings greater than outgoings. The big guy can always find a way to make money, it’s the small guy who leaves his money in the bank.
Imagine yourself to be an investor. You can no longer earn interest from the bank, so you have to look for an investment. You can’t loan money to a local hire shop that wants to expand because he’s not allowed to pay you. But that hire shop owner can take his own money and purchase more things to hire out. However, he has none, so he’d like to borrow yours. But while he can take one of his assets (say, a lawn mower) and hire it out for a profit, you can’t take one of your assets (money) and hire it out to him.
Apparently that’s fair in the minds of some people. I think that’s ridiculous.
This is hardly surprising, ScrubOne, the guys at the Standard have a view of economics that can only be described as deranged. Even Obama makes more sense.
You can outlaw interest, but eliminating the time value of money requires fundamental restructuring of folks’ utility functions.
You could probably set a phd level history of economic thought field exam question in sorting out the various long discarded quackeries in that single post. Old school Marxist stuff on money-commodity-money replication, tinges of social credit, ….
The one thing I *do* remember from Finance 101 is “The first principle of finance is the time value of money”.
On second thoughts, I wouldn’t like to have that guy owe me money!
Removing interest is ridiculous. A person has a choice: they can spend their $5,000 on a second-hand car or new furniture, or they can save it and therefore get interest on it (someone else wants to buy a car or new furniture but doesn’t have the $5,000).
Interest is a standard thing in the world of finance. To remove it would be to unfairly influence the choices people make regarding their money and could spurn dreadful things such as hyper inflation, bankruptcies, and a repressed and dictatorial society.
Comments are closed.