Debt and Savings

Thomasio · January 5, 2016

I got into this discussion under Atheism and Religion, but I guess it's a bit off topic there, so let me introduce my point here again.

Anyone who has money, however much or little of it, wants to get interest paid on it.

Whether invested in hard assets like real estate or plain cash in the bank, the general idea is that wealth by itself, invested in the right way should gain value over time and the gain should be greater than the inflation of fiat money is.

If you build a house and find someone to rent it, you will set the rent to a level where in the long run you get a return on investment and if you build a factory to produce something, you will set the prices of your products to a level where in the long run you make a profit.

Or in short, no matter where you invest your money, you want interest paid on it.

Of course there will be cases where this doesn't work out, people as well as companies go bankrupt all the time, but overall on average it's supposed to work out, at least for the smart ones, so let's focus on the average.

Precious metals will near automatically even out inflation, so from an interest point of view that could be considered "neutral", nothing more than a protection against inflation.

Cash in the bank that doesn't get interest paid is identical to storing cash at home, about the same as precious metals, only with the additional risk of devaluation through inflation.

If you want interest paid on something, you have to find a debtor who pays that interest, money in the bank by itself doesn't gain anything, until someone takes the money out of the bank, invests it into something that produces profit out of which he can pay back with interest.

If you rent a house, you become in fact the debtor of the landlord and if you take a loan from a bank to buy a car, you become the debtor of someone who has put his money into that bank.

Or in short, except of precious metals, ALL savings, ALL investments require a debtor paying the interest.

In a state there are only four groups that can either save money and get interest or take loans and pay interest.

1) Private people or households

2) Businesses

3) The state

4) Foreign countries

Even though within each group there may be individuals going against the stream, it is safe to argue, if one group as a whole on average saves more than they owe, another group will automatically on average be a debtor.

Traditionally private households save 10-20% of their income for retirement.

Traditionally super rich individuals cannot spend as much as they make, meaning they can't help accumulating more and more savings.

Even though private households take loans all the time, overall on average private households are net savers.

Businesses, especially big business, with all the tax evasion strategies they have found, with production moved to China, registered address of the company on the Cayman Islands, plain fraud like several banks got caught with throughout history, have at least in the western world become net savers as well.

Not sure about the numbers in the US, but here is a graph from Germany:

http://www.flassbeck-economics.de/wp-content/uploads/2015/12/Ehntssalden1.png

Haushalte (blue) = private households

Unternehmen (green) = businesses

Staat (yellow) = the state

Ausland (light blue) = foreign countries

All numbers in % of GDP.

I believe on the top two lines, private households and businesses, the numbers in the US won't be much different, only the bottom two will be reversed.

Where in Germany they have a huge export surplus allowing the state to have become a slight net saver recently while foreign countries take on ALL the debt, the US has a trade deficit meaning foreign countries are net savers and the state takes on ALL the debt.

Remember, overall the numbers ALWAYS add up to zero.

Concerning the underlying problem, there isn't really much of a difference, whether the own state takes on the debt or foreign countries do, the problem is always that net savings in private households and businesses REQUIRE some state to take on the debt.

In Europe they now have the problem that after foreign countries have taken on all the debt from German savers for the last 16 years, about ALL countries except of Germany itself are near bankrupt.

As a recipe against this, how foreign countries shall get out of their debt, the IMF as well as the European Union are now requesting that foreign countries cut spending and reduce their debt.

This allows the conclusion, foreign countries can be the required debtor for savings of private households and businesses only for a limited time, until they are bankrupt.

In the US, they never went for the option of shifting the debt onto foreign countries, therefore the problem that this would not work for long doesn't exist in the US, but the state is near bankrupt in the US, therefore the state itself has to cut spending and reduce debt.

The BIG problem arising now is the question: Who shall become the new debtor paying interest?

The numbers MUST add up to zero, so if the current debtors cut their debt, there has to be found another debtor, or savings would disappear at the same rate debt gets reduced.

If you go for the libertarian idea of abolishing the state, there are only two groups left in the game and that leaves only three options:

1) Private households must be forbidden to save for retirement and must be forced to take ever increasing amounts of loans for nothing but consumption.

2) Businesses must be forced to run an ever increasing deficit, through investing more in production than they make profit.

3) Neither of them can on average get any interest paid, meaning interest on loans must become illegal.

Even if you don't abolish the state, as long as you request the state to reduce its debt, you're facing the problem, that either private households or businesses must become on average net debtors, or neither of them could get any interest paid anymore.

This doesn't mean I would be in favor of one or another solution, this doesn't mean I would know the solution, it just means I see an unsolvable problem and I'm curious to find out, whether or not you guys have a solution to this.

As a final note let me add:

Heiner Flassbeck, a professor of economics in Germany, the author of many articles about economics in German and provider of the above graph suggests as the only possible solution, to confiscate capital from businesses and tax businesses to much, that they cannot survive without taking loans, investing and expanding, but he doesn't explain how that could be done without all businesses moving to China.

Mister Mister · January 5, 2016

I didn't follow all your reasoning, or read that closely, because you start from faulty premises, and come to conclusions that I reject on moral premises.

Anyone who has money, however much or little of it, wants to get interest paid on it.

Whether invested in hard assets like real estate or plain cash in the bank, the general idea is that wealth by itself, invested in the right way should gain value over time and the gain should be greater than the inflation of fiat money is.

If you build a house and find someone to rent it, you will set the rent to a level where in the long run you get a return on investment and if you build a factory to produce something, you will set the prices of your products to a level where in the long run you make a profit.

Or in short, no matter where you invest your money, you want interest paid on it.

Anyone who has money, wants to get interest paid on it? Nope...people pursue money for all kinds of reasons.
Wealth is not created by investment, wealth is created by acquiring resources from nature, and re-purposing them to have greater value and utility to others. Investment is ideally only a small part of a healthy economy, where people with excess capital can take a risk on people with good ideas who need capital. 100 years ago, finance made up about 5% of the American economy. Today it makes up 25% of the economy. This is due of course to the fiat money system, which it seems you are assuming in your model. In a free society with more stable currency, it wouldn't be possible for so many to make so much money just moving paper around. People would actually have to produce goods and services.

If you go for the libertarian idea of abolishing the state, there are only two groups left in the game and that leaves only three options:

1) Private households must be forbidden to save for retirement and must be forced to take ever increasing amounts of loans for nothing but consumption.

2) Businesses must be forced to run an ever increasing deficit, through investing more in production than they make profit.

3) Neither of them can on average get any interest paid, meaning interest on loans must become illegal.

First of all, I don't "go for the libertarian idea of abolishing the state", I argue that libertarian ethics are sound and valid and universal and that the state is immoral. But I don't see that you've proven that your 3 premises follow. How could you forbid someone to save for retirement, or force them to take loans, or to run a deficit, without violating the NAP? This just sounds like another scare story. No one knows what the world without a state would look like, though we can make some educated guesses. But I know almost by default that you are full of BS, you have no more idea what a free society would look like than I do. Using a bunch of graphs and intellectualizing to "prove" how horrible things would be in the absence of a coercive monopoly is just manipulation.

Heiner Flassbeck, a professor of economics in Germany, the author of many articles about economics in German and provider of the above graph suggests as the only possible solution, to confiscate capital from businesses and tax businesses to much, that they cannot survive without taking loans, investing and expanding, but he doesn't explain how that could be done without all businesses moving to China.

"Smart guy who writes many articles suggests AS THE ONLY POSSIBLE SOLUTION...", do you think that's a philosophical argument?

Thomasio · January 6, 2016

I didn't say what my opinion was, in fact I'm kinda trying to make up my mind what to think of all the different contradicting statements I hear from all sides.

On the one hand I find the calculation of Heiner Flassbeck quite convincing, when he points out that the total balance of all savings and all debt must always add up to zero, because his numbers clearly show they do just that.

(Those numbers aren't just some numbers he made up, but the official numbers he was working with, while he was a secretary of state for the German Ministry of Finance, they only kicked him out after he tried to warn them, that the German policy of eternal trade surplus would ruin the rest of Europe, which by now we know, it actually did.)

I bet if you look up the numbers for any other country, you will see the very same zero balance between all savings and all debt.

Depending on who puts the numbers together, you might find different values of who has how much, but in the overall total you will see a zero.

On the other hand I find Flassbeck's solution rather impossible.

The fact that everyone wants interest I don't doubt, because if that wasn't true there wouldn't be banks, but exclusively money services like Paypal.

Of course there are people doing something for the fun of it, but nobody invests in a business, if he doesn't expect to get more out of it than he puts in.

Whether or not the actual gain comes from launching your own business, or lending the money to another person who then launches a business, makes no difference, the fact stands, if it weren't for a return on investment, which is just another term for interest, nobody would launch a business.

The vast majority of private households bring their money to a bank, because they have only so small amounts, it isn't worth any other form of investment.

The bank then bundles a package and gives it as a loan to a debtor who pays interest on it, out of which the bank takes its fees and forwards a smaller interest to the savers.

If there was no interest paid by anyone and/or if no one needed a loan anymore, banks would have to cover their expenses by charging the savers a fee, which means savers wouldn't bring their money to a bank anymore, but store it at home, where it doesn't cost any and that would kick all banks out of business, because if nobody brings them the money they could lend to debtors, they cannot give any loans to potential debtors, especially if you abolish fiat money they could print.

No matter how small the interst rate, there has to be an interest rate or else banks couldn't exist.

So does your picture of a free society include the abolishion of the banking system, or how do you see banks survive?

IFFF you see banks survive through interest rates charged on loans, you're right back at square one, where all savings and all debt always add up to zero and with the state out of the picture you have to name the group, either private households or businesses that shall become the debtors.

LibertarianSocialist · January 6, 2016

You can't have compounding interest. Infinite exponential growth within a limited system is impossible.

You can have interest, but it cannot be truly compounding. It may try to be, but there must be ways of defeating the tendency toward monopolization. An economic system based on profit, rent and interest is quite sustainable so long as the level of exploitation does not exceed the point at which the subjected will revolt.

Most of the ancaps here believe such monopolizations are unsustainable, that the natural tendency within a capitalist society is for competition to drive down profits due to inefficiencies of scale. I assume most believe that most large financial institutions would be too bureaucratic so as to see their return on investments fall past a certain size. The direct result of this would be a constant shifting of profitability between sectors of society. A game of hot potato but with usury instead of the potato.

Also, a system of banking need not revolve around interest loans. It could provide other services and these services could be motivated by other means than return on interest.

Torero · January 6, 2016

I've coloured your text in red as I reached the maximum number of quote blocks...

On the one hand I find the calculation of Heiner Flassbeck quite convincing, when he points out that the total balance of all savings and all debt must always add up to zero, because his numbers clearly show they do just that.

I didn't say what my opinion was, in fact I'm kinda trying to make up my mind what to think of all the different contradicting statements I hear from all sides.

I see you're not an economist, but I won't hold that against you at all; I am light years away from an economist myself and like you I try to get my head around it. Overall I agree with RoseCodex's response (apart from the BS part, it's just thinking out loud from your side, which wouldn't be BS imo).

But your premise is that current economy is a zero-sum game. It isn't.

As far as my amateur mind understands state economics:

1 - money is created out of thin air, based on nothing more than "agreements" or "trust" - fiat currency

2 - states get money from 3 sources (1; the printing, 2; loans/bonds = leading to state slavery of the people, 3; taxation = taking money from the people)

3 - the money supply of states is thus endless as THEY are the powers who can make and control the laws, THEY have the guns to enforce them and THEY have the indoctrination to keep the people in line (using the media and education)

So, comparing a normal household (with incoming cash from services done (Arbeit) or gains from others (Erbung or Lotteries) and outgoing cash flow; payments) with a state is senseless; we cannot print money and we cannot enforce others to pay back loans we take.

(Those numbers aren't just some numbers he made up, but the official numbers he was working with, while he was a secretary of state for the German Ministry of Finance, they only kicked him out after he tried to warn them,

Oh, if this guy you bring up as an authority figure to back up claims is/was a politician, I would be VERY cautious with him. Politicians are professional liars. Don't take his "word" that this poor moral soul wanted to warn the system/others and he was the victim of his moral stance...

that the German policy of eternal trade surplus would ruin the rest of Europe, which by now we know, it actually did.)

No, the greatest country of Europe (and possibly the world), Germany, is destroyed by corrupt ponzi schemes to pay corrupt Goldman Sachs and related crooks (and then in the media it is framed on the "lazy Greeks") and especially by the European Union (and the ECB). Stefan has produced an excellent video: The Truth about the Euro, watch it; it is very well backed up by research; his sources are always there to check them.

I bet if you look up the numbers for any other country, you will see the very same zero balance between all savings and all debt.

I "bet" that is not the case. There is no zero balance. And savings? Which savings? The state has no savings; it runs on debt.

Depending on who puts the numbers together, you might find different values of who has how much, but in the overall total you will see a zero.

How is that "zero" created? What numbers are you putting together? I really don't follow you...

The fact that everyone wants interest I don't doubt, because if that wasn't true there wouldn't be banks, but exclusively money services like Paypal.

In your OP you are mixing up "interest" (generation of money on money due to loans) with "investment". It cannot be true that "everyone wants..." A, B, or X, as all people are different and have different demands. I think you can safely say that many people want investment if they have money. But investment =/= interest. Investment is tangible, interest is shifting numbers.

Of course there are people doing something for the fun of it, but nobody invests in a business, if he doesn't expect to get more out of it than he puts in.

Why are you so absolutist in your claims? "Nobody" and "everyone" are completely non-sensical terms. People are all different. In general of course most people would want to gain from money they invest. But not everyone and especially not everyone in the same way. Charity is widely spread and has a very low (if any) return on investment.

Whether or not the actual gain comes from launching your own business, or lending the money to another person who then launches a business, makes no difference,

It does make a difference. Lending money to others is based on trust. Trust can only come with moral, ethical behaviour. You wouldn't lend money to someone who does not comply with paying back the loan, or else it would be useless, self-destructive.

Trust is directly related to a free society. Forcing people to do things (or to not do them) makes people hesitant and suspicious. Force is directly the result of the immoral state system we have today. So as RoseCodex well explains; the basis; morality, actually makes this lending system better in a free society than in a society based on violence, like statism is.

the fact stands, if it weren't for a return on investment, which is just another term for interest, nobody would launch a business.

There are litterally millions of businesses in the world. They all work differently, have different ideas and outcomes.

Your statement "return on investment is just another term for interest" is not true. If you work for me and I lend you 10.000 euros to do a specialization training that costs you 1 year, I gain back more when you are a higher valued worker which I can charge my clients for. That does not involve interest. Interest would be; I lend you 10.000 euros and in 1 year time you have to pay me back 11.000 (10% interest). Nothing more, nothing less.

Me lending you 10.000 and getting back 10.000 after that year (the same amount I lend you) + a higher skilled employee does NOT involve interest, yet gives me a return on investment.

The vast majority of private households bring their money to a bank, because they have only so small amounts, it isn't worth any other form of investment.

I don't know about you, but I do not "bring my money to a bank"; my salary and other incoming cash is put into my bank account for safety (people not stealing it from under my mattress) and ease (I can just use my debit card for payments and take small amounts every time from ATMs).

The bank then bundles a package and gives it as a loan to a debtor who pays interest on it, out of which the bank takes its fees and forwards a smaller interest to the savers.

The banking system is a tad more complex than this. Watch some videos on YouTube about it.

If there was no interest paid by anyone and/or if no one needed a loan anymore, banks would have to cover their expenses by charging the savers a fee, which means savers wouldn't bring their money to a bank anymore, but store it at home, where it doesn't cost any and that would kick all banks out of business, because if nobody brings them the money they could lend to debtors, they cannot give any loans to potential debtors, especially if you abolish fiat money they could print.

You're running through it and I cannot follow.

If there was no interest paid by anyone, it would be harder to get credits as credits are given based on the system of interest, this far I get it and yes, I am struggling with the same question.

But see my example of the employee. Money is not purely interest-driven; it is investment-driven mostly (RoseCodex has pointed out that even in the corrupt crony-crooky-"capitalist" system of today 75% of the money is created by investments, not by interest).

No matter how small the interst rate, there has to be an interest rate or else banks couldn't exist.

A bank is just a place to store money (ideally, it doesn't work like that today of course). Why can a bank not exist like that? You have internet banks who have no office costs and very low other costs and they can have other businesses that can cover those (insurance, investments in real, tangible stuff, etc.).

So does your picture of a free society include the abolishion of the banking system, or how do you see banks survive?

To say "abolition" or "your picture of a free society" is using utopian trap propaganda. A stateless society is first small, it's not some "blueprint for the whole world", those are false claims done by statists who are afraid to have to behave morally and not violently.

IFFF you see banks survive through interest rates charged on loans, you're right back at square one, where all savings and all debt always add up to zero and with the state out of the picture you have to name the group, either private households or businesses that shall become the debtors.

No, without fiat currency (fake, printed money based on nothing), without bailouts (governments taking stolen money to prevent bankruptcies; corruption!) and without interest (creating money from money alone, no investments, nothing tangible, nothing real) the loan-debtor relation is much more simple than the currently flawed "system".

So going from that to "banks will have to steal money from people who saved money" is a completely ridiculous leap. And directly in contradiction with a free society where just that violent force is not there...

In the simple example I gave it DOES however mean that you have to spend your money WISELY. So yes, a free society would punish people who play tricks and games with someone elses money. I would say that's a good thing; now those tricks and games are actually facilitated AND encouraged even (debt is regarded a good thing).

Thomasio · January 6, 2016

@Torero

I guess it gets too long to go through all of it with quotes, also I agree with quite a lot of what you say, so let me focus on a few things.

The state cannot print money, only the FED can.

The FED is a privately owned bank, they give loans to the state and they charge the state interest on it.

If the state was printing money itself, the state wouldn't have any national debt.

The reason why it's organized like that is, because a state that prints its own money would easily cause runaway inflation, while a state that has to "ask" a private bank for a loan, will get that loan only if the private bank estimates they will get the loan paid back.

There's even loads of proof for this problem, in countries like Argentina where the state frequently prints itself into hyper inflation.

Therefore it's not the state stealing money, it's a private bank that charges interest on loans, forcing the state to charge taxes that raise the money required to pay the interest, or in other words, a private bank is stealing from the people through the help of (bribed) politicians.

It kinda puzzles me, how you can blame someone completely drowned in debt for stealing from you.

Isn't it absolutely obvious that the ones stealing are the ones who end up with your money in their hands?

If you would take the politicians out of the picture, the thieves won't go away and I'm quite sure they would find new ways to keep the stealing going, through media propaganda like global warming and other stuff.

To my mind the only way to stop the stealing would be politicians that cannot be corrupt, but I will admit, I don't have the slightest clue, how we could achieve that, because corruption is something like the foundation of politics.

Heiner Flassbeck never was a politician, he was (for a lack of a better word) an accountant and an advisor, supposed to check the numbers of the Ministry of Finance and give them advice of how to proceed.

He was the first pointing out that southern Europe would go bankrupt, but at first he mentioned that only internally within the Ministry.

He got kicked out of his job, because politicians didn't want to hear about his prediction, because they didn't like the reason he gave of why this was happening.

After that he went public with his predictions and he has become one of the harshest critics of politics, especially the economic policies of the state.

He has gained quite some popularity in Europe, because his predictions have come true near precisely.

Unfortunately almost all his work is in German, but here is a short part of his ideas in english, from a conference in Italy:

from time 15:45 on

If you look into the latest press releases from the IMF and compare to what the IMF said 20 years ago, you will see, even the IMF has recently reversed its ideas and now adopted most of Flassbeck's theories.

If you believe there could be a state in the world, where the total balance of the 4 groups, private households, businesses, state and foreign countries, savings and debt don't add up to zero, give me an example where it's different, I don't know of a single one.

The calculation is quite simple, if you have access to the data.

Take all the savings private households have anywhere, in investments like the stock market, account balance in the bank, pension plans and all that, subtract the debt they have for car loans, student loans, their homes and everythng and you get to a total for that group, which shows they are either net savers or net debtors.

Do the very same calculation for the other 3 groups, find out which group is a net saver and which group is a net debtor.

Add up all 4 groups and the result is zero.

I'm not going into your claim return on investment would be different from interest, I guess we won't get to common ground on that one, so let's skip that and talk about the things we might find common ground in.

Torero · January 6, 2016

@Torero

I guess it gets too long to go through all of it with quotes, also I agree with quite a lot of what you say, so let me focus on a few things.

The state cannot print money, only the FED can.

The FED is a privately owned bank, they give loans to the state and they charge the state interest on it.

Yes, I skipped that step because it complicates the story, but in essence it is irrelevant.

The FED (or any other Central Bank) is just as "private" as a "free market consultant" hired by the State only; especially in Germany and Holland you have thousands of those people hired as consultants by the State; they are labeled "private", but if your only client is the State, it's just a construction to keep the number of Beamten down, nothing more; in essence those employed 100% by the State are just State employees.

The "private" banks called "Central" are able to print money and the only force that allows them to do so (the force writing and controlling the laws) is the State. You and me cannot print money; counterfeiting. We are put in jail by the State for that. So if an entity is somehow granted that unique task, and the granting party is the State; in essence the State controls the money printing.

If the state was printing money itself, the state wouldn't have any national debt.

The reason why it's organized like that is, because a state that prints its own money would easily cause runaway inflation, while a state that has to "ask" a private bank for a loan, will get that loan only if the private bank estimates they will get the loan paid back.

There's even loads of proof for this problem, in countries like Argentina where the state frequently prints itself into hyper inflation.

So far so good, I'd say; not that I agree with the system, just go along with how you describe it.

Therefore it's not the state stealing money,

Huh? It is; through taxation (stealing in the present) and through state debt (stealing from next generations).

it's a private bank that charges interest on loans, forcing the state to charge taxes that raise the money required to pay the interest, or in other words, a private bank is stealing from the people through the help of (bribed) politicians.

No, the bank is not private. That's just a label. If the State is the only one that has the force to allow (or prevent) this scam, they are effectively the owners of this scheme.

It kinda puzzles me, how you can blame someone completely drowned in debt for stealing from you.

Isn't it absolutely obvious that the ones stealing are the ones who end up with your money in their hands?

That there are more forces involved than 1 does not make it less stealing. It makes it even more stealing, but from different "parties" (which, in essence, as explained above, are the same force anyway).

If you would take the politicians out of the picture, the thieves won't go away and I'm quite sure they would find new ways to keep the stealing going, through media propaganda like global warming and other stuff.

Whoo, this is jumping from the Earth to the Moon (talking about media propaganda...) and back. It's not as simple as "taking politicians out of the picture"; libertarianism/anarchism is also about having a non-centrally controlled financial system, even with competing currencies. Bitcoin is a neat example, I'd say.

To my mind the only way to stop the stealing would be politicians that cannot be corrupt, but I will admit, I don't have the slightest clue, how we could achieve that, because corruption is something like the foundation of politics.

So you want to keep "politicians" (politicians are nothing more than professional liars) exactly why?? Why do you want to keep the force alive? And then in your OP you "suggest" to steal people's savings??? And you consider that a decent, moral, efficient "solution"? :sick:

Heiner Flassbeck never was a politician, he was (for a lack of a better word) an accountant and an advisor, supposed to check the numbers of the Ministry of Finance and give them advice of how to proceed.

He was the first pointing out that southern Europe would go bankrupt, but at first he mentioned that only internally within the Ministry.

He got kicked out of his job, because politicians didn't want to hear about his prediction, because they didn't like the reason he gave of why this was happening.

After that he went public with his predictions and he has become one of the harshest critics of politics, especially the economic policies of the state.

I don't know the man, but you keep repeating state propaganda stories. Like he's some victim of some kind. Can't he just be part of the same corrupt clan and keep you following him by spreading such propaganda?

He has gained quite some popularity in Europe, because his predictions have come true near precisely.

Unfortunately almost all his work is in German, but here is a short part of his ideas in english, from a conference in Italy:

I have no problems understanding German, but thanks for the link in English. I will take a look at it.

People gain "popularity" all the time. "Popularity" is not an argument. That would make Justin Bieber suddenly some "musician" to take seriously... :unsure:

If you look into the latest press releases from the IMF and compare to what the IMF said 20 years ago, you will see, even the IMF has recently reversed its ideas and now adopted most of Flassbeck's theories.

You are taking the ffs IMF press releases as proof? Also there; try to separate the propaganda from the real stuff. Do you really think the IMF is open about everything they do? The Mass Media are an enormous force in the Indoctrination by the State. In everything. Why should the IMF be saved from that??

If you believe there could be a state in the world, where the total balance of the 4 groups, private households, businesses, state and foreign countries, savings and debt don't add up to zero, give me an example where it's different, I don't know of a single one.

Now you're reversing it. You claim something and then ask others to disprove your claims. That's not a fair debate; it's a fallacy. Either you give arguments for your claim, or you don't and it becomes a loose statement without any value.

The calculation is quite simple, if you have access to the data.

Take all the savings private households have anywhere, in investments like the stock market, account balance in the bank, pension plans and all that, subtract the debt they have for car loans, student loans, their homes and everythng and you get to a total for that group, which shows they are either net savers or net debtors.

Do the very same calculation for the other 3 groups, find out which group is a net saver and which group is a net debtor.

Add up all 4 groups and the result is zero.

No, because those "4 groups" you identify are not the same. The household economy works according to the calculation you describe. But states do not work like that; they do not have a zero sum game. There's so much debt in the world that there's no money available to pay that back. In a zero sum environment that would be impossible. Due to fiat currency that is possible.

I'm not going into your claim return on investment would be different from interest, I guess we won't get to common ground on that one, so let's skip that and talk about the things we might find common ground in.

My "claim"?? It's not my claim. It's a definition question. I may paraphrase to make it simpler for both you and myself, notorious NON-economists, but you cannot equate "investment" with "interest". You didn't even take a few minutes to see the difference from my simple 10.000 euro example, did you? :rolleyes:

Thomasio · January 6, 2016

Can I cut it a bit short? Even if it may skip a few points?

Just a few logic questions:

1) If the state steals from us, how come the state is near bankrupt?

If the state is just a bribed organization that steals on behalf of the ones who end up with the money in their hands, doesn't that make much more sense?

If the mafia kills someone by paying a professional killer, how much safer would the victim be if the killer gets arrested?

If the state steals only on behalf of others, if the state only executes the stealing, but forwards all the stolen money to others, then where do those others go, once you take the state out of the picture? You think they would quietly disappear?

2) Why did incredible loads of money printing in Japan, by the Japanese central bank not cause any inflation? Why has Japan had 25 years of continuous deflation and depression, while they have printed money like crazy, reaching a national debt today of almost 250% of GDP in 2015?

If money printing directly by the state causes hyper inflation, as we have seen several times in the last years in Argentina and other states like that, why didn't the same thing happen in Japan?

I believe, that's because a state that prints money in order to pay his employees, down to the lowest cleaning stuff in state owned offices actually hands out freely printed and therefore worthless paper, which those employees will use to buy goods and services, which allows the manufacturers to ask higher prices.

I believe, if money printing is taken away from the state, if an exclusive permission is given to a private bank, who can print money as much as they like, but can hand it out only in form of a loan, meaning they want it back, the actual amount of money going around in the population doesn't increase.

Just the opposite, with the interest the state has to pay on national debt, which it takes (steals) from tax payers, the money going around in the population decreases, people have less money in their pockets to buy goods and services, manufaturers have to cut prices to compete on a shrinking market, thus you get deflation out of money printing by a central bank.

3) I stated, the financial balance of all 4 groups in state always add up to zero.

You stated you don't think so.

I cannot give you the precise numbers for (how many are there these days?) all the countries in the world, but if it's quite common that these numbers don't add up to zero in a country, you should easily be able to find one, no?

I mean this is not an impossible proof like proving there is no god, which can't be done, theres a finite number of countries in the world, all of them have official numbers about their finances and their trade balances, so this is a solvable task, especially if you believe it should be the majority of countries where the numbers don't add up to zero.

Maybe you know that in our current money system, with central banks, absolutely ALL money is created through loans?

Central banks never hand out money for free, they give loans and they want it back (even though we all know, most of it will never be paid back).

Private banks create money that isn't even printed, out of thin air with every single loan they give to private people, for every car, every mortage, even credit cards are nothing else but money created out of thin air, that isn't even printed, that isn't influenced at all by the state or the central bank, but it's "only" loans and the banks want it back with interest.

On first view this means, banks giving credit out of thin air to private people will at first create some inflation, because people will have more money in their pockets to buy goods, but in the long run it creates deflation, because as soon as people have to pay back the interest on top of the original sum, they have less money in their pockets to buy goods from, which forces manufacturers to cut prices to compete in a shrinking market.

On second view this means, there cannot be any money in the world (other than the worthless paper from states that print money themselves) that doesn't consist of a creditor and a debtor with a total balance that evens out to zero.

No, I don't want to keep politicians, at least not the way the system works now.

As I said, I have no clue how it could be organized, but I strongly believe any kind of economy needs rules including an organization enforcing the rules.

I believe such an organization would be called government, but it definately shouldn't be anywhere near the corrupt politics we currently call government, because those are nothing more than the executive of the real criminals in the background.

I believe in plain anarchy without any government, 99% of peaceful and modest people couldn't exist in peace, because 1% of criminals would mess up everything, just like a few % of radical Muslims mess up the peaceful life of a vast majority of humans all over the world.

Mister Mister · January 7, 2016

Can I cut it a bit short? Even if it may skip a few points?

Just a few logic questions:

1) If the state steals from us, how come the state is near bankrupt?

If the state is just a bribed organization that steals on behalf of the ones who end up with the money in their hands, doesn't that make much more sense?

If the mafia kills someone by paying a professional killer, how much safer would the victim be if the killer gets arrested?

If the state steals only on behalf of others, if the state only executes the stealing, but forwards all the stolen money to others, then where do those others go, once you take the state out of the picture? You think they would quietly disappear?

Because the state is not a person. The people who have borrowed that money are not personally liable for that debt. That's the whole point. The State is not like a "professional killer" in your example, because even a hitman takes personal risk for the violence he commits. Also, a hitman doesn't have a legal monopoly on killing for hire. He likely competes with other hitmen, whome he probably respects, ironic as it may seem. But politicians and bureaucrats and even the enforcer class for the most part (especially in more peaceful, 1st world countries), faces little to no risk for the crimes they commit, AND they are the only group that can legally steal within the arbitrary borders of the defined state. This is because of the belief in the State, and the giant mechanisms which accumulate around it. It is this belief we are trying to undermine.

Saying "there are bad people and so we need a government to control them" is nonsense, it's an old argument against libertarianism, and it folds easily - this is not philosophy, it is an appeal to fear. As far as I can tell, I was right when I suspected that you are trying to push a scare story, to justify initiating force against people. Yes, these are challenges, they may be difficult, they may be scary, they may seem overwhelming to you. You and I are probably...most likely even, not smart or informed enough to solve these challenges on our own. Neither is Flassbeck, or Stef, or Ron Paul, or Paul Krugman, or Donald Trump, or Bernie Sanders, or anyone for that matter. But that doesn't mean you get to use force against other people.

Torero made a great analysis, with many brilliant points, but this one really cooked my noodle: "A stateless society is first small, it's not some "blueprint for the whole world", those are false claims done by statists who are afraid to have to behave morally and not violently." Brilliant.

So tell us, why is this important to you?

Thomasio · January 7, 2016

Because the state is not a person. The people who have borrowed that money are not personally liable for that debt. That's the whole point. The State is not like a "professional killer" in your example, because even a hitman takes personal risk for the violence he commits. Also, a hitman doesn't have a legal monopoly on killing for hire. He likely competes with other hitmen, whome he probably respects, ironic as it may seem. But politicians and bureaucrats and even the enforcer class for the most part (especially in more peaceful, 1st world countries), faces little to no risk for the crimes they commit, AND they are the only group that can legally steal within the arbitrary borders of the defined state. This is because of the belief in the State, and the giant mechanisms which accumulate around it. It is this belief we are trying to undermine.

I don't see how competition and the risk of getting caught for a hitman, vs a government that can commit criminal acts risk free, makes any difference on the fact that they are only the executors of the real criminals in the background.

If you arrest a hitman, the mafia will find themselves another hitman and if you arrest all the hitmen, the mafia will act on its own.

If you abolish the state, the super rich will find themselves another executor for their criminal behavior and if you abolish all possible executors, the super rich will act on their own.

That would have the advantage that we would finally clearly see who the real criminals are, but it wouldn't change anything on the fact that they will keep going with the very same thing they have been doing for centuries.

The rich have never had any kind of problem keeping their stealing going, whether in anarchic environments like countries in Africa with long lasting civil wars, or in monarchies like France up to the 18th century, or in communism in Russia, or in democracies nowadays, during times of war even worse than during times of peace, in the lawless society of the old wild west same as in modern times with loads of laws, at the most the executors of the crimes got beheaded at the end of a civil war, but the true thieves have never been caught, let alone prosecuted.

What makes you think that another round of abolishing (if not beheading) the executors could bring an end to the eternal problem of rich people exploiting poor people?

What conslusion do you draw out of the fact that literally ALL super rich people (the actual real beneficiaries of the stealing) are highly in favor of abolishing government?

Do you believe they suddenly found their moral side and are now voting against their own criminal behavior, or is it more likely that they expect to have an easier time of even more stealing without a government in between that causes them huge expenses through all the bribery they cost?

Torero · January 7, 2016

I see a lot of left-wing propaganda mambo-jambo, Thomasio.

Some points highlighted:

- you jump from "the super rich" (I'd call them the Elites; the Rothschilds, Rockefellers, Romanovs, etc. etc.; the families with a lot of background influence) to "the rich". That is a common trick from left-wing professional liars to make people who gain a bit less than others start to attack people who work hard/have good educations.

Like the Hartz IV-Spießer criticizing the doctors, engineers and entrepreneurs who actually did something more with their lives than watching crap on TV and drinking cheap beers....

- you state that "the rich" always ("eternal"; another absolutism) "exploits" "the poor".

First of all; the poor in the past were people without reading or writing skills, very little means of defense or travel/emigration options and very importantly; no knowledge of or access to philosophy. The world has changed dramatically since then and anyone now who is labeled "poor" can have those things. Education used to be """for free""" in Germany, is that still the case? So also money-wise it's not like all the centuries before.

Second point; what do you mean by "exploitation"? Is offering a job and a salary exploitation? Is doing business exploitation? What is exploitation is the crony-"capitalist" system; if you fail in your business (like banks), you run to the state to help you out exploiting other people who have to pay for those bail-outs, corruption and other madness.

And you stay blind for arguments. You keep saying "abolishing the state" like it's some world-wide utopian idea to live peacefully based on negotiation and not force. That shows you're just repeating propaganda tactics and are not interested in a real debate.

I've watched the video you posted by the way. Mildly interesting slides (unreadable from the distance) and some good comments and some very bad comments (advocating more statism, wanting to "manage" the monetary "union" and not dismantling it and more). But I don't understand why you posted this fragment? Is there really nothing else in English of this guy? Then post a good video in German please. At least one that supports your statements about the man.

And especially on the "we have to take the savings of people to pay for the debt [not created by those people]" part (I am paraphrasing, but according those lines you started the conflict in your very own topic).

That is; if you want a real debate and not just repetitive returns to rhetoric responses.

Mister Mister · January 7, 2016

What makes you think that another round of abolishing (if not beheading) the executors could bring an end to the eternal problem of rich people exploiting poor people?

What conslusion do you draw out of the fact that literally ALL super rich people (the actual real beneficiaries of the stealing) are highly in favor of abolishing government?

Do you believe they suddenly found their moral side and are now voting against their own criminal behavior, or is it more likely that they expect to have an easier time of even more stealing without a government in between that causes them huge expenses through all the bribery they cost?

Because I'm not advocating for, or trying to "abolish" anything. You frame it that way because you think like a central planner, not a philosopher. The only way is to spread rationality and peace and win-win negotiation, and build the voluntary networks and institutions that will eventually replace the coercive ones whose days are numbered. This is nothing at all like a Civil War in Africa. It is more like the Renaissance or Enlightment or Scientific Revolution, a change in culture, a change in ideas, so that ways of thinking and doing things in the past, which was assumed to be the way it is, are no longer socially possible.

But I can just as easily flip it on you, and ask, what makes you think that another attempt to turn the coercive, violent, hierarchical power of the State towards "serving the people" won't end in more bloodshed and enslavement and imprisonment and impoverishment and misery and debt?

"What conslusion do you draw out of the fact that literally ALL super rich people (the actual real beneficiaries of the stealing) are highly in favor of abolishing government?" Can you point to proof of this? Just going through my head, the Rothschilds, the Gates, Warren Buffett, George Soros, even the Kochs, all big-time Statists. But if this is true, it suggest that these super rich people actually have way less power than you think they do, because governments around the world are increasing in power. I'm not sure what reality you're living in.

Thomasio · January 7, 2016

I see a lot of left-wing propaganda mambo-jambo, Thomasio.

I would have never even mentioned any of that, if it hadn't been for THIS video

https://board.freedomainradio.com/topic/46102-the-new-pyramid/

upvoted 4 times and even against my questions underneath defended as if it was the common point of view in this forum.

This video shows precisely the exploitation of producers by takers, perfectly showing that producers are relatively poor working people, while takers are rich people, company owners, etc.

I may have worded that a bit too small, but of course I ment those shown in the pyramid on the very top.

I was VERY surprised finding this video in this forum without 50 downvotes underneath, because it clearly presents the core ideas of socialism.

Despite the fact communism and other systems claim to be socialism, they are not, the idea of worker owned manufacturing, THAT is the core of socialism.

- you jump from "the super rich" ....

My bad, sorry, wasn't intentional, just replace any instance of "rich" or "super rich" in my post by "thieves", in the same sense the above video calls them "takers".

- you state that "the rich" always ("eternal"; another absolutism) "exploits" "the poor".

That's what the above video says, I assumed it was common ground in this forum, otherwise I wouldn't have used that argument.

Torero · January 7, 2016

Yes, that's what I noticed so many times already.

You are generalizing people, religious people (the other discussion we met), businesses, "thieves" (like someone who is "rich" -compared to whom?- is automatically a thief or a "taker") and even on a discussion platform where clearly many different individuals are voicing their thoughts "a common point of view" or "common ground"... :rolleyes:

People are all different.

shirgall · January 7, 2016

People are all different.

I can tolerate this generalization, though: "People respond to incentives"

rosencrantz · January 7, 2016

To comment on a general topic. Yes, the economic is a zero sum game. If you create money out of thin air you can either give it to somebody for free or lend it at an interest. In both cases, no additional money was created because the equations on both sides add up to 0. The sum of all transactions when done in double bookkeeping has to be 0 by definiton.

For more, see https://en.wikipedia.org/wiki/Balances_Mechanics

Thomasio · January 8, 2016

To comment on a general topic. Yes, the economic is a zero sum game. If you create money out of thin air you can either give it to somebody for free or lend it at an interest. In both cases, no additional money was created because the equations on both sides add up to 0. The sum of all transactions when done in double bookkeeping has to be 0 by definiton.

For more, see https://en.wikipedia.org/wiki/Balances_Mechanics

Thanks for that one, finally someone supporting my view.

Now based on this (can we call if a fact now?) theory, it's a must that for every penny of debt the state has, there is a creditor owning it and expecting it back with interest.

If the state as a major debtor shall be taken out of the picture, WHO shall in the future take on the debt the state has taken on so far?

Or do you plan on reducing savings as well and make it illegal for savers to accumulate new savings?

I mean it's quite logic that private households aside of short term loans for a car or a house, naturally save more money than they take on debt, putting part of their income aside, for bad times or for retirement or for their children, so private households will always be net savers.

Meaning with the state out of the picture, businesses have to become net debtors or else the whole idea of taking the state out cannot work.

Big problem is, how to you transform businesses that are net savers today into net debtors?

LibertarianSocialist · January 8, 2016

Thanks for that one, finally someone supporting my view.

Now based on this (can we call if a fact now?) theory, it's a must that for every penny of debt the state has, there is a creditor owning it and expecting it back with interest.

If the state as a major debtor shall be taken out of the picture, WHO shall in the future take on the debt the state has taken on so far?

Or do you plan on reducing savings as well and make it illegal for savers to accumulate new savings?

I mean it's quite logic that private households aside of short term loans for a car or a house, naturally save more money than they take on debt, putting part of their income aside, for bad times or for retirement or for their children, so private households will always be net savers.

Meaning with the state out of the picture, businesses have to become net debtors or else the whole idea of taking the state out cannot work.

Big problem is, how to you transform businesses that are net savers today into net debtors?

I'm having a hard time figuring out why it is preferable for the state to own the debt instead of another class (or all classes)? The state in itself only takes that money from the producers anyway, the burden always rests on them.

The producers can support a class of people living off interest and also maintain a surplus of wealth, as long as this class is small enough to not be an unsustainable burden.

Even if everyone uses their wealth to get interest, it is all relative. A worker may get a 3% return on his savings while the bank gets 4%, the construction company charges 5% interest on their services. That same worker must pay 5% interest on his purchases, he derives interest, yes, but in reality he is still in negative interest. Even if he has money stored up and doesn't need a loan, the owning class still has a sufficient monopoly to charge interest such as through surplus labour, rents and inflated item prices. Profit, rent and interest are one and the same.

As long as the receivers of interest spend or lose their fortunes it is sustainable.

Also, care to tell me your positions regards political economy? It still eludes me.

rosencrantz · January 8, 2016

If the state as a major debtor shall be taken out of the picture, WHO shall in the future take on the debt the state has taken on so far?

Private banks loan much more money into existence than the state.

I mean it's quite logic that private households aside of short term loans for a car or a house, naturally save more money than they take on debt, putting part of their income aside, for bad times or for retirement or for their children, so private households will always be net savers.

That's right, but when you deposit money at a bank, this money is used as a collateral by the bank to create much more money than is put in. If a bank gets 100€ say, it keeps 10€ as a safety while loaning out 90€.

Thomasio · January 8, 2016

I'm having a hard time figuring out why it is preferable for the state to own the debt instead of another class (or all classes)? The state in itself only takes that money from the producers anyway, the burden always rests on them.

It isn't.

It's just the logic consequence of allowing private households to make enough money to be net savers and allowing businesses to make so much profit that even after investments they are still net savers.

Since the balance must add up to zero, that leaves only the state ending up with the debt.

Of course it would be highly preferable if one of the other groups became the debtors, but what do you want to do to achieve that?

You would have to either reduce the income of private households, either through wage cuts or tax increase, so much that they cannot survive without taking on debt, or reduce the profit of businesses, either through lowering prices or higher taxes, until they are forced to take on debt.

As long as you don't do either of that, the state will automatically accumulate debt.

Logic, if you abolish the state, even though you might still not intend to enforce either of the other options of who shall become a debtor, forces of plain logic will lead to one or the other.

Private banks loan much more money into existence than the state.

Doesn't make any kind of difference.

A loan still consist of a creditor and a debtor, and their total balance is zero.

As long as you cannot make either of the two groups, private households or businesses net debtors, the state is the only group in the game that will end up with the debt and if you take out the state one of the other two groups necessary must become a net debtor.

rosencrantz · January 8, 2016

As long as you cannot make either of the two groups, private households or businesses net debtors, the state is the only group in the game that will end up with the debt and if you take out the state one of the other two groups necessary must become a net debtor.

This is only the case if there is a normal distribution of wealth. In reality, wealth is distributed following the power law. There is a bell curve distribution for height. Most Americans have a height of 5,8 feet with one standard deviation above and below. This also means there is not one single person who is say 16 feet tall. With wealth following the power distribution there are no such restrictions. Bill Gates is the equivalent of a 16 feet giant coming into a room and skewing the statistical data.

That is an emergent feature of a (relatively) free trade system, that is set up as a network. Those companies or persons that get their revenue from many other persons or companies and that spend their money on a relatively smaller amount of people or companies become richer. It is much more likely that I buy something Bill Gates offers than the reverse. Since most people get their income from a single source (their employer) and spend it on many several sources (their landlord, food, entertainment) there is a natural imbalance towards few getting richer pretty fast.

This natural imbalance makes debt necessary that comes either directly from banks or from rich people / companies lending it to you. To make some money as a company you want to have you have to spend a lot of money first, which is loaned into existence basically.

Thomasio · January 8, 2016

Also, care to tell me your positions regards political economy? It still eludes me.

That's a tricky one, because I'm just a typical private household.

Married, we own a house and a car, we have some savings for retirement, but we can already predict, by the time we reach our statistical life expectancy, there will be nothing left.

I'm no economist, but I'm trying to make up my mind.

That's why I'm engaging in discussions like this one, because I'm trying to get information from ALL sides, where I then try to make up my own opinion out of a summary of all of it.

I'm a programmer, so I have a deep sense for logic, meaning I can't overlook logic consequences, such as the fact that all savings require a debtor and increasing savings requires finding additional debtors.

I'm a huge fan of statistics and probability calculation and I'm aware of facts like there cannot be infinite growth in a finite world.

I've become a fan of Heiner Flassbeck, not because of the solutions he proposes, but because of the statistical data he presents.

So what I'm doing is, I take his statistics and apply my own logic to them, which leads me to a result way different from his predictions.

But since you asked specifically for my position, I'll give you a few examples of my current points of view.

I'm a big climate change skeptic, I believe even IFF humans cause some part of the natural changes in climate, after all humans are part of nature, so some changes in about everything on this planet are naturally to be expected, or in short, advancing and adjusting to changes makes far more sense than trying to preserve the past.

At same time I'm very strongly against air pollution, where I believe industrial over production is the source of the problem.

Given the fact that roughly 50% of all cars produced in the world are not sellable because there are no customers needing or wanting them, I would strongly recommend to abolish 50% of the worlds automobile industry.

The same holds true for about anything else humans produce, we have a gigantic over production of absolutely everything, including the world producing twice as much food as 7 billion people can eat, so I would strongly recommend to abolish a big part of food and all other production as well.

But I do realize, in a free capitalistic market, that's just not possible, because in a market where yet another automobile manufacturer can enter the market anytime, if only he has some kind of business model how he can compete and grab a share of the market, the over production of absolutely everything will permanently become bigger and bigger, while air pollution will automatically become worse in the process.

The logic idea of competition driving the weakest out of the market, in real life aparently doesn't hold, else half of the worlds car manufacturers should be gone by now.

It's absolutely clear by now, while almost all of the big car manufacturers produce twice as many cars as they can sell, all prices of all cars in the world reflect the fact that the manufacturers have twice the expenses.

Smaller manufacturers have higher expenses due to less industrialized production, so they can't be a competition for the big ones.

Or in other words, IFF we would abolish 50% of all car manufacturing, prices of all industrially produced cars would get cut in half and we wouldn't have one single car less in the streets.

The free market doesn't exist there, simply because all major players in the game do the very same thing and the customers have no choice but pay the double price, because a competition that would produce at the low cost of industrialized production but limit their production to the amount of cars they can actually sell doesn't exist.

The next logic step is, if we attempt to abolish about 1/2 of the worlds industry, simply because it isn't needed, that would lay off 1/2 of the worlds workers.

Since we already have huge loads of unemployed workers all over the world, cutting production and laying off even more workers would definately collapse the capitalist system.

I completely dismiss the idea of the diligent becoming successful and the lazy remaing poor.

It's a plain logic fact that if the world produces twice as much stuff as needed, while millions and millions of workers have no jobs, there's no point in some people working harder to make more money, because no matter who makes it out of poverty, he will never become an additional worker, he will only replace someone else and the overall unemployment rate on a global scale remains the same.

Good example is Germany within the European Union.

While Germany has cut wages, has become very competitive and has created jobs, Greece, Portugal, Spain, Italy, France and more other countries now have more unemployed workers than ever before.

Now Germany suggests to those bankrupt states in southern Europe, they must become competitive as well, cut wages, create jobs and pay their debt.

But competition is a relative concept, even IFF Greece, Portugal, Spain, Italy, France and all the other countries would create jobs now, that wouldn't be new jobs, they would only recapture the jobs that have previously been moved to Germany, meaning if southern Europe gains competitiveness, Germany would lose competitiveness, lose jobs and the overall unemployment numbers would remain the same.

In the end, the only result of "everyone becoming more competitive", which is a logical impossibility, means exclusively that all workers in all countries produce more goods for lower wages, which in return means, private consumers have less money in their pockets to buy what manufacturers produce, thus sales numbers will drop, over production will increase and we will end up in a new great depression.

Given these thoughts, I currently believe, the only way to give the poor a chance to enter the labor force is a limitation by law of how many hours a single person can work.

If we would enforce a worldwide law, limiting the working hours of a single person to 20 hours a week or something like that, for the time being we would automatically get rid of most of the huge over production and almost all people would receive their fair chance to enter the labor market while at same time all workers would have far less stress.

It would still leave enough competition in the market, so the diligent would make more money than the lazy, but at least there wouldn't be a need for a welfare state anymore, simply because almost everyone would have access to some kind of job and a demand that almost matches the available offer would result in wages a worker can actually afford a life from.

But of course it would mean, the super diligent of today, who manage to compete in a market that will ALWAYS have millions of unemployed, would lose half of their income and since so far these diligent ones are still a slight majority in democratic countries, plus the fact that the super rich thieves on top of the pyramid have no intention or interest in raising wages, I'm quite sure, this will never be done.

But then ...... "never" is once again one of my (I admit I tend to do that) exaggerations.

I believe the current capitalistic system isn't sustainable, it will collapse sooner or later and the later it collapses, the harder it will crash.

Not sure what will happen afterwards, but I'm afraid it won't ven matter, because the fact that today hardly anyone attempts to solve the problems, while the problems keep growing exponentially, will lead to a completely uncontrolled crash in which society as we know it will completely vanish.

A German journalist and writer, named Ulrike Herrmann, predicts this even worse than I do.

She has written a book about it, where she predicts, capitalism will crash so badly and uncontrolled that almost all our todays technology will become useless, she believes humanity will literally be thrown back into the stone age.

Her presentation of the book (in German) you can find here:

Thomasio · January 8, 2016

To make some money as a company you want to have you have to spend a lot of money first, which is loaned into existence basically.

I couldn't have said it any better.

But doesn't this mean debtors have to be found?

Where do you find a debtor willing to take the loans in a stateless society where private households are net savers, businesses are net savers as well and a 3rd party doesn't exist?

I can (once again) point you to the video of Heiner Flassbeck, showing the distribution of savings and debt as it was in the 60s.

From time 41:20 to 42:30 he shows, how the state and foreign countries used to be more or less neutral, as long as businesses where the natural counterpart debtors to savings of private households.

In such an environment, there is no problem taking the state out.

The big problem is, how do you get the big corporations to become net debtors again, after they have moved production to China and gained power over the media, running propaganda for less taxes on businesses so they can make more profit without needing loans?

Mister Mister · January 9, 2016

Sorry Thomasio, I'm a little annoyed, you seemed to skip over a criticism I had of something you said that I think is quite significant. You said that "literally all the super rich are pushing for the abolition of government". I asked for proof. But as I said, even if that is true, how do you explain the fact that all governments around the world are generally increasing in power? Or do you disagree even with that?) So either what you said isn't true, or the rich are not as powerful as you seem to be indicating...unless you think current trends are heading for an anarchist society in the near future.

I think you ought to prove or recant that statement. If the opposite is true, as it seems, that most high-profile wealthy people are Statists of one form or another (usually globalist eco-fascists like Bill Gates), then does that affect your views at all?

Thomasio · January 9, 2016

Sorry Thomasio, I'm a little annoyed, you seemed to skip over a criticism I had of something you said that I think is quite significant. You said that "literally all the super rich are pushing for the abolition of government". I asked for proof. But as I said, even if that is true, how do you explain the fact that all governments around the world are generally increasing in power? Or do you disagree even with that?) So either what you said isn't true, or the rich are not as powerful as you seem to be indicating...unless you think current trends are heading for an anarchist society in the near future.

I think you ought to prove or recant that statement. If the opposite is true, as it seems, that most high-profile wealthy people are Statists of one form or another (usually globalist eco-fascists like Bill Gates), then does that affect your views at all?

Ok, I will admit, I cannot bring you links to ALL the super rich, but here is one good example:

https://en.wikipedia.org/wiki/Political_activities_of_the_Koch_brothers

According to this, they are "significant financial contributions to libertarian", "advocated for the abolition of Social Security" and all that.

Either way, the rest of your question is somewhat independent from this.

Of course I do not support government as it is today, because those are in fact what libertarians describe them to be, the executors of the super rich, they get themselves a bribe for helping the super rich to steal from the workers.

Of course I don't want this to keep going, of course I want to kick out 100% of all current politicians, send them to hell, confiscate all their property and revoke all their pensions, because they do not rightfully or at least not morally correctly own any of it.

The problem I'm having with libertarians is, if you "only" abolish the state, but leave the real criminals their stolen wealth, they will use their money power to quickly find themselves another executor and keep the stealing going.

I believe the super rich are in favor of abolishing the state, because they already have an idea, how they could find another executor that does the job way cheaper than the bribery of the political class costs.

So to my mind, we would not only have to abolish the current political system, but also have to abolish the super rich class from the top of the pyramid, confiscate all their stolen wealth and send them to hell and the very same thing we would have to do with all the media that currrently runs the propaganda of the super rich.

Last but not least, I don't think a plain anarchy could provide a stable and fair system, where then the workers could enjoy the fruits of their labor.

As discussed the last days under current events, the problem with muslim immigration and the riots they create has to be prevented, there has to be someone or something that keeps these problems away from the workers and I don't think individual workers caring exclusively for their own property could prevent a mass immigration into the country.

I believe I said already, I have no clue, how we could organize that without getting into a bribed political class and of course we have to make sure, whatever system we install to keep peace and social behavior within a morally correct range, must be free of any temptation to bribery, but I don't think a system of everybody caring for himself and somehow everybody will automatically behave will do the trick.

In short: I do NOT want to keep the government as it is, in fact I do NOT want one single of todays politicians to keep his job, I want them ALL gone, but I do believe, SOME kind of organization is required, which by definition would be called government, even though it should look and work way different from what we have today and even though I have no clue how we could organize it.

Matthew Ed Moran · January 10, 2016

I think the whole "numbers must add up to zero" thing is just an accounting method. The economics of the situation simply means there are less resources available than thought before, and given the expectation of increasing wealth, capital will command a higher interest rate, which will increase savings on net. This is because more wealth is accumulated by simply deferring consumption. I don't follow how savings necessitates debt (I think that's what you said, correct me if I'm wrong). And I think you have mis-characterized what interest is, at least according to the count of Mises, who says that interest is the extent to which we prefer consumption in the future rather than the present. Profit can be made on loans, but to make a profit on a loan you must use the resources in a way that provides more utility in the future compared to simply consuming the capital. Capital needs to be maintained, and so there is always a rate of interest, even if it's marginally infinitesimal. But what modern governments do is consume capital like crazy by debasing the currency, at which point we will be in a disaster situation (relatively) since the capital base and productivity for current consumption of the economy will crumble exponentially. I believe this is what happened in Rome, which led to the dark ages, and basically all other governments throughout modern history.

Thomasio · January 10, 2016

Whether you call it bookkeeping or accounting or whatever, doesn't change the fact, the sum of all savings must equal the sum of all debt.

Wealth is created by extending the amount of money in circulation at the same rate production increases, so that at all times in the process the same amount of money in circulation stand against the same amount of products, so that prices remain stable.

If more money is put into circulation (not just printed) than productivity increases, you get inflation, if productivity grows faster than money enters the circulation, you get deflation.

Money printing by itself doesn't cause any inflation or deflation, only the act of putting money into circulation does.

Therefore the initial printing and handing out of money to the population generates inflation, but as long as all the handing out is always exclusively done as a loan which has to be paid back after a while, upon the end of paying back the loan, due to the interest the debtor has to pay on top of the original sum, money gets taken out of circulation permanently, therefore you get eternal deflation, unless you keep printing more new money and push it into the market than all the paid debt plus all the added interest paid takes out.

Not sure if I got that worded clear, so lets make an example:

I know someone will now try to declare my point false, because an import/export imbalance can shifted properties, but this is just an example for a CLOSED economy.

Of course any specific part of an economy can outcompete another part, so that one part actually gains a surplus, but that always means, there will be some other part having the same deficit and if you keep that going for a while, the surplus country will get wealthier all the time, but as soon as the deficit countries are bankrupt, the surplus country cannot have a surplus anymore and their export based economy will collapse, which is what Germany and China experience these days.

After all the world as a whole IS a closed economy, so imagine the following example represents the whole world.

Nobody says the US couldn't outcompete Mexico or vice versa, nobody says Europe couldn't outcompete the middle east, but overall the balances add up to zero.

Let's say we abolish fiat currency, we go for a gold standard and an imaginary closed economy has precisely 1 ton of gold in circulation, 1000 people living in that country, owning 1kg of gold each.

They produce all goods and services needed for the people and prices by the law of a free market grant that the sum of all goods and services equals 1 ton of gold.

Now imagine, every year, the population grows by a few %, or automation and other improvements in production allow the economy to produce a few % more goods.

If there is no gold added to the economy, prices of goods and services will fall every year, simply because the same amount of gold has to buy an increasing amount of goods and services.

If the economy has a gold mine, that digs up a bit of gold every year, then

- if the amount of gold found per year is in percent of the existing gold equal to the increase in productivity, all prices remain stable, that's the ideal situation a perfect financial system would have.

- if less gold is found, prices decrease.

- if more gold is found, prices increase.

Now imagine some people trying to save some gold, put it in a safe, store it, for retirement or something.

The very first, near instant effect would be, part of all goods and services can't be sold anymore, simply because the gold in circulation at current prices isn't enough to buy all goods and services.

Next, all prices of all goods and services will fall, because a lower amount of available gold now has to buy all the goods and services.

Now imagine, those savers accumulate savings for a while, then they begin to give out loans to those who want to build something, launch a new company or something.

At first, all prices would increase, because the gold in circulation increases.

Shortly after that, production increases more than ever before, because the new factory built from the borrowed money pushes out additional products, which leads to all prices of all goods and services falling faster than they raised.

Shortly after that the loan gets paid back with interest, the gold in circulation gets reduced again and all prices fall even deeper.

From now on the creditor doesn't even have to give loans for all the gold he owns, he can keep the interest from the first round, give the same loan as before again and do another round of deflating prices.

This is unavoidable, unless you dig up and throw into circulation more gold than the total amount of all loans charge for interest AND the total amount of increasing productivity is, you end up in eternal deflation.

Fairly obvious, deflation isn't a bad thing, it's actually pretty good for private customers, if their shopping becomes cheaper all the time, but it's the death of an interest based financial system.

Also it's obvious that the increasing productivity will increase wealth for everybody over time, as long as you let all people in the country participate in the money circulation.

If you lay off people to cut production to keep prices up, you take people out of the chain, they become poor and begin to depend on welfare or charity, which is what happens worldwide these days.

Also it's obvious that those who save some gold and give loans, begin an eternal accumulation of more and more gold, which ultimately means an exponential accumulation of gold in the hands of the creditors, where anyone who has ever checked out what "exponential" means, can figure out, that at a predictable time in the future, they will own ALL gold except of the newly found gold.

But as soon as the creditors have accumulated so much gold, that the gold remaining in circulation isn't enough anymore to pay the interest on the loans, the system collapses.

This is the point, the financial system of the world as a whole is at right now.

Only due to the fact that fiat money can be printed in unlimited amounts (which is what central banks do) our financial system hasn't collapsed yet, but this collapse is dead ahead and predictable.

The neccessary money printing, just to keep up with the exponential growing interest creditors charge has by now reached astronomical levels, it just can't go on for long anymore.

Now if you want to point out with a gold standard that wouldn't happen, you're only partially right.

You're right as far as the system couldn't pump up the gigantic bubbles we have in real estate and stock market, it would collapse far earlier, but it would collapse just as well.

LibertarianSocialist · January 10, 2016

Just because households are net savers does not necessarily preclude a system in which they are the primary debtors in society. As I mentioned before, interest bears many forms, and it is the sum of all these forms (interest on money but one form) that dictates the real balance of interest in society.

Even if the majority of households are creditors, a few (though usually quite a significant portion of the underclass)will be financial debtors. This is sufficient for a class of parasites, and needn't entail the entirety of the households, though it would be less than if they were all entailed.

It is also important to remember degrees. The working class has a significant portion of its wealth taken through interest as surplus labour, this is vastly more than any amount of interest gained through savings in a lifetime. Even if every working class household had positive savings, and each leveraged interest, they could still be net debtors in other realms of interest.

Say for instance group A owns all the gold coins, which they receive 3% interest for loaning, while group B owns all the houses, which they receive 4% rent on. Group A are net savers (at least financially) and also net debtors (on the whole). Group B are the parasite class, if only by 1% (I will forgive them ).

What were the conditions which caused businesses to be net debtors? This sounds very interesting, should I watch the video?

LibertarianSocialist · January 10, 2016

Countries with a trade surplus do not necessarily lose that surplus when deficit countries go bankrupt. They do so because those countries are no longer willing to honour the debt. They may say they can't because no money, but they could pay back with goods or services (however unlikely), if the creditor country was ready to enforce that request. In essence, the imaginary promise of future goods has been reneged.

Good rest of post, really clear. I get what you are talking about now.

But seriously, shush up about the whole printing money thing or else we'll never be free! Anyway politicians and big business are too greedy for that, they will pursue their greed unto their own undoing.

Also, how does the state stop the deflationary spiral you mentioned? If the state becomes the debtor, wouldn't this be the same? The only difference would be this thing we call the state steals or prints money as a redistributive and anti deflationary measure. Couldn't alternative organizations do that? (Leaving aside that they are arguably also states).

Thomasio · January 10, 2016

What were the conditions which caused businesses to be net debtors? This sounds very interesting, should I watch the video?

Wages were increasing by 8-10% per year, generating an extreme increase in demand for goods, which producers could satisfy only through continuous expansion of production, which required loans to build factories, which generated more jobs, which generated even more demand.

An upwards spiral, where near full employment left employers no option but raise wages to have any workers at all, which in return generated the demand for more workers.

As soon as wages stopped increasing in the end of the 70s (because employers had managed to buy the political class as well as the unions and bribed them into stopping the wage increase), expansion of businesses stopped as well and that's the beginning of mass unemployment, which has led us to todays downwards spiral in which cutting wages leads to less demand, leads to closing factories and laying off workers.

They may say they can't because no money, but they could pay back with goods or services .....

You don't see a contradiction here?

If a country imports more than they export, they have a deficit.

If a country pays debt back with goods and services, that means they become a surplus country, because they then export more than they import.

But that neccessary requires that not only the deficit country converts to a surplus country, but also the surplus country becomes a deficit country.

In other words, a country that bases it's economy on an export surplus can never cash in on their savings, unless they cut their own over production underneath the level of consumption of their own people.

As long as a surplus country keeps the surplus, they will accumulate savings indefinately, at the most they might shift the debt from one debtor to another, but over all they keep accumulating credit.

When after the first world war Germany was supposed to pay the damages they had caused throughout the world, while at same time the winners of the war did everything they could to prevent Germany from rebuilding a trade surplus, it was John Maynard Keynes who pointed out, that Germany cannot pay anything, as long as the others do not allow them to have a trade surplus, but the world didn't listen, they kept requesting Germany shall pay, but still have a deficit and the direct result was the 2nd world war.

After the 2nd world war, Germany was again supposed to pay damages, but this time around Germany was allowed to build up a trade surplus, the last payment where Germany paid back their debt from the war was quite recently, but they were able to pay, only and exclusively, because they were allowed to have a trade surplus.

In other words, as long as Germany keeps this gigantic surplus they have built up over the last 50 years, together with China they will ruin the whole rest of the world, simply because the only way how the rest of the world could ever pay back anything would be, if Germany and China became deficit countries.

LibertarianSocialist · January 10, 2016

Cool, thanks for explaining. But wouldn't such business debt require continuous economic growth? It seems like the limit to such a system would be the producers receiving most of their product, causing a profit squeeze for the capitalists, with its attendant instability, and reverting to a business saving model once near this ceiling once growth slows down.

Those businesses only take loans if they think it will give them an overall profit eventually.

Sorry, I misinterpreted your point about export oriented countries. I thought you referring to the consequent debt of trade imbalances, not the trade imbalance itself. Yet at the same time you must be if you are talking about how money is removed from circulation?

The surplus country needn't cut production to ensure a trade surplus. Debtor countries can increase the rate of exploitation or shift production from domestic consumption to export so as to become net exporters. Meanwhile the creditor country will only accept the surplus goods until the debt is repaid, whereupon they stop buying. Only import dependent countries are forced to accept surpluses that would put them in debt.

For example, person 1 sells food in his shop, which both himself and person 2 need to live, while person 2 is a builder. Every day person 2 eats 1 hours food while providing half an hours service for repairs to the shop. After 10 days he accumulates a debt. The shopkeeper demands the debt be repaid, and so the builder does 5 hours work on improving the shop. After this the system returns to the former trade balance. (not saying it couldn't change though, of course).

Thomasio · January 11, 2016

Yes, such a business model requires continuous growth, which is why it isn't sustainable in a finite world in the long run.

Capitalism by itself requires continuous growth, capitalimn cannot exist, if it doesn't grow and create a continuously increasing profit.

To make it sustainable, you would have to stop growing the quantity of production at a given point and begin to increase the quality of life for the people.

That could be using a 3% increase in productivity not to produce 3% more, but to reduce working hours by 3% or something like that.

In a capitalist system all parts of the system depend on one another, businesses can make profit only if their customers have the money to buy the products and since the customers are the working class that consumes out of its wages, capitalism can grow only if BOTH, wages and profits, increase (and decrease) in parallel.

Cutting wages upon increasing productivity and shifting profits away from the workers to the super rich automatically backfires, only if the super rich let the working class participate in the growth, so that the working class at all times have through increasing wages the means to buy the increasing production, the system grows and thrives.

Of course the system might work even better, if the super rich wouldn't exist in the first place, but that arguably might mean, the huge capital required for progress in our highly advanced technology might not be available anymore, so I'm not sure whether or not the super rich on top of the pyramid are plain thieves or somewhat useful to the system.

I haven't made up my mind on that part, so I will not judge this part.

Either way, even if they are useful, if the super rich aren't willing to let the workers participate in the increasing overall wealth generated in capitalism, cutting, or even only not increasing wages, literally cuts the profits of the super rich as well.

Big problem here is, on an individual level and on short term, cutting wages allows a temporary increase of wealth for a tiny sub group of the super rich, meaning if only ONE large corporation cuts wages, it gains an advantage over other corporations and can use that advantage to increase its profits for a short time.

But obviously all other corporations will be forced to cut wages as well, to regain competitiveness and once ALL employers have cut wages, competition returns precisely to where it was before the cut in wages, but then the effect that the working class doesn't have the money to buy all the products anymore kicks in and leads to factories closing, workers layed off and businesses going bankrupt.

To overcome this kind of (absolutely human) selfish shortsightet profit maximizing, a working capitalism requires some kind of mechanism that prevents the system from destroying itself.

We could get the western world back on it's feet, if we abolish the corrupt system of a super rich elite bribing the political class into supressing wages of the working class.

Once we give the working class the means to buy what they produce, a steady growth, including a steady increase in wages as well as a steady increase in profits for businesses would work just fine.

That's the part, where libertarians are absolutely correct.

I'm not exactly sure whether or not libertarians have a system in mind that prospers out of itself by letting everyone in the system participate in the growth, but since we have so many of them in this forum, maybe one of them can fill in here.

...................

Next topic

You have to separate internal balances of a country from external trade balances, if you mix them up you're easily confused and lose the main picture out of sight.

First take a look at international trade.

No matter how much a country produces, no matter how much of it is exported, as long as it imports more than it exports it accumulates debt and if it exports more than it imports, it accumulates savings.

Fairly obvious, a deficit country cannot keep this going for long, sooner or later they are bankrupt and an increase in their exports cannot change that, unless they increase exports above their imports, which makes them a surplus country.

But the trade balance throughout the whole world is ALWAYS ZERO, the world as a whole is a CLOSED system, for every additional country that makes it into a surplus, either the existing surplus countries lose part of their surplus, or the remaining deficit countries will accumulate even more debt.

That's why in the long run the international trade balance for every single country in the world should be even, a country may have a surplus for a few years, followed by a deficit for a few years, depending on the economy, but as soon as just one country in the world is out of balance for a long time, there will unavoidably be some other country somewhere in the world that goes bankrupt.

That's why for example the European Union has written into its contracts that all countries must have a balanced trade, they even have rules that countries violating this balance over a long time have to pay a fine to the union, but Germany is permanently ignoring that paragraph in the contracts, they are exceeding ALL limits of the contract permanently and they abuse the power of their money to bypass the contract and don't pay the fine.

Once you understand the fact that international trade balances can NOT be a long term basis for growth, because competition on an international level is a zero balance game, you can conclude that exclusively internal growth is what creates increasing wealth in the long run.

Then you're back at the fact that only countries with increasing wages will do well in capitalism.

There is a reason why the modern form of capitalism got started in England about 250 years ago, while wages in England were the highest wages in the world.

There is a reason, why capitalism was creating insane amounts of growth and wealth in the US in the last 200 years up to 40 years ago, while wages were increasing rapidly.

There is a reason why capitalism stumbles from one crisis into the next, ever since wages don't increase anymore.

..... and yes, that's because of a government that steals from the workers and gives to the super rich, which reduces the buying capacity of the people upon increasing productivity, which in return leads to less sales for businesses, which leads to factories closing, which leads to mass unemployment.

Cutting wages further so that more people get a job doesn't solve that, as long as the total of all wages doesn't increase, it may get a few people out of poverty without the need for welfare, but it won't get the capitalist system out of the crisis, meaning even this kind of creating low paid jobs is only a temporary thing that lasts only until the still increasing productivity launches another round of lay offs.

I still believe, it isn't the intend of the government to do this, but since politicians are normal humans like everyone else, they are an easy target for the bribery of the super rich who are just too shortsightest to see that bribing politicians into wage cuts backfires big time.

I've just seen a video from Stefan, where he points out how intelligent Donald Trump is.

I'm crossing my fingers and hope he does understand that only increasing wages can solve the problem.

The democrats have understood at least this little detail, but then ...... they have a ton of downsides, like climate change and other junk and one good point doesn't make an overall good picture.

LibertarianSocialist · January 11, 2016

Great posts Thomasio, keep 'em coming. I don't disagree with anything in your last post, just your original assumptions about interest and debt.

Aggregate trade balances are a little different to purely monetary balances, the former subsumes the latter. An entire country can be a net creditor internationally and also a net importer of tangible products. When we consider interest it is both zero sum and not. It is zero sum in that interest creates no extra value, that value must be exogenous (deferred consumption a major exception to this). But it is also not zero sum as a simple credit and debit exchange is. Say I loan 100, the debtor gets 100, he gives back 105, that 5 is an exogenous input, it is not zero sum.

Furthermore, you have argued yourself that value creation is not zero sum, in that increased wages increase demand thus increasing production thus increasing labour demand in a positive feedback loop.

What I am trying to get at is that while households are net savers, they are only so in a monetary sense, and even then only savers in an absolute, but not relative sense. These households (the producers or working class) do not have a net value surplus. They on the whole produce far more value in their lives than they ever receive (generally in the form of surplus labour), and only receive a fraction of it back.

These are your debtor class, not the state. The state is a net value consumer. It requires a producing class to support it, and while it may assume a large portion of the monetary debt, the amount of wealth stolen to support itself must always be more than this debt, hence it actually is a creditor (it lives on interest).

Thomasio · January 11, 2016

Yes, I know what you mean.

Countries like Switzerland don't need much for export of goods, they mostly export credit and cash interst.

But that's not what I mean, in fact this monetary balance is included or better added to the trade of goods and services, so a countries balance consists of the sum of both.

Also a countries balance as a whole includes both, private import and export as well as public import and export.

Or in short, whether a country has a surplus or a deficit includes everything going in and out of the country.

Furthermore countries that compensate a deficit in the trade of goods and services with a surplus in monetary business are quite rare, those are usually the small countries, the tax havens for the super rich or so, not the usual deficit countries like Greece or Spain.

In Europe the situation has evolved to the absurd situation that Germans do not only export goods to southern Europe, Germany is the only of the big countries in the European Union (excluding Luxembourg and other tiny ones) not in deep financial trouble, so Germans ship the goods and the loans required to buy the goods in one package, meaning not only does Germany have a huge surplus in trading goods, they also have a huge surplus in giving loans to foreign countries and (IFFFF the debtors would ever be able to pay) Germans would cash in on their exports TWICE.

You're quite right that workers don't get paid as much as they produce value, but from a accountant point of view that's not important.

From a financial point of view someone who gets more money than he spends is a net saver and someone who spends more than he gets is a net debtor, independent of how much someone should get compared to how much he actually gets.

Private households are even from the little amount they get paid still net savers, because even from their small income they still put about 10% into saving accounts, pension plans, etc.

Businesses have become net savers, as a result of several factors.

First of all they stopped increasing wages in the 70s or at least they slowed down the increase, while productivity steadily increased, meaning businesses made more profit.

Next they invested far less than before, because the relative (if not absolute) reduction in wages led to decreasing demand, which made investing in new factories pointless.

Next they used the saved money to buy back their own shares from investors so they don't have to pay as much dividend anymore.

Next they bought one another, merged to ever bigger corporations and of course they deduced the price they paid for buying their competition from their taxes.

Last but not least they bribed the political class into giving them gigantic tax breaks.

Before anyone gets this wrong, of course all of this works only for the huge corporations.

Small businesses up to middle class just like private households pay more taxes than ever before.

Getting from here back to a status, where businesses, especially big business becomes the natural counterpart of private savings again isn't easy, if not impossible.

Most big businesses have accumulated unimaginable savings, they just don't need any loans, no matter what.

Have you heard about VW? When they calculated they might get fined in the US to pay 18 bln or so?

Have you heard what they did ONE DAY later?

They have put aside 6.5 bln of their savings to be prepared for the coming wave of court suits and they stated, even if it were 30 bln in the end, that's no problem for them, even 40 or 50 bln wouldn't ruin them.

They released their CEO from his post, but somehow they forgot to mention, they still pay him millions of salary for the next year or so, because they didn't feel like bothering with firing him, they found it easier to keep paying him until his contract expires and the millions that costs are just peanuts to them, they will simply deduce it from their taxes.

Meanwhile the city of Wolfsburg (the hometown of the VW central, the only big business in that area and the main source of taxes in town) is in deep trouble, because the very first thing VW did after they expected huge expenses coming their way was, they recalculated their taxes and announced, they would now pay far less.

So after all, it's the people of Wolfsburg paying a huge price for the criminal activities of VW, where the loss in taxes for every single citizen of Wolfsburg in relation to their income weighs heavier than a 50 bln fine would weigh for VW, while the biggest winner of the story is the former CEO, who got paid for committing fraud and now gets paid for nothing.

Yaya, I know, taxes are theft, so that's not a valid argument, but then ...... as long as the system exists and charges taxes, I don't see how it shall be fair that VW makes innocent people suffer a loss they aren't responsible for.

Mister Mister · January 13, 2016

Ok, I will admit, I cannot bring you links to ALL the super rich, but here is one good example:

https://en.wikipedia.org/wiki/Political_activities_of_the_Koch_brothers

According to this, they are "significant financial contributions to libertarian", "advocated for the abolition of Social Security" and all that.

Either way, the rest of your question is somewhat independent from this.

Lol, the Kochs, really? Last I checked, they were around #50 on the list of political contributors - most of the top 10 are public sector unions btw. It's totally hilarious and predictable that everyone focuses on the Kochs, who are sort of libertarians, and not Democrat or Republican establishment people, as the poster children of lobbying and corruption; as opposed to the Teacher's Union or the AFL-CIO or Lockheed Martin. But again, this just proves my point. The Kochs are really not as powerful or influential as everyone says they are: they advocate for less taxes and regulation, legalizing drugs, and a non-interventionist foreign policy, none of which is happening. They were influential in the Tea Party's big win in the 2010 election, but in a recent interview, Charles Koch said "I'm not really sure what we won", referring to the betrayal of small government principles by the Congressmen that the Kochs supported. I found this interesting and really sad, almost as if the ghost of Murray Rothbard, who was once their friend, but whom they betrayed to try to compromise with the Establishment, was standing behind him saying "I told you so. But the Kochs are the exception: Soros, Buffet, Gates, Rothschilds, all dyed-in-the-wool Statists. So when you said "literally ALL super rich people (the actual real beneficiaries of the stealing) are highly in favor of abolishing government", you were wrong...right?

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