[Non-Doomsday Economics] Democrats end expanded entitlements, bailout Silicon Valley

The Something Awful Forums > Discussion > C-SPAM > [Non-Doomsday Economics] Democrats end expanded entitlements, bailout Silicon Valley

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PawParole: Nov 16, 2019

bagual posted:

apparently the original writer for the article i read is BBC's venezuela correspondent, i'm probably dumb it's just been reposted a lot in pt-br news outlets, lol if he's somehow pumping crypto or something

https://twitter.com/bbcmundo/status/1362789302602768395

https://www.economist.com/finance-and-economics/2021/01/20/have-banks-now-got-too-much-cash

# ? Feb 19, 2021 22:28

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# ? Jun 1, 2024 02:19

Gazpacho: Jun 18, 2004; by Fluffdaddy; Slippery Tilde

banks are just going to have to hike fees folks. they don't want to do it but only way to keep from losing your money is to just take it up front

# ? Feb 19, 2021 22:43

im on the net me boys: Feb 19, 2017; Hhhhhhhhhhhhhhhjjhhhhhhhhhhhhhhhhhhhhhhhhhhhhjhhhhhhjhhhhhhhhhjjjhhhhhhhhhhhhhhhh cannabis

bagual posted:

apparently the original writer for the article i read is BBC's venezuela correspondent, i'm probably dumb it's just been reposted a lot in pt-br news outlets, lol if he's somehow pumping crypto or something

https://twitter.com/bbcmundo/status/1362789302602768395

so it looks like JPMorgan is asking just the biggest firms that have deposits to reduce them, not everyday people. Still weird but not impacting everyday people yet

# ? Feb 19, 2021 22:47

NeonPunk: Dec 21, 2020

It just sounds like having deposits is a liability for them. After all, they can't make money off it if the account holder wants to withdraw their money out, so they have to always keep their money available for them instead of churning it around.

# ? Feb 19, 2021 22:51

Ice Phisherman: Apr 12, 2007; Swimming upstream
into the sunset

Nonsense posted:

If China cuts off REM, we're invading Bolivia via coalition.

China cutting off access to rare earth metals and the resulting war was literally the plot line of Call of Duty: Black Ops 2.

I do not want to live in a dumber, shittier version of CODBO2.

# ? Feb 19, 2021 22:55

kumba: Nov 8, 2003; I posted my food for USPOL Thanksgiving!

enjoy the ride; Lipstick Apathy

At least in Florida, you can't ask to see a real unit because if they showed you a real unit they have to show everyone a real unit because of fair housing laws, and good luck getting a tenant to agree to that

Source: wife worked as a property manager for a few months and hated every minute of it

# ? Feb 19, 2021 23:17

nomad2020: Jan 30, 2007

Ice Phisherman posted:

China cutting off access to rare earth metals and the resulting war was literally the plot line of Call of Duty: Black Ops 2.

I do not want to live in a dumber, shittier version of CODBO2.

I think the Fallout world went to poo poo in a similar fashion.

# ? Feb 19, 2021 23:24

JAY ZERO SUM GAME: Oct 18, 2005; Walter.
I know you know how to do this.
Get up.

im on the net me boys posted:

yet

# ? Feb 19, 2021 23:26

Vox Nihili: May 28, 2008

Ice Phisherman posted:

China cutting off access to rare earth metals and the resulting war was literally the plot line of Call of Duty: Black Ops 2.

I do not want to live in a dumber, shittier version of CODBO2.

It also doesn't make any sense, there are rare earth metals all over the place!!!

# ? Feb 19, 2021 23:27

Nonsense: Jan 26, 2007

business travel to Africa is heavily discouraged. So only China and South America are viable markets.

# ? Feb 19, 2021 23:29

Ocean Book: Sep 27, 2010; - hi

does anyone have that really good post on the falling rate of profit from like a week ago ish ?

# ? Feb 19, 2021 23:49

Rutibex: Sep 9, 2001; by Fluffdaddy

Ocean Book posted:

does anyone have that really good post on the falling rate of profit from like a week ago ish ?

https://streamable.com/a42kxt

# ? Feb 19, 2021 23:54

Ice Phisherman: Apr 12, 2007; Swimming upstream
into the sunset

nomad2020 posted:

I think the Fallout world went to poo poo in a similar fashion.

Ish. It came from resource depletion. Specifically it was over oil. The US was able to miniaturize nuclear power to put in basically everything so you had nuclear powered cars and toasters and poo poo, but it wasn't rolled out fast enough and there's only so much fissionable material. Nuclear war kicked off over the conflict over scarce resources that the world never adapted to no longer depend on.

This is pretty much how I expect the world to go as well unless there are radical social changes, scaling up in methods to produce what we need to survive or massive new breakthroughs in technology which make the scaling up less necessary.

One of the big hurdles for the near future is going to be water as there are several countries that are already experiencing extreme drought and restricted access to potable water right now, the US included. How we allocate scarce fresh water, especially between sources that are between two belligerent countries as humans have this tendency to draw borders using major rivers is a serious problem going forward. There are also downstream (heh) problems with getting enough water to create enough crops so people can eat. That can be partially resolved with water conservation and industrial scale vertical farming, but humans have been draining fresh water from ancient aquifers and a lot of those are tapped, near tapped or even poisoned by processes like fracking. We're going to have to change our relationship to how we allocate our water or major governments are going to start looking for sources on other peoples' land. Or depending on the government they're already doing it.

Sadly on this timeline, I don't get laser weapons or a nuclear powered motorcycle. Nor do I get to kill raiders covered in tire armor with a junk jet while listening to Ella Fitzgerald on my Pipboy.

The future is disappointing.

Ice Phisherman has issued a correction as of 00:21 on Feb 20, 2021

# ? Feb 20, 2021 00:01

anime was right: Jun 27, 2008; death is certain
keep yr cool

Ocean Book posted:

does anyone have that really good post on the falling rate of profit from like a week ago ish ?

its in the op, if u ever need to find it

# ? Feb 20, 2021 00:21

skooma512: Feb 8, 2012; You couldn't grok my race car, but you dug the roadside blur.

kumba posted:

At least in Florida, you can't ask to see a real unit because if they showed you a real unit they have to show everyone a real unit because of fair housing laws, and good luck getting a tenant to agree to that

Source: wife worked as a property manager for a few months and hated every minute of it

Still don't know how that passes any legal sniff test. You need to sign a 12 month lease that's hard to break, but you're not allowed to actually inspect the thing you're renting.

I mean, we all knows the laws are written by and for the elite but lmao.

# ? Feb 20, 2021 00:40

Centrist Committee: Aug 6, 2019

im on the net me boys posted:

so it looks like JPMorgan is asking just the biggest firms that have deposits to reduce them, not everyday people. Still weird but not impacting everyday people yet

hi I�m a bank. no I won�t be taking any deposits. yes, this normal. capitalism!!!

# ? Feb 20, 2021 00:42

gradenko_2000: Oct 5, 2010; HELL SERPENT; Lipstick Apathy

Vox Nihili posted:

It also doesn't make any sense, there are rare earth metals all over the place!!!

You mean capitalism isn't good at contingency planning???

# ? Feb 20, 2021 00:47

silentsnack: Mar 19, 2009; Donald John Trump (born June 14, 1946) is the 45th and current President of the United States. Before entering politics, he was a businessman and television personality.

Ice Phisherman posted:

We're going to have to change our relationship to how we allocate our water or major governments are going to start looking for sources on other peoples' land. Or depending on the government they're already doing it.

too many 'other people' and not enough water for the people that matter? two problems easily solved by crushing things under a big hydraulic piston. requires the "handwaving major atrocities" stage of decivilization tho.

# ? Feb 20, 2021 00:48

namesake: Jun 19, 2006; "When I was a girl, around 12 or 13, I had a fantasy that I'd grow up to marry Captain Scarlet, but he'd be busy fighting the Mysterons so I'd cuckold him with the sexiest people I could think of - Nigel Mansell, Pat Sharp and Mr. Blobby."

Well given most the way most societies 'civilised' I'd say that handwaving major atrocities was a important stage of civilisation rather than the other way around.

# ? Feb 20, 2021 01:03

Olive Branch: May 26, 2010; There is no wealth like knowledge, no poverty like ignorance.

Olive Branch posted:

So earlier in the thread I said I'd gamble away on AMC and toxxed myself on donating a fifth of my earnings to the Goon Fund. AMC may not be recovering before Friday, but I'm not going to let my greed of not selling earlier or the market deny needy goons some extra assistance in these troubled times.

The highest profit I could have earned from selling all of my AMC sales at peak would have been $500. A fifth of that is $100. Here is a new I'm making: if my profits of AMC don't go higher than $500 by this Friday, I will donate $100 to the Goon Fund anyway. Solidarity and praxis, people! Don't speculate, just index fund.

Toxx done! I sold AMC way back when at a loss, but I still had $100 USD kicking around to donate to hungry and needy goons.

# ? Feb 20, 2021 01:21

Ocean Book: Sep 27, 2010; - hi

hmm the falling rate of profit post i meant was this really good effort post that talked in concrete ways about how capital is currently running into issues and what forms of squeezing we�re seeing in the present moment like increased worker discipline and cutting reinvestment in society. posted a bit after the gamestop stuff started dying down i think.

# ? Feb 20, 2021 01:25

Mr.Radar: Nov 5, 2005; You guys aren't going to believe this, but that guy is our games teacher.

Ocean Book posted:

hmm the falling rate of profit post i meant was this really good effort post that talked in concrete ways about how capital is currently running into issues and what forms of squeezing we’re seeing in the present moment like increased worker discipline and cutting reinvestment in society. posted a bit after the gamestop stuff started dying down i think.

I would like to read this too if anyone has the link.

# ? Feb 20, 2021 01:26

Elemennop: Dec 29, 2004; only the martyrs have their identities remembered. please remember me, i beg you!

HAIL eSATA-n posted:

this is the look and speech mannerisms of a sociopath

I used to work at Citadel, and spoke with him before. 100% certain he's non-trivially on the spectrum. He gave an impassioned speech to the company, tears in his eyes, about how one of his best experiences in life was exploiting an arbitrage in the convertible bond market during college

e: not excusing his behavior, he's also a piece of poo poo

Elemennop has issued a correction as of 02:15 on Feb 20, 2021

# ? Feb 20, 2021 02:12

bagual: Oct 29, 2010; _{_{inconspicuous}}

PawParole posted:

https://www.economist.com/finance-and-economics/2021/01/20/have-banks-now-got-too-much-cash

hah i'm picking up news ahead of the economist magazine, too bad it's kind of a wet fart

# ? Feb 20, 2021 02:22

im on the net me boys: Feb 19, 2017; Hhhhhhhhhhhhhhhjjhhhhhhhhhhhhhhhhhhhhhhhhhhhhjhhhhhhjhhhhhhhhhjjjhhhhhhhhhhhhhhhh cannabis

Olive Branch posted:

Toxx done! I sold AMC way back when at a loss, but I still had $100 USD kicking around to donate to hungry and needy goons.

good poo poo!!!!!!!!

# ? Feb 20, 2021 02:53

i am harry: Oct 14, 2003

Ice Phisherman posted:

Sadly on this timeline, I don't get laser weapons or a nuclear powered motorcycle. Nor do I get to kill raiders covered in tire armor with a junk jet while listening to Ella Fitzgerald on my Pipboy.

The future is disappointing.

you can still die to a rat though

# ? Feb 20, 2021 02:59

silentsnack: Mar 19, 2009; Donald John Trump (born June 14, 1946) is the 45th and current President of the United States. Before entering politics, he was a businessman and television personality.

namesake posted:

Well given most the way most societies 'civilised' I'd say that handwaving major atrocities was a important stage of civilisation rather than the other way around.

it would be difficult to claim we ever really gave up the savagery. selfish/violent impulses are still there, to be denied or suppressed or otherwise TREML!!!

i am harry posted:

you can still die to a rat though

with enough determination, you can die to anything

# ? Feb 20, 2021 03:01

Ice Phisherman: Apr 12, 2007; Swimming upstream
into the sunset

i am harry posted:

you can still die to a rat though

# ? Feb 20, 2021 03:08

cool av: Mar 2, 2013

kumba posted:

At least in Florida, you can't ask to see a real unit because if they showed you a real unit they have to show everyone a real unit because of fair housing laws, and good luck getting a tenant to agree to that

Source: wife worked as a property manager for a few months and hated every minute of it

wait what? they don't just have 15 realtors parade people through your apartment all day every day the minute your lease has less than 6 months remaining and you don't sign a renewal for 10% more?

# ? Feb 20, 2021 03:35

gradenko_2000: Oct 5, 2010; HELL SERPENT; Lipstick Apathy

Ocean Book posted:

hmm the falling rate of profit post i meant was this really good effort post that talked in concrete ways about how capital is currently running into issues and what forms of squeezing we’re seeing in the present moment like increased worker discipline and cutting reinvestment in society. posted a bit after the gamestop stuff started dying down i think.

This excerpt was taken from "The City: London and the Global Power of Finance", by Tony Norfield

quote:

Marx argues that there is a ‘progressive tendency of the general rate of profit to fall’ and this is ‘just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labour’.²⁸ Elsewhere, Marx states that this is ‘in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations’.²⁹ As such, it is worth spending a little time on this subject.

Competition between companies forces them to cut costs. They may try different ways of doing this, including cutting pay, or moving production to low-wage areas, but these manoeuvres can only go so far. In the end, they have to raise productivity. Raising productivity means that more commodities are produced per worker in a given time, thereby increasing the mass of the means of production – raw materials, machinery and technology – compared to the number of workers employed and the labour time they work. This is what Marx called a rise in the ‘technical composition’ of capital. Alongside this, the value of the means of production will also tend to increase relative to the money that capitalists have to advance to pay wages. For example, even the infamous Foxconn, with its vast assembly plants in China employing very low-paid workers, had to increase the number of robots a hundredfold in order to lower its unit production costs further.³⁰

Marx’s concept of the rising ‘organic composition’ of capital is used to refer to the process of capital accumulation where both the technical and the value compositions rise together. This combined ‘organic’ concept of the composition of capital is critical for understanding what happens to capitalist profitability. While the number of hours of surplus labour determines the amount of capitalist profit, the rate of profit is measured by the amount of profit divided by the value of the total capital invested. The implications for the rate of profit can be seen by taking a typical worker in a productive capitalist enterprise as an example.

Productivity increases will usually mean that the value represented by the worker’s wage will fall, because the socially necessary labour time contained in the commodities the worker needs to buy also falls. But even if it costs nothing to hire the worker, he or she must still work for less than twenty-four hours a day. So there is a limit to how much surplus value a worker can produce for the capitalist. But there is no definite limit to the mass of raw materials and machinery that he or she can work with. Over time, the mass of profit created by the worker will tend not to rise as much as the value of the capital invested in the means of production rises. This results in a tendency for the rate of profit per worker to fall, and so too throughout the whole capitalist economy.

This tendency is modified in practice by many factors. Improved productivity often means that a given portion of the means of production, such as computers or raw materials, will cost less than before. But usually a revamp of the productive system is needed for significant productivity increases. In this case, companies do not work with the same amount of machinery, etc., that now costs less; they must work with a new, expanded system of machinery. Each item may cost less, but there are more of them used per worker. Unless the productivity gains are dramatic, the socially necessary labour time embodied in the expanded system of machinery and raw materials per worker will tend to increase. There are of course examples of dramatic productivity improvements that do significantly cut costs for capitalist businesses: more efficient transport systems such as container ships; better telecommunications; new or improved computer technologies; and the use of cheaper synthetic materials. These can certainly have the effect of boosting the rate of profit. But this effect will also wear off, and the cost of investing in research for the next innovation also has to be taken into account. It is obvious that the volume of machinery and raw materials per worker will rise inexorably; it is only the cost of this greater volume that might sometimes be lower, or rise very little.

Over time, perhaps many years, the rate of profit will thus tend to fall. As it does so, the capitalist system becomes more prone to crises. Companies may earn more or less than the average rate of profit, but, as the average drops, more of them come closer to making a loss. Even if their rate of profit is still positive, the amount of profit they make might be insufficient to provide them with the funds necessary to invest in the new technology they need to stay competitive.

There are two consequences of this long-term trend to lower profitability. One is that profit becomes a specifically capitalist barrier to improving productivity, or even to producing anything at all. What is produced is not determined by what society decides democratically or by what science is capable of engineering. It is only a question of whether an investment will make a profit, not a question of delivering what society needs with the resources it has available. This Marxist indictment of capitalism is more fundamental than those criticisms that focus on monopolistic barriers to production or on how the struggle for ownership and control of the world’s resources can lead to war.

The second consequence is that, as it becomes more difficult to generate a profit via capitalist production, ‘making money’ via finance begins to look like the easier option, particularly for those countries in a privileged position to take it. This was the context for the huge explosion of financial dealing from the 1980s, the seeds of which were sown in the 1970s as the world capitalist economy came under serious strain. The financial illusion of creating value out of nothing, particularly by extending credit, can work for a while. But when there is insufficient new value produced on which the illusion can feed, the world is then confronted with an increased burden of debts that cannot be repaid.

It is this problem of capitalist debt repayment that plagues the world today, seen most evidently in the col- lapse of the Greek economy as European creditors desperately search for ways of getting their money back. Some form of debt write-off for Greece has seemed in- evitable since its crisis first broke in 2010, but that would then create a huge problem for the creditors. They find it difficult to recognise as a reality, because they are already faced with massive financial liabilities of their own. Collapsed property bubbles in some countries have left many banks with dubious mortgage loan ‘assets’; in others, governments have struggled to maintain a semblance of financial viability as their spending on pensions, welfare payments and social services runs beyond what their stricken economies can afford. A ‘debt crisis’ is not really a crisis of debt, but more a sign that the economy’s production of value can no longer support the previous illusion of wealth. The chronic nature of the current crisis, with persistently low rates of growth compared to earlier decades, is another sign that the game is up.

Rather than being the result of terrible, avoidable mistakes, as government policy advisers like to claim when advocating their ‘solutions’, economic crises play an important role in the capitalist market system. They are both the culmination of previous economic trends and a means by which the rate of profit might be increased back to levels that will allow investment and growth to resume. This can happen in several ways. If capital values are destroyed through a collapse in asset and commodity prices, those capitalists left standing will be able to buy means of production more cheaply and so secure a higher rate of return on their investments. This was what happened after the Second World War. But, at least in the rich countries today, governments have been reluctant to allow the mechanism of crisis to get into full swing, fearing social turmoil. Instead, huge levels of debt, which in earlier crisis resolutions would have been either written off or devalued, still remain in place. As a result, one of the classic mechanisms for resolving a crisis, the destruction of capital values, has not, at the time of writing (mid-2015), yet come into play. The major central banks have done their best to prevent this outcome with successive ‘quantitative easing’ policies and historically low interest rates; weaker countries have more directly borne the brunt of the economic damage.

Another key way of trying to restore profitability is to increase the exploitation of the workforce, by cutting real wages and imposing onerous new conditions. So far in the rich countries, this has only been attempted in a piecemeal fashion. For example, between 2010 and 2014, the number of people in the UK on ‘zero hour’ contracts, with no guaranteed working hours, quadru- pled to some 700,000, or 2.3 per cent of all employees.³¹ More drastic measures have been taken in poorer countries.

Related to this is a third policy driven by the exigencies of the crisis: the elimination of ‘waste’. This involves expenditures that capital can do without, those that do not look like directly contributing to profitability, either now or in the near future. Why bother paying to educate workers with public funds when there are plenty of skilled and educated workers available already? Why bother providing more than the absolute minimum of health and welfare services? This is the reality behind so-called austerity policies today, to the extent that even the privileges of the middle-class professions, traditional bastions of support for established political parties in all countries, are coming under attack.

# ? Feb 20, 2021 03:36

KirbyKhan: Mar 20, 2009; Soiled Meat

Yeah, that was that one I remember

# ? Feb 20, 2021 03:44

Joey Steel: Jul 24, 2019

gradenko_2000 posted:

This excerpt was taken from "The City: London and the Global Power of Finance", by Tony Norfield

Just quoting this in case I need to find it in the future.

# ? Feb 20, 2021 04:03

Ice Phisherman: Apr 12, 2007; Swimming upstream
into the sunset

gradenko_2000 posted:

This excerpt was taken from "The City: London and the Global Power of Finance", by Tony Norfield

Gonna quote this so I can find it later.

# ? Feb 20, 2021 04:20

Accretionist: Nov 7, 2012; I BELIEVE IN STUPID CONSPIRACY THEORIES

gradenko_2000 posted:

This excerpt was taken from "The City: London and the Global Power of Finance", by Tony Norfield

Quoting in solidarity with those two

# ? Feb 20, 2021 04:33

gradenko_2000: Oct 5, 2010; HELL SERPENT; Lipstick Apathy

right after I finished Norfield, I went straight into Cedric Durand's "Fictitious Capital: How Finance is Appropriating our Future", which is also quite good:

quote:

Marx�s judgement on the credit system was very different to Hayek�s. For him, far from running up against the limits of the available resources, credit could overcome the barriers constituted by self-financing and the production of precious metals. It thus �accelerates the material development of the productive forces and the creation of the world market�.17 The idea of resource constraints was not completely missing here, but it was limited to those situations where the credit system �appears as the principal lever of overproduction and excessive speculation in commerce� because here it forces �the reproduction process, which is elastic by nature � to its most extreme limit�.18

The credit system has a dual character immanent in it: �. it develops the motive of capitalist production � and restricts ever more the already small number of the exploiters of social wealth � On the other hand however it constitutes the form of transition towards a new mode of production. It is this dual character that gives the principal spokesmen for credit �. Their nicely mixed character of swindler and prophet.

Consistent with what was commonly accepted in the nineteenth century, for Marx fictitious capital does indeed result from the development of the credit system.20 The exchange of loan-capitals is a means of valorisation de-correlated from the productive activity that gives rise to fictitious capital. Its constituent parts are the making available of loanable funds, repayment deadlines, and the corresponding interest. Nonetheless, fictitious capital is not reducible to the credit system alone. Marx�s main original intuition was that the creation of fictitious capital proceeds from a more general logic of anticipating the capital valorisation process. Fictitious capital thus appears as a claim and a projection made by capital-holders; its failure leads to financial crises and social and political battles over the distribution of the resulting fallout.

In its various institutional incarnations, finance is essentially reducible to the advance of a certain monetary value in exchange for a promise of reimbursement or, indeed, a property title over activities that will create values as they play out. Finance thus establishes a mode of capital valorisation that seems to give money magical faculties. What Marx says about interest-bearing capital is also true of finance in general: �it becomes as completely the property of money to create value, to yield interest, as it is the property of pear-trees to bear pears.�21 The comforting idea that it is possible to separate the valorisation process from the production process and the exploitation of labour is a chimera, but it sustains what are for capital powerful mechanisms of domination.

How does the creation of fictitious capital work? �The formation of fictitious capital is known as capitalization�:22 that is, it produces debts or securities whose value results from the capitalisation of the anticipated revenues.23 As such, the central problem fictitious capital poses is not � as the Austrian school approach has it � the existence of prior savings sufficient to allow the creation of supplementary capital. The problem is that fictitious capital pre-empts the future valorisation process even as it makes it invisible. If, according to the Austrian approach, fictitious capital is synonymous with failure and wastage, in the Marxist analysis its fictitious character is not synonymous with the success or failure of the future valorisation process, even though it does indicate its fragility. In short, it poses the present valorisation of money-capital as a stake in future economic and political processes.

Marx identifies three forms of fictitious capital: credit money, government bonds and shares. On this point as with others � think, for example, of the Manifesto�s prophetic pages on globalisation � Marx displayed staggering capacities of foresight. For while credit money and financial markets occupied only a limited place in his era, today they are at the very heart of the functioning of economies.

Credit money may seem the form most difficult to identify as a species of fictitious capital. Is it not interest-bearing capital, rather than fictitious capital? A matter of idle funds whose owners want to lend them in exchange for interest? The correct answer is that credit money shares characteristics with both these types of finance capital.24 It begins with a bank loan, which, having been a simple monetary sign, becomes money through circulation. But this circulation itself largely results from an ex nihilo creation, in that it is an advance on a future revenue and essentially does not come from previously saved funds. The generalisation of credit money since the mid-twentieth century implies �the a-priori canonisation of private labour as social labour�.25 Firms� production and the labour of worker-borrowers is pre-validated by money before commodities are actually sold or wages actually paid. The generalisation of this type of credit, which has long sustained economic growth, is made possible by a certain regularity of economic activities. Indeed, deposits rely on the promise that it will be possible to withdraw them in the form of notes issued by the central bank; yet no bank is able to keep to this promise if a large number of depositors want to withdraw their money simultaneously (a bank run). After all, except for reserve funds, all deposits are nothing but numbers, without any immediately available counterpart. If there is a lack of confidence in a particular bank, and even more so when there is a lack of confidence in the banking system in general, only the central bank � which has the supreme monetary power of issuing the money that serves as the banks� reserve fund � is able to prevent or contain the financial panic. This evidences both the hierarchical nature of money as an institution and the political regulation associated with fictitious capital.26 Credit money�s fictitious dimension and its political anchoring are both accentuated by the fact that the government bonds that commercial banks sell to central banks under repurchase agreements constitute a sizeable part of the raw materials serving private banks� creation of credit money. In 2010�12, the banking/public-debt-crisis spiral in the countries of the European periphery forcefully illustrated the destructive power of such an imbrication. Here, the important question was the European Central Bank�s refusal to commit to any unconditional automatic repurchase of the various countries� public debts. This not only cut off the peripheral countries� access to financial markets but simultaneously led to a rapid devalorisation of government bonds. This in turn massively weakened the banks who held large volumes of these titles. The lack of any such guarantee brutally demonstrated the single currency�s fundamental policy shortfalls. Politics is credit money�s guarantor of last resort. It alone can allow the controlled expansion of credit money and prevent it from abruptly contracting in turbulent periods.

The fictitious character of public debt is more immediately apparent. Indeed, it does not have any counterpart in capital valorised through production processes. Even if the expenses financed by debt do relate to investment in infrastructure or the education system, they have no direct monetary return to which the repayments correspond. Certainly, the state holds financial assets (debts, shares) and a physical estate, but essentially the latter is not supposed to be ceded. Ultimately, even though the financial management of state assets is becoming increasingly important in the current context � in particular through the selling off of the family jewels in the context of austerity plans � it is claims on the amount of future taxation that dominate public debt. Moreover, the principal on the debt is never repaid, because new issuing is constantly used to compensate the payment of securities reaching maturity. The fact that government bonds are tradeable further perfects their fetish character. For the individual bondholder, the fiction becomes a reality when he finds a buyer for his bonds. But these bonds do not in themselves have any direct counterpart in the valorisation process: they are advances on tax receipts.

This singular characteristic of liquidity, mentioned at the beginning of the chapter, is just as essential to market-listed stocks and corporate bonds exchanged on the financial markets. Unlike public debt, these latter do indeed represent a real capital � that is, capital invested by firms or used in their operations. Here, it is the duplication implicit in the financial mode of valorisation that is at the origin of the fiction:

But the capital does not exist twice over, once as the capital-value of ownership titles, the shares, and then again as the actual capital invested or to be invested in the enterprises in question. It exists only in the latter form, and the share is nothing but an ownership title, pro rata, to the surplus-value which this capital is to realize.27

The same is true of company bonds, albeit with the difference that here it is a matter of credits and not property titles, and the capitalised revenues are thus interest, not dividends or really accumulated capital.

Table 1 offers a simple presentation of the basic forms of fictitious capital. It underlines the various bases of this fiction and the different modalities through which it is constituted as an economic object. In the case of bank credit, and more precisely the credit issued by banks beyond their reserve funds, the fiction rests on the fact that no revenue has been received in advance and on the anticipation of a future accumulation process. Nonetheless, this fiction is regulated in so far as the foreseen repayments are meant to be compatible with what is considered the normal development of business. With traditional bank credit, the banks hold onto the debts so they are not subject to a re-evaluation process.28 This broad category of bank credit also includes commercial credits that banks acquire from companies in transactions discounting inter-company debts.

In the case of public debt, the fiction derives from the fact that bonds do not correspond to any real capital accumulation process, but simply to advances on future tax receipts � receipts that themselves depend on the revenues that economic agents will draw from future economic activity. However, the tradability of these debt titles, like the tradability of shares and bonds, introduces a new dimension that gives fictitious capital its full power: its liquidity. A tradable equity simultaneously represents both access to earnings flows and a wealth that can at any instant be converted into real money at prices corresponding to the financial community�s self-referential estimation of expected future returns.

The fictitious character of capital in the form of tradable equities brings us back to the paradox of liquidity. While banking crises correspond to a lack of a posteriori validation of credit money and manifest themselves in bank runs, financial crises translate into the stock-market collapses that occur when too many agents try to offload their securities simultaneously.

In sum, fictitious capital is an incarnation of that capital which tends to free itself from the process of valorisation-through-production. According to the Marxist approach, capital is fictitious to the extent that it circulates without production yet having been realised, representing a claim on a future real valorisation process. Today this fictitious capital can rely on public authorities� support, in particular the support of central banks. As they take action in favour of financial stability, these latter effect a social pre-validation of the accumulation process by way of fictitious capital. As Marx understood, fictitious capital plays a profoundly ambivalent role. On the one hand, it is a factor favouring capitalist development, to the extent that this anticipation operation allows the acceleration of the rhythm of capital accumulation. Here, we have the spirit of the nineteenth-century �banking school�, for whom the creation of money should respond to agents� needs, as well as the spirit of the Keynesian approach, which considers that the full employment of economic resources does not happen all by itself. On the other hand, fictitious capital�s anticipation of future accumulation implies a radical form of fetishism liable to mutate into unsustainable phantasmagoria. The mass of accumulated fictitious capital can, then, assume proportions incompatible with the real production potential of economies. This reasoning is closer to that of the first theorists of fictitious capital, and indeed to Hayek. If this is indeed the case, then the over-accumulation of fictitious capital will inexorably lead to crisis.

gradenko_2000 has issued a correction as of 11:51 on Feb 20, 2021

# ? Feb 20, 2021 04:43

redleader: Aug 18, 2005; Engage according to operational parameters

gradenko_2000 posted:

This excerpt was taken from "The City: London and the Global Power of Finance", by Tony Norfield

copying the other posters with the right idea

Archduke Frantz Fanon posted:

we dont need to invade we just couped their government lol

wait was the myanmar coup actually us-backed?

# ? Feb 20, 2021 05:18

gradenko_2000: Oct 5, 2010; HELL SERPENT; Lipstick Apathy

Doomsday economics / climate change thread crossover:

quote:

Figure 10 concerns a third type of fictitious capital: the stock-market capitalisation of listed domestic companies, whose value reflects the market valorisation of anticipated profits. The graph presents the pattern of stock-market capitalisation relative to GDP since 1975 for the main rich economies and since 1979 for our eleven-country average. Japan once again shows an atypical trajectory. After hitting a record level of 130 per cent in 1989, this ratio plunged to 53 per cent in 2002, after the bursting of the dotcom bubble. Conversely, the respective profiles of the other countries are relatively similar. The 1980s and 1990s saw a two-stage rise in the ratio, which reached its maximum in 2001, before falling in two further stages following the 2001 crunch and the crisis of 2008�9. Despite this partial reflux, the long-term rise is considerable. The mean ratio passed from 24 per cent in 1979 to 85 per cent in 2015, peaking at 111 per cent in 1999. This development was most impressive in the US and the UK, rising from 40 per cent and 35 per cent respectively in 1975 to 146 per cent for the US in 2014 and 112 per cent for the UK in 2012, after having peaked at 146 per cent and 171 per cent respectively in 2001. There was the same tendency in Germany, albeit at a much lower level: having stood at 10 per cent of GDP in 1975, stock-market capitalisation reached a level of 64 per cent by the millennium, before settling down at 47 per cent in 2014.

Crucially, the contemporary accumulation of fictitious capital on the stock markets is closely connected to the addiction to fossil fuels. Current market trends show capital�s projections for a future still based on carbon. Indeed, the hydrocarbon reserves claimed by the major oil companies very largely determine their valorisation, because they constitute the basis for forecasting future profits. However, according to IPCC estimates, if we are to keep the temperature rise beneath the 2�C limit, then we will have to leave somewhere between two-thirds and four-fifths of these reserves unused. Companies in the energy sector, together with those in the directly affected industrial sectors, represent close to one-third of worldwide stock-market capitalisation. Taking the political measures necessary to halt fossil fuel extraction would immediately result in a knock-on destabilisation of the financial markets. Bank of England governor Mark Carney warned as much in autumn 2015, when he evoked the �tragedy of the horizon�. He was referring to a �tragedy� resulting from the fact that the likely effects of these changes lie beyond decision-makers� own temporal horizons:

A wholesale reassessment of prospects, especially if it were to occur suddenly, could potentially destabilise markets, spark a pro-cyclical crystallisation of losses and a persistent tightening of financial conditions. In other words, an abrupt resolution of the tragedy of horizons is in itself a financial stability risk.5

Here, the preservation of fictitious capital on the stock market directly impedes the fight against global warming.