
High finance is wrecking the economy and the planet, but it won't reform itself - fanf2
https://www.prospectmagazine.co.uk/magazine/high-finance-is-wrecking-the-economy-and-the-planet-but-it-wont-reform-itself-banking-wall-street-city-of-london
======
hellofunk
I'm most bothered by Indonesia and what is happening there. The pursuit of
profit is so strong that the cheap land-clearing method of burning has
destroyed the air quality of many parts of SE Asia and caused suffering to
millions of people. In the last couple of months alone, nearly half a billion
tonnes of CO2 have been released into the atmosphere from these fires [0].

And it's all about money.

[0] [https://www.channelnewsasia.com/news/singapore/indonesia-
for...](https://www.channelnewsasia.com/news/singapore/indonesia-forest-fires-
haze-climate-impact-carbon-masagos-11946108)

more:

[https://edition.cnn.com/2019/09/11/asia/malaysia-
singapore-p...](https://edition.cnn.com/2019/09/11/asia/malaysia-singapore-
pollution-intl-hnk/index.html)

~~~
christiansakai
Indonesia has so many problems. Corruption is the biggest problem. All
Indonesia’s problem stem from corruption.

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sgt101
It's funny that "usury" has gone from mortal sin (Thomas Aquinas
:[https://oll.libertyfund.org/pages/aquinas-on-
usury;](https://oll.libertyfund.org/pages/aquinas-on-usury;) but also Jesus in
the temple) to everyday activity, and that the communities that outlaw it (the
whole of Islam, old style communism) don't get a mention in discussion. Very
much in contrast to discussions of food ethics and human rights !

~~~
cbnotfromthere
_" the communities that outlaw it (the whole of Islam, old style communism)"_

I lived almost 20 years in communist Romania, I can assure you interest aka
"usury" was not banned at all.

~~~
sgt101
That's so interesting!

What institutions administed loans? How were they squared with anti
capitalism?

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Animats
Well, yes. Financial deregulation in the US was a big mistake. Which we knew
in 2008. Yet it wasn't reversed then.

~~~
pjkundert
Regulated or deregulated — central bank fiat money created via debt
instruments is inevitably self-destructive.

We are in a situation where essentially all global personal tax revenue goes
directly or indirectly to pay commercial and central banks for the money
supply to exist.

Destroy that — or be destroyed by it.

Everything else is just rearranging deck chairs on the Titanic.

~~~
RealityVoid
All money is essentially debt. It might be a failure of imagination from my
part, but I can't see what you would replace it with except a system just like
eit but not quite it.

~~~
rjf72
He's referring to something in specific that many people do not consider. Most
of our money is not printed, but created by fractional reserve systems through
debt. Banks in general are only required to hold 10% of their deposits on
hand. The rest can be lent/invested. If there's a run on the bank they rely on
a central bank to give them money to cover it. Most people know this stuff,
but consider this:

\- Bob deposits $100 of 'real' money at a bank.

\- Joe takes out a loan of $90 and uses it to buy something from Jane.

\- Jane deposits $90 at the bank.

\- Mike takes out a loan of $81 ...

And this process recurses on downward with a smaller and smaller share each
time. But the mathematical result of this is that $100 of "real" deposits ends
up creating $1000 of debt. And that's before interest which, for long term
loans, can be multiplicative. So $100 of "real" money may end up creating
thousands of dollars of debt. We've created a system where banks end up, quite
rapidly, being owed literally more money than exists. Great time to be a
banker for sure.

This is why the Fed and other financial entities are so obsessed with
inflation. Inflation makes everything more expensive in the present, but it
also reduces the cost of loans from the past. Imagine I take out a loan for
$1000 and somehow the next day we see 100% inflation. Well now my loan can be
paid back with only $500 of 'value' as measured from the time I took out the
loan. If inflation is higher than the interest rate on my loan, I actually
earn money by not repaying it. By contrast, deflation makes older loans more
expensive. And of course there is also the investment outlook. Inflation is a
penalty on wealth. If there's 2% inflation per year, my billion dollar piggy
bank becomes worth ~$20 million less each year. So I'm incentivized to invest
actively. By contrast with deflation I can sit on my money and become
relatively richer by the day.

But this also puts us on a roller coaster. Old debt is only paid off with new
debt which will only be paid off with new debt which ... And the money
definitely does trickle downward, but at the same time it gushes upward. And
the ride keeps going faster, and growing bigger. Not hard to imagine a
different system as ours is grossly counter intuitive. Of course different
doesn't mean better so, as a recurring theme in human history, we're only like
to change once things go boom.

~~~
captn3m0
Thanks a lot. Can you recommend a book if I’d like to read more on this
explained similarly.

~~~
maneesh
A great book on the creation of the fed and fractional reserve is The Creature
From Jekyll Island

~~~
captn3m0
I almost bought this, but the author looks very shady:

>G. Edward Griffin (born November 7, 1931) is an American author, filmmaker,
and conspiracy theorist. Griffin's writings promote a number of views and
conspiracy theories regarding various of his political, defense and health
care interests. In his book World Without Cancer, he argues that cancer is a
nutritional deficiency that can be cured by consuming amygdalin, a view
regarded as quackery by the medical community.[2][3][4] He is the author of
The Creature from Jekyll Island (1994), which promotes false theories about
the motives behind the creation of the Federal Reserve System.[2][5] He is an
HIV/AIDS denialist, supports the 9/11 Truth movement, and supports a specific
John F. Kennedy assassination conspiracy theory.[2] He also believes that the
biblical Noah's Ark is located at the Durupınar site in Turkey.

[https://en.wikipedia.org/wiki/G._Edward_Griffin](https://en.wikipedia.org/wiki/G._Edward_Griffin)

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sorenn111
My issue with articles and stances like this is that I agree that rent seeking
behavior is obviously an issue. Rent seeking is by definition unproductive
economic behavior. But the existence of rent seeking does not serve as proper
indictment of capitalism in general.

Capitalism has been an effective and great tool and system in many ways, it
just needs focus on the improper practices.

~~~
collyw
> Rent seeking is by definition unproductive economic behavior.

While I am inclined to agree with you, I do see benefits to the renting model.
Basically any thing in the cloud is paying towards "rent seeking" model and it
has enough benefits for many people that its worthwhile.

~~~
tryptophan
Renting =/= rents(in the economic sense). Renting cloud VPS is not rent-
seeking(in the economic sense).

Two completely different concepts which unfortunately bear the same name.

~~~
collyw
Ok, if you are going to claim a distinction, I think its fair to ask where the
distinction lies. Whats so good about renting cloud infrastructure from
renting an apartment?

(Apartments don't com with the same level of vendor lock in.)

~~~
boomboomsubban
Running a cloud infrastructure takes work, and the profits should be made from
the service provided and not off the monopolization of some property.

~~~
collyw
So does building and maintaining an apartment.

~~~
boomboomsubban
The article discusses rentier, which is pretty much the rent seeking discussed
here. Renting an apartment isn't profiting off the monopolization of property
either.

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tim333
Humans have been wrecking the planet (deforestation, killing the megafauna
etc.) and doing economically dubious things (wars etc.) for far longer than
high finance has been around. Still it provides another tool that can do
damage or be used for good that could benefit from better regulation.

