The article only makes sense with a certain, fixed view of money.
Money is a social contract, it's worth whatever we want it to be, and we can change the value of it at any time.
The credit crises is not a issue of money, it's an issue of confidence in the system. No confidence, no credit, no system.
During this time, any government can play magic with the balance sheet and do as they please. This is what TARP etc. was about. The issue is really just about 'who wins and who loses' in a centrally planned game of money magic.
The drug industry mightn't have been too affected, by the downturn, and 'confidence' in their economy just kept on trukin'.
But any 'crash' in a post financially literate age that is not due to a true existential shock (like an earthquake that destroys nations) ... then we should be able to handle it ourselves without the crunch. The real issue just comes down to how we're going to divide up the pie when we wave our magic money wand, and it more than likely ends up benefiting the bankers more than others.
I agree with you whole-heartedly that money is a social contract. I did disagree with how you’ve formed your argument:
The credit crises is not a issue of money, it's an issue of confidence in the system.
Money is a social contract...
You wouldn’t enter into a contract with someone you had no confidence in that they would uphold their end.
Money is credit is debt is a social contract. I think that maybe you’ve gone slightly too far in the opposite direction of money being some fixed thing. It represents confidence, and we can’t just make it whatever we want, although we can bend it in a lot of ways.
Interestingly enough, with this view of money, it does make sense that at the pinnacle of failure of regulated, government-sanctioned contracts, you might find people (in aggregate) turning their confidence towards organized crime, with a proven record of organizing massive operations to move products.
We can make money whatever we want. Fixed currencies that are backed by gold, surely, we can't 'make' gold ... but that's an artificial limitation.
I'm not saying we should make it what we want, but we have to remember that's what's at stake.
Organized crime may have the advantage that contracts are ruthlessly enforced ... so you can't have the totally corrupt value chain as you had with housing, wherein there was fiction from the house buyer, to the lender, to the VP of mortgages, to the bundlers, to the buyers of said bundlers, and to all the people trading on top of that.
Also, there are no derivatives or complex financial instruments riding on top of the drug trade, so the 'house of cards' would have a lot less falling to do if it were to come apart.
But you can't build an economy of killing people who don't pay you or sell to your customer ...
The "artificial" or rather "natural physical" limitation on gold is what give it value in the social contract in the first place, so you can't just make it what you want. If you remove the limitations, its very hard to form the contract - but not impossible.
>The real issue just comes down to how we're going to divide up the pie when we wave our magic money wand, and it more than likely ends up benefiting the bankers more than others.
I suspect the problem is whatever strategy you use to manipulate the money system to avoid a downturn, it’s going to benefit somebody. The banks are just very well informed, and in a position to do pretty much anything anybody else might do, so however you carry out the intervention they will have the tools and resources to ensure they benefit from it somehow. So how do you manipulate the money supply without going through banks?
Well HSBC ( Hongkong and Shanghai Banking Corporation ) was created by the british after the opium wars to launder opium money out of china to the west. If any bank is adept at procuring drug money, it's HSBC.
It's a shame how little we are taught about the opium wars in the US. It fundamentally changed the world. Some historians describe it as the greatest wealth transfer in human history. The capital extracted from china is what funded some of the largest banks in the world today, the industrial revolution in the US/britain and political dynasties well into the 20th century.
Of course it left china in shambles, but the opium trade was the true gold rush of the 19th century.
It's impossible to say. We can realistically only see the broad strokes of history.
1. We know that the west was running a significant trade deficit with china. To such a degree that we finally decided war was the only option. We know that soon after the first opium war, china started running a trade deficit with the west.
2. We know that economic impact was so significant it collapsed much of chinese society and led to the greatest catastrophe in the 19th century. Up to 30 million people died.
3. We know that half of the largest western banks were founded in the mid 1800s ( HSBC, Wells Fargo, BNP Paribas, Santander, Deutsche Bank, Toronto-Dominion, Royal Bank of Canada, Societe Generale, etc ). Doesn't mean that all the banks were financed by opium money but that immense capital accumulation occurred in the west making it possible to found a large number of banks.
4. We know enough capital was accumulated in the west to heavily industrialize. Though we credit britain with starting the industrial revolution in the early 1700s, it didn't become significant until the mid 1800s when britain and primarily the US went on a major industrial campaign.
5. On the flip side, we know that china didn't have the capital or stability to industrialize.
6. We know opium money produced at least two US presidents in short time.
As for getting a specific number. I don't know how we'd even get that. We know it was significant enough that it completely tilted the world in favor of the west and ruined china for 100 years.
my armchair finance question isnt whether this is good or bad, but is it going to work again during the 2018/2019 recession? Call me paranoid, but I fully subscribe to the inverted yield curve theory of recession.
A big question is cannabis earnings...With canada's legalization, and most of the worlds decriminalization of cannabis, the drug trade cant be operating at the levels of 2009 profit. heroin and harder drugs are not as popular as cannabis and i suspect the earnings curve is flat as is evidenced by the increased introduction of carfentanyl in the supplychain.
Access to secure and just banking should probably be classified as a desirable positive (not to be confused with the more important negative rights) human right.
What I mean by secure and fair is what Krugman talks about here[1].
The idea would be similar to saying that people should have secure and fair access to water (in other words, not polluted, and not horded by nestle).
As it stands, our banking system is not secure (as the '08 fin crisis demonstrated) and it is certainly not fair (as banking execs, bureaucrats and plutocrats made out fine while taxpayers and money-holders were left on the hook for the fallout, bailout, and the bursen of 4+ trillion in what is basically free helicopter'd money for wall st).
Money is a social contract, it's worth whatever we want it to be, and we can change the value of it at any time.
The credit crises is not a issue of money, it's an issue of confidence in the system. No confidence, no credit, no system.
During this time, any government can play magic with the balance sheet and do as they please. This is what TARP etc. was about. The issue is really just about 'who wins and who loses' in a centrally planned game of money magic.
The drug industry mightn't have been too affected, by the downturn, and 'confidence' in their economy just kept on trukin'.
But any 'crash' in a post financially literate age that is not due to a true existential shock (like an earthquake that destroys nations) ... then we should be able to handle it ourselves without the crunch. The real issue just comes down to how we're going to divide up the pie when we wave our magic money wand, and it more than likely ends up benefiting the bankers more than others.