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Debt, a curse or necessity

What’s so bad about debt? After all debt of one sector of the economy is savings of other sector. Yet too big debt causes several problems on the macroeconomic level. But to start with, we have to separate in our analysis, the sovereign debts of the governments with the right to issue independently currency and debts of all the other sectors of the economy, namely the private households, and corporate, non-corporate private businesses.

1. To answer to the question, at first it has to be explained shortly how debts became the basis of money creation and the foundation of the monetary system, then, it is necessary to categorise the different debts, modern monetary system is based on, and to understand the major developments of these debts since the 2008 crisis.

A. The following short essay explains in understandable way for every reader, what does it means that money is debt?
https://rodeneugen.wordpress.com/2018/06/23/how-can-money-be-a-debt/

B. Since the 2007, when the economic crisis started, several dramatic developments evolved in the US and EU economies, the sovereign emitters of the most important world currencies, the US dollars and the Euro, that can be characterised by dramatic public debt increase since 2007, as seen in the next chart.

B1. The US economy a major shift occurred from private non financial debts to public debt. Since 2008-2017, the private debt declined from 170% to about 150% of GDP. Out of it the private households debt dropped from about 100% of the GDP to about 80%. The private non-financial corporate businesses total debt is about 70% of the GDP, similar to the 2008 data.
In parallel with it the public debt increased in the same time between 2008-2017 from about 68% to more than 100% of the GDP.

B2. In Euro zone a less dramatic shift occurred from private non financial debts to public debt. Since 2008 the private debt declined from 165% to about 160% of GDP. Out of it the private households debt dropped from about 64% of the GDP to about 58%. And the private non-financial corporate businesses total credit stabilized at 80% of the GDP since 2008.

In parallel with it the public debt increased from about 69% to more than 87% of the GDP peacking at 92% in year 2014.
B3. In China the private debts, most of it of non financial businesses, increased to unprecedented level of above 240% of the GDP, from just about 100% of the GDP in 2008.
Chinese public debt even if grew from 35% in 2008 to 48% in 2017, it still remains very low compared to the US and Eurozone debts. Most probably, in the future, if and when the private businesses will have difficulty with their debt, that is by large the highest among the big economies, to save the financial system and the Chinese economy from collapse, the private debt will be nationalised, just as it happened after 2008 in US.
C. Since debt is Money, and money is an agent, that represents one to one the value of the products exchange, volume of money in circulation influences the volume of economy. So we have to ask, how money influences the real economy’s circulation.
We can recognise two states of money, state of potential circulation or actual circulation. In the modern times the act of transfer of money, in most of the cases is done by stroke on a keyboard. Since it usually takes a blink of time to transfer money from one account to an another one, the money mostly is accumulated as stock in the financial institutions, in state of potential circulation, and only small parts of it is in circulation every moment. This fact is not only a technical issue, but also influences the volume of money in the financial system.
D. As contrary to every other sector in the economy, by definition a sovereign government, with sovereign right to emit its own currency, can never default on it’s debts, if they are in local currency to the local entities. (Default means loss of capacity to repay contractual obligations.) This uniqueness is enabled by sovereign governments capacity to emitte currency without limits. Yet unlimited emission of currency by governments, may cause devaluation of the currency against other economic items of local suppliers, that will increase their products prices, and cause by it inflation. The value devaluation can be against currencies of other countries, tangible or intangible assets, or consumer goods and services. The volume of currency is not the only way, the debt translated to money influences the economy through money circulation. Every additional currency volume added to the economic circulation, if not accompanied by equivalent increase in production capacity, will have to couse general increase in prices, (inflation).
E. The volume of currency is not the only way, the debt translated to money influences the economy through money circulation. Except of money volume issued by the government, the other factor is the velocity of money circulation. Money circulation velocity can be influenced by different variables.
-The most obvious variable to influence money circulation velocity, and highly manipulated by the central banks is the interest rate. Higher interest rate, lower velocity of money circulation, vice versus.
-Other important factor influencing the level of velocity of money circulation is the level of inequality of income in the economy. Higher equity in income increases the money circulation velocity, vice versus.
-Level of indebtedness of private households and corporations also influences negatively the velocity of the money circulation.
-Since income tax is on annual basis, level of income taxation also influences negatively the money velocity.
-If the money still would be in form of physical items, like paper bills or coins, and to pay with it, it would have to be brought physically to the supplier, the time period that the money would be out of financial system would be much longer. This would influence the available money in the banks, for overnight deposits, as minimum reserve required by the bank. This means, the potential level of available funds for credit would be more limited, and this has also negative influence on money velocity.
– the velocity of money circulation can be influenced even by technical issues, like the frequency of wage payments. Change from one week paycheck to one month paycheck will influence money velocity, since one week paycheck enables to reduce the value of necessary buffer stock money held in bank accounts.
– The demographic developments of the society, as for example the age structure of the population has to have influence on population propensity to savings in form of money. Expected rational would be: as individual ages, his life expectancy decreases, so he should rather reduce his propensity for savings. In reality it’s not clear, what saving behavior is to be expected from aging population.

The two charts above obviously show the decline of velocity of money circulation in the most advanced currency regions. Interestingly even the 2008 crisis and the almost zero interest rates that followed didnt change substantially the general trend of reduced velocity, as contrary to what would be expected.
F. But the financial world is more than money emitted by the government. Additional money creation by central banks, happens too in commercial banking system, that multiplies through credits several times the original money emitted by the government. The relation between credit and the currency issued by the government can be regulated by the government, or rather the central bank itself. The government has several tools how to influence the volume of money in circulation, while regulating the banking system.
F1. Minimum Reserve Ratio Requirements, defined as percentage of the value of deposits in commercial banks, that are their liabilities to its depositors – savers, that have to be stored physically in the bank vault in form of cash, or as balance of the commercial banks account in the central bank. This percentage is defined as obligatory by the central banks, that are part of the sovereign governments operation. In most of the countries this ratio is about 10%, what means, that theoretically the bank credit can be up to 9 times more than the deposits in the central bank.
F2. Other requirement the banks have to fulfil is the minimum capital adequacy ratio, or equity requirement ratio to the total credit, the commercial banks lent to creditors.
These two instruments were created to secure financial stability of the banks, and as such, the whole financial system. But the result is, that when the government creates new debts, and finances it by emitting additional currencies to economy, it always can control the amount of money in circulation, unless all the deposits of savers in the banks will be covered by equivalent currency bills in the bank vaults, and all the credits given by the banks will be out of banks equities. Banks equities by their nature are limited, since their source is either from emitting shares to investors, or from accumulated profits, that were not paid as dividends to the owners. The credit on the other hand is out of deposits, what is the usual state of liquid money, unless it is currency bills, saved in mattresses. When a bank gives a credit, it will be again deposited in a bank account of the borrower, or if money is used as payment, that is also deposited in a bank account of the supplier. So in modern banking system money never actually leaves  the banking system, but for a blink of second.
A financial system based on banks equities would be financially very stable, but it also means, that the capacity of the commercial banks to lend money would be limited, and the government would have to be the major source of the money supply to the economy. This would have to be by creating excess expenditures, and this also means nationalisation of most of the economic activities and suppression of the private sector. Since government cannot act in competitive environment, it’s activities are usually out of monopolistic power. It means also relative inefficiency of activities in government fields.
G. The debt of the private households as contrary to public debt has limited capacity to grow. Private households if indebted above their capacity to repay debts, are forced either to sell their assets, usually private dwellings, that were mortgaged to banks, or reduce their level of consumption. If the private indebtedness is a large-scale, whole country phenomenon, it causes collapse of the aggregate demand, and the economic activity is depressed. The result may be an economic crisis of reduced level of economic activity, unemployment, etc.
H. The corporate and non corporate businesses have several debt types. Equity, bank loans, and corporate bonds. Each of this liabilities behave differently. As in the case of private households, the private businesses cannot create debts exceeding their repayment capacity, but as a temporary state.
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2. After analysing the state of debt following the 2008 economic crisis, and explaining the connection between debt and money we can try to answer the question why debt is bad after all.
Historically economic activities could be without exchange of money. In the agrarian societies, the peasantry was self sufficient in supplying most of the needs of the family or the community. The exchange of products was necessary because of seasonal overproduction and high storage costs. Many produced agricultural items were also unsuitable for storage and had to be sold. On the other hand the peasantry needed some products, that was unable to produce by itself. Such a product could be salt or seasoning, necessary for food storing, or products produced by specialist craftsmen, who processed iron, wood, leather or textiles, like blacksmith, cobblers, tailors, etc. But most of the needs of the population, who lived in the rural regions were based on self-supply, without need for exchange of goods and services, so also without need for money.  Such an economy was pre monetarised.
Even today most of the housewifes activities are economic activities of production, without commercialization and monetization, meaning without money exchange. Such an economic activity is not counted as part of the income on individual as well as on the national level. This activity doesn’t participate on the GDP creation, can’t be taxed, and hardly can be financed by debt.
Since the industrialisation, more and more economic activities were about transfer of ownership of products produced by human activity between two legal entities, the supplier and the purchasers. On one side, the supplier brings to the deal product, on the other side, the purchaser brings money. Because of it, availability of money is crucial for any economic transaction. Collapse of money supply, because of money’s abundance or scarcity, will necessarily cause disruption in products production and commercialisation, even in extreme cases to its total collapse. Economic crisis in form of inflation or deflation is all about collapse of commerce, because of discrepancies between the value of money or product circulation.
Such a discrepancy is almost necessary because of very different timeline of money elasticity to grow or to shrink, as compared to the product’s production capacity change, that on the short term is very inelastic. To put it metaphorically, to create money all you need is keyboard connected to a right computer program, while to create production capacity, you need an additional, well planned production facility, its building an introduction to operation may take years.
Yet not everything is lost.
The financial system has its stock buffers too, using money’s value holding property in form of financial savings and deposits, that are influenced by many factors, among them the most important probably is the interest rate. High interest rate causes increased savings, vice versa.
Yet, any economic item or commodity if to abundant its value decreases, and if too scarce increases. The same with money, if too much of it, it causes inflation and too little of it deflation.
As described previously, the 2008 economic crisis resulted an unprecedented increase of public debt in US and EU, and big increase of private debt in China. If private debt can endanger the financial stability of the whole financial system, as it was proved since 2008, the government can always rescue the economy on the macroeconomic level. By doing it, it takes over the private debts, while this process creates cash money.
Does this unprecedented increase in public debt, translated to additional cash money in the financial system causes the expected inflation? Yes and no. As to consumers basket price index, that influences on short term the standard of living, it’s not translated to inflation, because of globalisation of the economy, and the excess production capacity worldwide for these products. But at the same time money loses its purchase power against other value holding assets, like real estate properties, publicly traded company shares, even cryptocurrencies, etc.
An another question is, because of tendency of existing economic monetary system to continue to increase debts, does the described system have capacity to repeat itself, and eliminate again the danger of total collapse of the monetary system as it happened after 2008? It seems, until most of the debt and so the money in circulation originates from the commercial banks and not from the government, the government has still big space to squeeze the credit volume in the economy, or manipulate the money circulation velocity, if it is needed. Also the government always can issue new currency and introduce it to the financial markets.
As i see it, the major threat to the existing economic-monetary system is in shaking the trust, the people have in money, as value holding and value representing item, what is the foundations of the existing economic system. More and more voices are heard about the absurdity of the most universal faith the humanity has, the fath in the universal value of money, and mainly of the reserve currency money, the US dollar. Viz.
The fath in money, mainly the US dollar or Euro is universal, and stable, even crossing borders of countries and nations with animosity towards the sovereign government, that emitted the currency. This faith has irrational foundations and is not consequence of any external preconditions, just as any other religion, like believing in almighty God, or faith in humorous Spaghetti Monster. Yet, as any other religion, with increased human awareness to the fact, that money doesn’t represent any real value, except the very faith that it has value, secularization of faith in money can appear out of nowhere or out of deep economic crisis.

Scarcity versus abundance.

The question of scarcity and limited resources touches a much more substantial question of nature, the second law of thermodynamics, entropy. Entropy means processes in the nature, from potential energy, its existence is caused by disbalances of state of particularity, to state of absolute equilibrium or uniformity, irreversible without additional energy input.

Out of the second law of thermodynamics emerges the following questions: “Is entropy enforced on biological phenomenon or not?”, and if the answer is not, still there is the question, “Can the phenomenon of human consciousness free itself from entropy?”.

As to biological cycle, it seems on the local level, as a temporary phenomenon, until the conditions on earth and in the solar system are suitable, the life itself doesn’t behave according to law of entropy. Still there remains the question, “Is human consciousness ruled by entropy?”.

The answer is not obvious. If we investigate human existence since the dawn of the humanity’s impact on the nature was governed by entropy. The very first humanoid acts of regulating fire, that goes back hundred of thousand of years, even long before appearance of homo sapiens, created irreversible processes of diminishing certain forms of flora and animal life, that existed on the earth for millions of years. This process was intensified with introduction of agriculture, urbanisation, and even more since the industrial revolution.

Does it mean these processes initiated by humans are irreversible and non cyclical, what would mean, the human phenomena is necessarily doomed? Not necessarily. It seems, the human intellect, does have the capacity to create tools to reverse these irreversible processes. But on the other hand the same technological tools have the capacity to destroy the human life or even the life all together on the earth. The question is, how humanity will use these tools. If to look in the past, the recorded history of humanity doesn’t give big hope. The most advanced technologies, the humans developed, were used for self destructive acts. As those tools get the capacity of global destruction, their usage became more selective and careful. That’s how we still have this discussion. As the technology develops, and it becomes more and more available for wide range of private people, and not only states, can anybody secure, that there will not be misused for destruction?

Even more, at present the technology is developed by scientists and technology developers, who usually act out of long term systematic vision, while those in authority to implement these technologies, act out of short term non systematic view of the reality.

Still, even if the experience of human history, and the political – economic scenery at present, doesn’t give to much hope for only positive usage of the newly developed technologies, there is chance, that the technology, as a conscious being, will save the humanity from destructing itself. Then the question is, what kind of human existence we can expect in the world, sustained and protected by non human, non biological life forms? Do we want to live in such a world?

As to economy, the basic assumption of every economic model, be it Marxistic or capitalistic is, that resources are limited. Economy is a profession about efficient and “just” allocation of scarce resources. If no scarcity, there is no need for economy as a profession.

In the seventies of twenty century, the energy seemed to be scarce resource, since then, most of the people while speaking about scarcity, they have in mind energy resources.Maybe in our times, with the new technologies, there is no scarcity of energy any more. But scarcity doesn’t have to be only about basic raw materials, energy resource, or cereals and corn. Scarcity is also about sustainable ecological system, that enables sustainability of human social and political framework, securing decent human life for every individual. If over exploitation of global resources, and its impact on the environment causes collapse of social political systems, even if in certain parts of the globe, it is also an expression of limited global resources. And in our global world, it hardly can remain a local event. The recent happenings in Syria and some other countries in the globe are result of political-economic mismanagement of despotic regimes, without long term aims and management for sustainability of environmental resources, as water and agrarian land. This kind of political-economic mismanagement, can be observed as today in many other countries. The expected collapse of these countries will have global consequences on a scale, unknown until today.

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Is Marxism a solution for the problems of capitalism?

A dialog between a young student (W) emerging from the occupy wall street movement and an old school economist (E), who became sceptical about the capacity of capitalistic economic system to create a sustainable economic system, that can successfully cope with the major global economic problems of the humanity.

W. I want to approach from the outside and analyze economic analysis from its core: what are the assumptions that underpin economic analysis, and are they valid? (i.e. humans are rational, act to maximize utility, etc.) Are basic economic theories proveable? Are the basic axioms correct? As a quick example, demand curves are supposed to represent consumer utility. Utility is supposed to be reflected in the prices of commodities. Yet utility is not measurable. Utility is supposed to give a product the price at which a consumer would purchase it. Yet we only know a commodity’s utility if we know its price. This circular logic poses the question: is utility theory able to be empirically proved? Utility theory came about through the “Marginal Revolution” in the late nineteenth century in opposition to the classical economics’ labor theory of value. Yet the same question could be asked of the labor theory of value: if price is a reflection of the abstract human labor (labor-time required to produce any commodity under the conditions of production normal for a given society and with the average degree of skill and intensity of labor prevalent in that society), is this measurable? Is it able to be empirically proved?

Economics is a very unusual field. Unlike the hard sciences, economists cannot set up a laboratory and empirically test their theories. Only historical data can be used, and it is often even hard to verify how accurate the data is. Furthermore, many economists are vehemently opposed to each other, and often none of them can make accurate predictions. I am interested in understanding why all of this is.
E. You wrote;

Are basic economic theories proveable? Are the basic axioms correct? Utility is supposed to be reflected in the prices of commodities. Yet utility is not measurable.

I would put the question in a more simple way, “Is utility definable”. Probably on the individual level. After all it is changing with aggregation. This is the second important understanding of the demand curve, the reduced marginal utility as it aggregates in the increased possession of the item by the consumer. But this you have to understand, since it is just a simple derivation. From practical point of you, even the second ice cream doesn’t taste so good as the first one. To speak about utility, it has to be in relative terms to situation in time of purchase of the potential consumer and not in absolute terms of fixed and unchangeable utility measured to product. Let’s take as example utility from the ice cream compared to utility from chicken wings, while the price of both products represented by universal media, called money express their relative value derived from their relative utility. I’m sure if you are hungry, the chicken wings gives you more utility than the ice cream, but if you are full it is in opposite way. Since an average person enters the restaurant hungry, he is ready to pay a lot for chicken wings, and very little for ice cream. But then, when his hunger is satisfied, he still is ready to pay for the ice cream, not because he is hungry, but because he looks for some additional pleasure, this price have to be below the chicken wings price, even if its production cost in terms of labor time input is higher. And this is why the demand curve of menu in restaurant derived from it has downward tendency. The price itself represents the meeting point or equilibrium between marginal utility curve and marginal production cost.
The model starts to be problematic, when the marginal production cost is zero, like in cases of free music, movie, or any other item, already created and exists free for usage on the web? This is the black hole of the market economy, where all the economic laws, as we know them start to collapse.
As to empirical prove of utility theory, don’t expect prove, as proof at level of certainty as of Einstein’s theory of General Relativity. (But even in physics not always you get such a clear verification) . Economics is about human behaviour, and as such, your scientific method approach has to be accordingly. I can make easily an experiment of checking marginal utility of any consumption product. But you will have always exceptions, and on those work the marketing agencies, to persuade the consumers to buy products without or with negative utility.

As to the labour theory of value, it is totally wrong, and never was right, except maybe it seemed to look right in the very first years of the newly emerging capitalistic economy in England in mid 19 century, when Marx lived. Marx didn’t give any value to factors as risk, entrepreneurship, brand value, know how, the differences of character among individual workers and of leaders of the new economy and technology emerging in front of him. He spoke about technology and its impact on the economy, but never admitted, that its development is unpredictable. I remember science fiction movies from sixties and seventies, where people having video phone calls in public phones. No one imagined the existence of mobile phone with the same possibility, and the revolution it will bring to human life.

Today the labour theory of value is even less relevant. I just heard, that Adidas is building a new factory for snickers close to Munich, where 400 employees will produce half million shoes annually. They are also closing a shoe factory in Bangladesh, with thousands of workers, who used to put millions of work hours in those snickers. Buy the way none of these 400 employees works in production line. How much value in your snickers is labour, and how much the abstract issue, that the shoe is called Adidas?

Also if you have politically socialist tendencies, to have intellectual decency, you have to ask yourself, where are the limits of your social responsibilities. Are there within the borders of US, or beyond. Do they include the workers of Bangladesh, Africa or China, who may starve if their work will be transferred back to the US or Germany, where the markets of their products are? Then also there is the question, do you have to buy new snickers, even if the old ones are still ok, just became out of fashion, and justifying it by claim that it gives work to the poorest in this world, while in other hand this over consumption is one of the reasons for global warming.

W. Even though I lean towards a Marxist perspective, I am not fully convinced of anything.

I understand that with utility theory, utility decreases with each marginal unit of consumption, which is why demand curves are downward sloping, and that price comes from the intersection between marginal utility and marginal cost. But price is supposed to be derived from utility. Can you predict price from utility? Utility is a defined concept, but it is not a physical, measurable quantity. An analogy I can think of is: “I posit that there is a feature within all physical objects that causes objects to be black. I’ll call this feature ‘B’. The more ‘B’ within an object, the darker it is. How do we know how much ‘B’ is in an object? We measure how dark it is! And we will base all of our theories on color based on this concept.

If utility theory is correct, a different analogy could be gravity. We know gravity exists but we can’t see it. It can only be measured by measuring things like the acceleration an object experiences because of it. However, the difference is that this theory can then empirically make predictions with very precise accuracy. For example, in the equation for gravity, force = G x mass1 x mass2 / distance^2, where G is the gravitational constant, a constant that is the same everywhere in the universe. This G was not measured directly, but derived. However, we have a value for G, and this value is then used to make very accurate predictions. Are there accurate predictions that are made with the concept of utility? Or, when we make predictions and they are not accurate, do we simply say, “well, the situation is complicated, there were other factors which caused the prediction to be inaccurate”? If predictions are consistently inaccurate, at what point would we start to question the fact that, even if utility theory seems logical, maybe it’s incorrect? Maybe price is not based on a subjective factor (utility, or satisfaction), but comes from some physical observable reality (an objective factor)?

As to labour theory of value, I think an important question is: what do we mean by “value”? You say Marx didn’t ascribe value to these things. But what do you mean by that? He didn’t incorporate these things into price? In what way does utility theory incorporate these factors into price that Marx does not?

Also, Marx did not deny the function of factors such as risk and speculation that go into the fluctuations of prices. Marx was concerned with price in the long-run.
Marx devoted hundreds of pages discussing technology and automation and the role it plays in the development of capitalism. He wrote of the necessity for constant improvements in productivity in order for capitalists to produce more efficiently to extract short-term profits by outperforming competitors, of how capitalism necessitates the need for revolutions in transportation, communication, etc. In fact, when reading Marx, it was pretty incredible to me the level with which he predicted technological innovation. I could come up with an abundance of quotes, but I won’t do this at the moment.
Amongst other reasons, a major reason why profit rates are constant throughout industries is that capital is free to flow across industries, so if one is more profitable, more capital will be attracted to this industry, and the rate of profit will decrease in that industry. Furthermore, it is not simply the number of hours worked that matters. What’s more important is relative amount of value produced by a worker, i.e. how much value a worker produces vs. how much the worker gets paid. With increased technology, a business can extract more labor out of an individual worker, thus leads to greater short-term profits.

Also if you have politically socialistic tendencies, to have intellectual decency……

I disagree with the framing of your last sentence regarding sneakers. Overconsumption is not the reason for global warming. Overproduction is the reason. An economy that depends on infinite growth is the reason. In fact, I read an article of yours from a few weeks or months ago, and you mentioned.
“The price to be paid in terms of global environment, to achieve this continuous economic growth, ignated an unsustainable processes of global ecological disbalance, endangering the very existence of bio-systems. It seems, already we are in the stage, that these processes cannot be stopped, unless a system change will happen.”
I agree with this. “Ethical consumption” (i.e. choosing to consume “environmentally sustainable” products) is not the solution to the ecological crisis. System change is.
E.
1. As to utility theory, gravity is not a good analogy. You have the G constant and it is exact and always the same, even if it came from measurement, or experiment, or what is called induction, and not prove deducted from theory of everything. When you speak about utility, you shouldn’t confuse between individual utility and aggregate utilities. The marginal utility is always a result of all the participants in the market, while all of them have a different utility curve, but all of them together have one aggregate curve. Those with too low utility from the product, will never purchase it, if the very first product price as to him is below the equilibrium price. Also the utility is always in relation too. Utility from beer, is in relation to the money I’m ready to pay for it. It could be in relation to chicken wings, but it is to complicated. The price of the beer in relation to money is not absolute value of the beer but a measure, ruler to express its relative value as to chicken. This is why utility argument is not circulare as you claim. Also the demand and supply curve is always in certain time and specific conditions. So if conditions change, the utility changes too.
I hope my argument is clear enough.

2. In market economy, as the technology is distributed to all the producers, on the long term all the producers products price will be the same, and their profit will be minimized to zero. The only way to be profitable in the market economy is by creating monopolistic advantage and scarcity, even if very temporary one, usually technological, or being the first on the market with product, like iphone. This is why Adidas, that has to compete Nike, Power, etc., but also car producers in spite of their brand, make very little profit, while Apple or Samsung made a lot, until the Chinese will take over the lead. GMs bankruptcy happened because it had to compete with Japanese and Korean car producers. In late sixties no one ever heard that they have any car production. Because every producer tries to adopt the cheapest way to produce, in the long term price in market economy leaves no profit, and in a way it flattens the production cost curve, meaning the first product produced have the same cost as the last one, theoretically to the infinity, and reduces marginal cost close to zero. In modern technology products like IT programs or art production, marginal cost of product is zero, and if distribution costs are zero, the product price has to be zero or close to it. Like the cost of this letter that will be eventually transferred to you.

3. Major problem of Marx are his political, sociological, historical analysis. If we accept the Hegelian dialectics, history is driven by conflicts. Yet, most of the conflicts are about clash of civilisations. Different mythologies, different human values, or lust for subduing and ruling others and not by materialistic class struggle for redistribution of resources. Definitely not in our times. Since Europeans adopted Monotheism, most of the wars were religious wars. The very first was Constantine. Before that the Greek-Persian, the Punic wars of Rome against the Phoenicians, the Romans blamed the Phoenicians of cannibalism (probably truth), the peloponnesian war was also about cultural differences between Sparta and Athens. Then you had medieval wars among the kings, what was struggle for territory in the sense of ownership, but not for economic reasons, but for glory and greatness of the Royal family. With the rise of capitalism colonial wars became about economy, but they were initiated by corporations, like East Indian company. But this is an exception. WWI was about frustration of German elites with the new urban population tending to support socialist parties, and not the conservative traditional elites, who, by the way, have done well for the working class, including first national security system in the world. Of course it was also about stupidity of absolutistic Russian Tzar, who was a retarded dictator, with a crazy wife. And then you had an 80 year old king of Austria. Intermarriage between the European kings made them dumb. Only exception that fits into Marx’s historicism is the French revolution, but it lasted few years, and was followed by Napoleon, the warmonger.
The classes struggle is non sense, and always was, even at times of great victories of this ideology in Russia and China, that was not result of power struggle of classes, but rather successful exploitation of opportunity, caused by political chaos after war, and annihilation of elits. In Russia they were successful in Germany not, even if tried. Why the German socialists were not successful with their revolution after WWI? After all they had much larger popular support than the Russian communists? Because they were less unscrupulous in their drive to political power, than their Russian camarads.

The Russian communist leadership was very effective in propaganda, and very goal minded. The goal was to grab the political power for any price. They fully implemented the slogan, The aim justifies all the means. They succeeded, but the price was huge and was paid by ordinary people. They murdered before the WWII millions of ordinary citizens in pretext of being capitalists, kulaks and bourgeoisie. You will say it is not Marxism. But yes, it is. Marx clearly speaks about the necessary annihilation of the bourgeoisie. And he says clearly, you can’t change them, they always will fight for their class interest. Conclusion, you have to murder them. The idea of proletariat dictatorship is also a very violent idea. Not to speak about the falsity of claim that there is proletariat and class struggle. Is such a claim a scientific claim? When did you meet last time a proletariat, are they the rednecks, who voted for Trump?

4. You wrote: …….. profit rates are constant throughout industries? It is empirically not truth. Maybe you mean interest rate? But even that is not constant. Interest rate is risk related. But above all, interest rate is not a free market price, but directly fixed by Federal Reserve bank.

5. We have agreement, the yield hungry capital driven economic system, combined with democratically elected populist politicians, monitored by specific interests of corporations is not very promising. Obama, who claimed to understand the global problems, had done nothing. He was puppet of big money. The disappointment from him brought Trump, who maybe will be more successful, by destroying the whole American political system. God knows if we will survive him.

Politics is about recruiting the ignorant masses to follow leadership case. Leadership is always elites by definition. The question is what purpose these elites follow. Are they for general utility of people, or fulfilling some hidden psychotic need to control and rule others. Communism under pretext of policy of general utility for all, created system of absolute power and absolute control of all. The Russian communists got all the legitimacy for all the cruelty and abuse of power they made from Marxist ideology.

6. As to labour theory of value, you wrote:
….more important is relative amount of value produced by a worker, i.e. how much value a worker produces vs. how much the worker gets paid….

First, if price is fixed according to labour time input in product, can’t be differentiation between labour value of scientist compared to manual worker. Also the wages according to Marx are according to needs. Kind of consumers basket. What it is i don’t know. Does it include sexy high heel shoes? And if not what about small hight girls that want to compete for male attention the higher ones?

7. Brand is about creating scarcity. When Apple launched one of his new products, he created a scenery of scarcity. Fronts of purchasers in front of its shops. Also the Apple shop chain is about trying to create a feeling of scarcity and ceremony, when you purchase iphone. Apple is fetish, as money, gold, diamond, or collection of art or old car is fetish. Marx spoke about fetish in negative terms. But it is still here. The profit is created out of scarcity, and not from exploitation of workers labour. Land in tiny city centres is scarce, so expensive. Land in vast uninhabited periphery is cheap. And it has nothing to do with labour.

8. I agree that capitalistic economic system has to change and will change. Either by collapse or by evolution. Collapse can be due to mass migration, I’m not speaking about millions but a hundred of millions of people leaving in places uninhabitable in the near future, like Bangladesh, Pakistan, Egypt, etc. due to ecological or political collapse or both, like in Syria. And it was not a result of US Middle East policy, but lack of water due to overpopulation, political corruption, and Turkish dams on the Euphrates. Parts of the world with huge population are becoming uninhabitable.
If to make evolutionary change, definitely materialistic Marxism can’t be the solution. Some new ideas have to be created, that may work, out off classical understanding of what humanity is all about.
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E. Your paper touches many subjects, and i will try to pick up some and comment on them

W. Consider the housing market before rent control. In economic terms, there was no shortage of housing. Yet people were being forced out of their homes because they could no longer afford rising rents – the conditions that fomented the urgency for action regarding rents in the first place. Economics would not consider this market failure, which is a situation in which a market left on its own fails to allocate resources efficiently.

You speak about homelessness. Price control on the rents, may be for some individuals salvation, but still many more others will stay out in the streets, since, what causes the homelessness is insufficient absolute number of apartments available for rent looking for tenants, and it will decrease with the price control.
Here i have to give a general remark, you have to decide what are you into, telling a story of an individual, for example homeless, or trying to analyse the system, its advantages and disadvantages, and try to find solutions. To speak about a general problem, and relating it to a particular problem, as an analogy is the basis of populist demagogue.

W. Nevermind the fact that the drive for profits has pushed governments to pass free trade agreements where capital is free to flow over borders but workers are not, which allows international capital to explicitly exploit the differences in wages in different nations and pit worker against worker. Definitely nevermind the fact that the profit-motive is largely what drove the expansion of slavery to provide the mass production of cotton for English factories. The 5 free market will solve all.

E. A very strong argument. I fully agree, that internationally free flow of capital without free flow of workforce causes discrepancy. But not too many in the unions or the left will accept to open the labor market for foreign workforce, and even less will accept the social class, you probably will call the proletariat opened immigration policy.

W. …..This explains why centrally planned economies never work very well?……

Thats quite an extraordinary claim. For example, in analyzing a country like Cuba, one would have to control for the obvious fact that it has faced a disastrous economic embargo and threats of invasion and infiltration from the most powerful country on Earth since its inception, and still managed to survive and build a better healthcare system than the US, eradicate illiteracy, and maintain a higher average annual growth rate since 1970 than the US , (even including the dismal years after the fall of the USSR where Cuba saw growth rates of up to -15%). This explanation provided by Mankiw is not an academic or scientific explanation. It is an ideological one.

E. Cuban experiment is an excellent example. Central planning economy can work well, if the needs are very basic, with very clear aim. It worked for USSR during second World War, when all the economy was recruited for war effort, or in Cuba, while the aim was to solve very basic problems, like illiteracy. But when the economy has many diversified tasks, trying to satisfy many different kinds of products, to satisfy maximum of the demand, it had to fail.

W. Still, its hard not to hear the promises the Bush Administration made when presenting their case for enormous tax cuts on the wealthy and corporations in lines like the following from Mankiw: Taxes are costly to market participants not only because taxes transfer resources from those participants to the government but also 13 because they alter incentives and distort market outcomes.

E. Here i would have a more profound argument against the claim that tax causes distortion to the market, and as such it reduces always the general utility. If divide the economy to two sectors the public and the private. Each sector has different activity (for example: the government produces education and health, while private sector consumer goods and services). Both sectors have to have very different marginal utility curve in certain time. The marginal utility of both activities has downward tendency, it means, if too much private activity is done, its marginal utility has to be less than of the public activity and vice versa. This is happening in US, where investments in private activities bring very little additional comfort, like new brand cars, while the public investments are neglected, and there are not enough roads, trains, etc.

W. These subtleties provide the illusion that the free market provides natural outcomes, and interference with the market is essentially unnatural.

E. Totally agree. And what if natural outcome without intervention results mass murdering of people or ecological disaster, like in case of global warming or water reserve exploitation? Market always allocates activities in certain time and location dimension, and neglects the impact of the economic activity in different dimension. For example, all the ecological problems are on global scale and long term, while market decisions are mostly short term and local.

W. Could it be that an economic mode of production that provides a tiny portion of the population ownership and control over the means of production (i.e. the factories, machinery, and raw materials that are necessary for the production of commodities) naturally produces a class of people (i.e. the capitalist class) that inherently have conflicting interests with the mass of people (i.e. the working class) that must sell their labor in order to survive? Could it be that since business owners necessarily must drive down costs in order to maximize profits to stay afloat in competitive markets, their interests are to keep wages as low as possible and to squeeze as much labor out of workers as they can, and that these antagonistic relations naturally lead to conflicts between workers and capitalists, where workers organize collectively to form unions and fight for higher wages?

E. Yes this sounds very Marxist and i see it very differently. There are no classes in the society, in anthropology sense of word. It is just a marxistic fiction. All you have is political organisations called communist party, where people with lust for political power, try to exploit frustration of certain sector of the society, less educated and less successful, to recruit them to create community of political supporters. Not all the workers are the same and the humanity is not divided to capitalists and workers. There are no social classes, there is no class of proletariat that identify themselves to other working people. No worker in Detroit has any positive feelings, towards a worker in Korean car factory. In contrary, they hate them and want to close for them the US car market. People are by their nature very competitive. Even the losers are failed winners. The workers who are employed and have pension fund investments are capitalists, on the other hand the CEOs can be just employees. You have also educated employees, and non educated ones. You have entrepreneurs and passive workers, asking only to submit themselves to some authority. Etc.

W.The theories stemmed from Marxs and others critiques of capitalism, and the idea that the means of production should not be owned privately by a small group of individuals, but instead should be owned collectively by workers. It is true that communists generally think that the market should not be the force that allocates societys resources, but that does not mean that the pervasive thought was that they should instead be allocated by a select group of government officials. The thought was that societys resources should be owned and distributed collectively and democratically, instead of leaving the distribution up to market forces that fluctuate wildly,….

E. This is a very popular argument of Marxists to defend Marxism, by saying it was not correctly implemented in USSR that’s why it failed. This is false claim. Collective ownership of resources distributed collectively and democratically, means economy is managed rather by political processes than by entrepreneurs competing each other fiercely. The necessary result of political processes is monopolisation of resources and decision processes in the hands of the politically most powerful, who are at the end most powerful because they are the best to manipulate other people and the truth and not because they have the best capacity to create wealth and utility for the society or have higher morality. In 20 century i recognise only 3 successful politicians with high morality, Gandhi, Mandela and Havel. No one else. Collective ownership and management resulted everywhere, even in the kibbutz in Israel the same result. After second third generation, when the founding fathers died, all was left is political struggle, who will be on the top. Remember in any political systems the most evil rule because they are the most evil.
W. …… Yet, today, in the wealthiest country the Earth has ever seen, there are around 550,000 homeless people……

E. You bring up US statistics, that is the result of very bad political processes, implemented in US, that brought to power very stupid and corrupt politicians. Donald Trump is just the top of the iceberg of the stupid political representatives, representing only particular interests, and have nothing to do with capitalistic economy. By the way Hillary Clinton wouldn’t be better than Donald Trump. Proper capitalistic system includes in itself very efficient tools how to cope with problems of inequality, social aid, public services, etc. The question is if these tools are used by the government. But if the political representatives are in payroll of corporations and banks, they don’t represent any universal economic goal, and not even the capitalistic system.

W. Nearly every major policy that has impacted the lives of workers for the better, from the eight hour working day, to social security, to job safety regulations, to medicare and medicaid, have been won off the backs of tremendous struggles of organized labor………

E. It’s not truth historically. The first welfare state was established by Bismarck before WWI, an ultra conservative German nationalist, to strengthen the German nation. Then after WWII it was introduced in GB by the Labour government. The Soviet threat, helped to restrain the criminal tendencies of politicians and their corporate management collaborators. But it has nothing to do with capitalistic or socialistic system of economy. Corporation tend to create monopolies through lobing, that are anti market anti capitalistic economy, that is based on competition.

The weakening of the concept of welfare state is result of increased economically inactive population due to aging, globalisation that by itself brought the distribution of welfare worldwide, and not only to the workers in the most developed nations, and lately the automatisation technology in production and management, that reduces the jobs in growing range of professions.

W. The demise of the Soviet Bloc was an incredibly complex issue. The facile explanation of why communism collapsed seems to suggest that communism is always doomed to fail; eventually the economy will stagnate and the situation will be forced to change. Hubbard explicitly states It is clear that a centrally planned economy could not, over the long run, grow faster than a market economy, leading to the collapse of the Soviet Union. But Mankiw and Hubbard never examine the opposite situation: that capitalism keeps seeming to run into this problem where workers revolt against the economic system and agitate for revolution. Couldnt one make the argument that capitalism, if left to itself, is always doomed to fail? After all, if it wasnt, why would the US have had to spend trillions of dollars over the past century , criminalizing and suppressing socialist and communist movements domestically and brutally crushing movements around the world ? Why would the US have had to overthrow countless democracies and install ruthless dictatorships , invade nations and slaughter millions , fund and arm right wing insurgents and military juntas , and spread anti-communist hysteria all over the world?

E. You put here on the paper a whole range of very weak arguments and i have to cope with it one by one.

1. The solution can’t come in Marxist kind of revolution by non existing proletariat, that by definition has to be employed and not unemployed, but by some system of welfare and employment, disconnected from the production process. I personally would suggest introduction of mandatory whole life education, training, or cultural activities, for the unemployed, while paying them wages, to secure decent living. The habits of waste and overconsumption, propagated by marketing agencies i would put under strict regulations.
2. I do agree that capitalism by itself is destructive and will be doomed, or will bring to the end the human civilisation, but not because of its failure to achieve its goal, the ever increasing yield on capital, but because of being successful in its drive to its goal. Capitalism’s aim predisposition is unlimited global resources, but the globe is with limits, and so the human capacity to comprehend the reality. So such a system eventually must collapse.
3. US post WWII policy of military intervention has nothing to do with capitalistic economy. It’s a result of majority of stupid political representatives, who represent only particular and not universal interests of the capitalism. Wars are too costly to be justified by economic means. Usually they are result of all powerful crazy or stupid leadership. Iraq war was result of very bad misconception of G.Bush junior and his arrogant advisers. Banana fruit company wars in Banana republics happened, but they were rather the exception than the rule. Most of the wars since WWII were result of fierce competition between despotic USSR, and democratic US. They managed to fight these wars in peripheral regions from European-US point of view.

As to your description of Marxist theory of value, if you reread with critical eye what you wrote, you have to come to conclusion that it is an anachronism, that probably never existed. The capitalists were not evil beasts, but real people, most of them run local based enterprises, in communities they were part of. The huge Ford like production line factories, like in Charley Chaplins movie existed only very partially in twenty century until the seventies. Since the eighties the automatisation of production, diminished the phenomenon of throngs of workers leaving by foot their shift. It also reduced the political power of unions.

To base whole economic theory on one temporary phenomenon is mistake. If you speak about scientific methodology, you have to define exactly who is proletariat and who a capitalist. Does such a definition exists? And if yes, do they exist as separate class?

W. Marx’s model was anything but deterministic. Marx’s entire theories were grounded in the philosophy of dialectical materialism, where history is a flow of interactions between ideas and material reality, and nothing is deterministic. Marx’s theories suggest that with a declining labor force, capitalism will be set into a series of crises as the rate of profit falls, and if he was right about many things, his analysis is more relevant than ever. We have yet to see empirically whether this was a correct prediction.
Marx did not deny the role that scarcity plays into short-term prices. He was concerned with prices in the long-term. Here I quote from this excellent source on Marxian economics:
Some people have the mistaken impression that the labor theory of value is some sort of substitute for the laws of supply and demand. This is not the case. All of the classical economists from Adam Smith, to David Ricardo to Karl Marx where aware of the forces of supply and demand. Yet they didnt think supply and demand were sufficient for a theory of value. Instead supply and demand were seen as the mechanism through which value operates.

For Marx, the theory of value is more than just a theory of prices. Price theory might help us make business decisions, but value theory is concerned with deeper social questions like Why do the products of labor take the form of commodities with prices? and What sort of social relations between producers are necessary in order for this to happen? In the process of answering such questions we can build a theory of the social relations of a capitalist society in all of its antagonism and dynamism.

You say most “conflicts” were about clashes of civilization, but your only notion of conflict in this statement is war. Nobody ever said that every single war was about the distribution of resources. In fact probably the overwhelming majority of wars were not simply about the distribution of resources. But this does not mean that many of the same wars you mention arise out of systems of societal organization that function to maintain the balance of classes. Was the Catholic Church’s dominance not necessary to justify and maintain the feudal order and the relations between serfs and lords? And religious wars fought between Protestants and Catholics, where Protestantism arose as a rebellion against the Church’s dominance and coincided with the rising of capitalism and the industrial class that conflicted with the traditional landed aristocracy? You are not mentioning innumerable international conflicts initiated by corporations (quick examples are the US overthrow of Guatemalan Democracy at the urging of the United Fruit Company, overthrow of Iranian democracy at the urging of the Anglo-Iranian Oil Company, etc.), but even those are not important compared to the majority of wars that are not directly attributable to corporations, but to the functioning of nation-states and their goals of preserving political and economic dominance.

Why did nation states arise with the advent of capitalism? Very briefly, the rise of private property and competitive commodity production based on wage-labor necessitates strict juridical frameworks to regulate production, contracts, etc. State force develops to maintain these legal frameworks. The need to regulate relations between capital and labor, and between capital and capital, further develops the functioning of the state. The producing classes, with wealth and power, dominate capitalist nation-states and wield the state to create favorable conditions for production, so states like Britain and the US intervene in foreign countries to ensure access to markets to sell surplus goods and access cheap labor and resources. I would argue that nearly every single war in the past few hundred years ultimately stem from these kinds of dynamics.

About the French Revolution being the only one that fits into Marx’s historical materialism, there are just so many examples I don’t even know where to begin. The Paris Commune in 1872, the Russian Revolution, failed revolutions in Germany, the Spanish Civil War, the Cuban Revolution, China, Vietnam, Chile 1970’s, not to mention countless other examples of mass movements that were not explicitly Communist but still the same light… in all of these places there were enormous worker uprisings. Your claim that the Russian Revolution was not a result of class struggle is completely unfounded. Have you read the testimonies of millions of revolutionaries who fought for revolution? It is books like “Ten Days that Shook the World” by John Reed and “October” by China Mieville that I think make pretty convincing cases that this classic line of “the Russian Revolution was not a mass uprising but an exploitation by the Bolsheviks of the masses” is completely without merit.
I think in your other email you said that the War in Iraq was simply stupid policy by one politician. This is an example of our disagreement. To me, the War in Iraq is not just a result of stupidity. It is part of a global project that has taken place in the past four decades, that we call “neoliberalism”. The War in Iraq was an attempt to dismantle a government that was at times resistant to US hegemony, and to build Iraq as an exemplar of a free-market, neoliberal success story, and it massively failed.

E.

You wrote: Marx’s entire theories were grounded in the philosophy of dialectical materialism, where history is a flow of interactions between ideas and material reality, and nothing is deterministic. Marx’s theories suggest that with a declining labor force, capitalism will be set into a series of crises as the rate of profit falls, and if he was right about many things.

To my understanding his materialistic dialectic historicism and his theory of stages is deterministic. Let me cite Wikipedia:
Marx predicted the breakdown of capitalism, and the establishment in time of a communist society in which class-based human conflict would be overcome.

How could you understand such a theory, predicting the next stages of the socio-economic structure if not as a deterministic one? You yourself wrote, it is surprising that Marx got it right in so many of his predictions. But then, how can you predict anything without to be deterministic? All the hard sciences are deterministic, because they try to predict. Just try to imagine, what would happen if you couldn’t predict the results of the simplest experiment. What if while boiling water on the fire the water would from while to while freeze instead of evaporate. You should check your claim that Marx’s historicism is not deterministic. Even in quantum physics, with its uncertainty principle you are predicting. And dialectics, materialistic or of the spirit is system of cause and effect. Thesis, antithesis – the cause, synthesis -the effect. What it is if not deterministic?

To me the expression, You can’t not to know, what you know”, is the basis of deterministic evolution of the spirit.
Also demographic trends, are deterministic within the existing cultural framework.

The first question is,… is human act out of free will or not, …
The second question
Can human individual act and have influence out if his social political background?
And the last one ……is dialectical materialism deterministic or not…..

To my understanding Marx saw historical processes as result of economic development in form of capital and knowledge accumulation and its ownership and the inter-relations between individuals in the society and individuals and the society, while the division of labour placed each individual to it’s class according to his economic task in the society.

I may be wrong about Marx, but still i believe i have the capacity to summarize the essence of differences between your and mine points of view. After all it’s not important who said what, but what are the ideas we believe in and if they are right or wrong.

To my opinion, the only way to change these deterministic processes is war, mass murdering, social-political upheaval through complete annihilation. If the Bolshevik revolution wouldn’t be successful, the world would be a very different place. Their victory was far from necessity. After all in 1917s election the Bolsheviks got only 24% of the votes, far behind the social democrats.

To my opinion, the major issue in political system is the legitimacy of the government authority. Historically rulers political legitimacy in the pre industrial revolution era was from their family stories about heroism, nobleman status of aristocratic families, etc., meaning fairy tales. If you visited palaces of European nobleman 250 years ago, you would see paintings of all their predecessors on the walls and their great deeds. Also their names included the roots of their families, etc. All this gave to them huge respect among the mostly illiterate rural population, living in the villages in the neighbourhood of their castles, who and their families were part of these stories, and as such could identified with them. Also there were no big concentration of population, that the rulers couldn’t manage. With the beginning of industrial revolution, growth of urban population, literate and concentrated in the cities and the new factories, this tie between master and vassal was broken. Add to it the new growing, well educated middle-class, and the old political power structure was broken. But no ruler, be it aristocrat, capitalist, or communist, gives up his grip on political power voluntarily, just because it lost its relevance. The revolution is the only way to change it. It started in France, the most important country in Europe, where the aristocratic grip to the power was the strongest, and most obscure. Germany, still divided among hundreds of city states the demand came later. To relate these events to clash of different economic classes with different economic interests is oversimplification. Class consciousness doesn’t exists, unless it is arisen by some ideologically motivated, semi-intellectual leadership with lust for political power.

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As to utility theory, i accept that the methodology used for the theory is very different from the methodology used by hard sciences. It is the same with all social sciences, psychology etc.

The question of determinism goes to the very core of the philosophical question, if there is free will or there is not. In physics and definitively in classical physics there is no free will, but mechanical obedience to laws of nature.
In sciences of human behaviour all what the scientists try to do is to build a model, that can be quantified, and partially explain certain aspects of human behaviour in certain situations. From this point of view Marx or Marshal are the same. Marx theory failed, not because his scientific method is worse than the alternative theory, but because he wrongly predicted human behaviour, in certain situations. He didn’t give enough importance to individuality, so important today, and on the social level to tribalism and all connected to it like, ceremonies, myths, feelings of belonging to community, fath, religion, casts, and thought it as a temporary phenomena, unless it is based on social class, divided by economic function of the class. He felt contempt to religion, to phenomena of casts in India, etc. and saw it as a temporary phenomena. He didn’t give enough importance to major force that drives the human individual to act, the urge to compete, to posses and to have profit from any opportunity it encounters.

To my opinion humans are result of evolution of hunters gatherers, who had to be opportunistic, trying to create advantage from every situation. This urge had to be restrained by the first agricultural statements about 10,000 years ago, when ownership on land became crucial to the success. With it started also to crystallize the social political structure of the society, all based on ownership. By diminishing the right to private ownership, the whole social-political-economic structure has to change. It is not a technical question. It has deep psychological impact.

Marxism is about materialistic mechanistic social-political processes. Essence of all is labour and capital. For example the spirit of creativity and entrepreneurship, he didn’t emphasise and counted enough, since it is uncountable. And to my opinion it is the most important factor that drives the economy. And now, my opinion on the major questions we have to discuss:

1. I personally believe that accumulated knowledge or in other words human capacity to comprehend reality, is the major force driving the human experience on the social or individual level.

2. Class struggle; i don’t believe there is class struggle between different socio-economic levels of society. As to my understanding, all the conflicts in human history, including civil wars as French or Russian revolution, were opportunistic exploitation of frustrated masses, who expressed their frustration by filling the streets ad hoc, without concrete plan what to do next day, after the masses go home. The very best expressed it Zizek, while participating in student gathering in Greece, during the demonstrations at the break down of Greek economy. He said, I’m with you, I’m left, Marxist, let’s do revolution, but you have to ask yourself, what will happen tomorrow, or the day after the revolution, who will clean up the mess after you?……
And this is the main point. It may seem, as if short term euphoric mood of masses can organise themselves to a political movement and act, within the classes. But maybe the experience shows us that rather some opportunistic charismatic unscrupulous leader, someone like Lenin, Stalin or Khomeini, takes over the political power after the revolution, and the result is more catastrophic in humanitarian terms than the previous regime. Experience and history shows me, collective leadership doesn’t work, but on the very short term and its results are unpredictable. Sometimes revolution may have positive outcome, when out of the revolution comes a leadership with very humanistic, pro community ideology, with deep philosophical and ethical commitment and understanding. That’s what happened to US with its founding fathers, all of them philosophers. But usually this is not what is happening. Usually out of revolution the most unscrupulous despots, with the biggest lust for power comes out as the leader. It will be Lenin and Stalin, Robespierre or Khomeini, and not someone more hesitant, more ethical, who will try to form some system of balances of power between different interest groups, and not just annihilate everybody who is not supporter of the case. This is why Kerensky failed, where Lenin was successful
2. Good government comes always out of evolutionary processes and not from revolution. The American independent war was a very unique exception, and this happened because of the personality of George Washington. Washington as a military leader, supported by the other founding fathers, all of them intellectuals, was an exception. He didn’t grab the political power, even if he had the opportunity to do so, but instead established a democratic system, with president elected by all, and for limited term. This was a precedent. It never happened before in human history. The only working democratic example were the Athenian Greeks and the Romans. Athens was a city state, with 100,000 citizens, and the Romans became dictatorship, very soon after the Punic wars, when it became an imperial power.

But very soon the American experiment became a great success, and England, then France tried to follow. And do not forget, US never became a colonial power, even if it could be. It took to France and England another 100 years to create a democratic system based on universal suffrage. Unfortunately in Germany the leaders of 1848 revolution were too hesitant to overturn the Prussian King, so it took 100 more years and two world wars, US occupation to bring stable democracy to Germany. Today you live in a democratic world, where despotism and dictatorship, as a political system is rather an exception. Of course, you still have most of the Muslim world, China, Africa. Are their dictatorships so successful? Or dictatorship is a result of failure to create a better political system?
3. I believe that history of humans is many times result of accidents and acts of few individuals and not of the acts of social communities, like socioeconomic classes, or nations.
Sometimes there are unstoppable, deterministic trends in the history. Like at present the technological development, that is unstoppable, and unpredictable. The same is with the population growth in third world countries with no or very poor education and social system, that causes mass emigration, that is expected to grow. Other deterministic phenomenon is the global warming. No-one seems to be able to change these trends, even if everyone understands the expected catastrophic consequences of these processes to the humanity and the biological processes in the nature.
4. As to Marxism as an economic model, i don’t think i have much to say about it above what was already said by others. Maybe i would add just, that the Marxistic social-economic model is not for humans as they are, but for the humans as they should be according to the Marxistic ethics. Meaning socially cooperative and responsible and not competitive individuals. This discrepancy between how people should be and how they in reality are, has to be overcomed by continuous revolution, not to overturn the government, but to change the people according the Marxist model. For this purpose all the tools are legitimate. As to Russian experience it included mass murdering and despotic repression by any means. And what is the result, creeping economy that fell apart after 80 years of central planning and despotism of worst kind. After 80 years or 3 generations out of the fragments of collapsed Soviet Empire, emerged the Soviet people, who are the most competitive and egoistic in the world. Why do you think, you will be more successful than all those clever people like, Lenin a professional philosopher, Mao Ze Tung poet, Pol Pot an engineer who studied in France, or Chauchesku a shoe maker.
5. You wrote:
Marx did not deny the role that scarcity plays into short-term prices. He was concerned with prices in the long-term.

Here surprisingly we can agree out of disagreement. It seems, if in modern market economy the competition is not restrained, (not as in reality,) due to technology, the marginal costs tends to become zero or close to zero. The only element of cost is the capital cost for investments. But this too tends to become close to zero. Of course it leaves very little for the labour, when everything is done by machines, but so happens to capital gain too? So who gets the reward? The scarce asset holders, like valuable located premises, the entrepreneurs, technological innovators, highly evaluated artists, etc.

6. Your interpretation of history, is with huge biases, putting events out of context and relevance, and i my even claim, smells from conspiracy theories. Truth is, as i wrote to you already, during the cold war, when the West felt threatened by the Soviet regime, and exaggerated this threat, (i believe, mostly out of intelectual misinterpretation of the power of the Soviet state, that had no legitimacy whatsoever of Russian intellectual elites), acted many times with exaggerated power to any threat from the communists, like in case of Muzadek in Iran. And in fifties it still could happen, that they gave overthrown a democratic regime, for economic interests of a corporation. It was an illegal act even then, as in case of Guatemala. But so since the seventies, since the end of Vietnam war all this changed. The US presidents Jimmy Carter, R. Regen, and above all Bush Junior, don’t show too much expertise in international policy. Clinton and Obama probably knew more, but the political system based on corporate money just flattened them. But at least they didn’t start a war.

Wars initiated by politicians happen mostly out of miscalculation, except if it is caused due to conflict between nations, and not by some president ignorant in international relations.

To my opinion, the reason for revolution is always loss of legitimacy of the regime. Thats what happened in French Revolution, then at 1848 it happened for the same reason. New urban middle class, the bourgeoisie, growing in numbers and in economic importance demanded participation in the political scenery. The French 1872 revolution was result of military debacle of Napoleon III against the Prussians. Lost war always shakes the legitimacy of the government. Very recent and similar cases of loss of legitimacy and power happened in Greece and Argentina, after the military debacle in Cyprus, respectively in Falkland war, or in the case of German and Austrian Kaisers, who lost their power after they lost the WWI. The 1905 revolution in Russia was result of debacle with Japan.

These changes of regime always happen in dictatorships, because loss of war causes weakening of deterrent force of the oppressive regimes, and the people are just not afraid to rise up. The same happened in the Arab spring. By the way, the Soviet Empire collapsed without Revolution. It was enough, that the Russian army was not ready to shoot on civilians, and the retarded alcoholic politburo give up the power without capacity to fight back. Only Ceausescu tried to fight back, with his securitate, recruits of his private army, about 10% of the population. The desperation of the population was so deep, that even murdering thousands innocent people didn’t stop them to turn over his government, and execute him. After this, the remaining communist leaders, whose only concern was not to be executed as Ceausescu, gave up voluntarily power. In Czechoslovakia they tried to fight back, but the army refused to shoot into the crowds, so frightened they stepped down, after 3 days of gathering of the Central committee of the party. Few hundred representatives of the proletariat asked one question, are they going to hang us for our crimes or not. Even if they spoke about different issues as reform etc. the only thing that really bothered them was the rope.

Democratic regimes from this point of view are more resilient, because in the democratic system is incorporated tool for change of government.

As to Russian revolution, the social political situation was too complicated to make it a revolt of proletariat. First of all was revolt of the soldiers who refused to fight on the fronts and Lenin, a German spy, promised them to end the war. Then 87% of Russian population were rural, at 1918. Even according to Marx it was not a proletariat. As i said, the Bolsheviks, who were only 24% of the newly elected duma at November 1917, exploited the naivety and hesitancy of Kerensky, who wanted to create a democratic republic. The Bolsheviks, were unscrupulous unrestrainedly cruel, and it have done, what they couldn’t achieve in the polls. Under the slogan, “who is not with us is against us”, they murdered in few years until 1922 hundreds of thousands of people. No one knows exactly how many. Their faith in Marxism, and belief that the history is on their side, enabled them to destroy opposition. They were just as ISIS today, just more successful. Fanatic in their faith, cruel, unrestrained, ready to destroy anything that stood on their way to power. It is not accident, that out of their lines came so many mass murderers. You are right, among the working class, who were told that they will rull through the Soviets, the revolution had to be a very enthusiastic time. But for how long. As Zizek said, i am for revolution. But what will happen a month after the revolution? He is too clever to support revolution with an aim different than western democracy. By the way, i was in Athens in 1 May the same year the Greek economy collapsed. I spoke to young communist students, and asked them what they want. All they wanted is subsidies from German working class. They said it in different words, but that’s what they wanted. But the German proletariat didn’t want it. This is all as to solidarity of world proletariat.

7. I agree that market-capitalistic democratic system can’t cope with the most urgent problems of the humanity. But definitely communism, in any form is not the solution. Whenever you leave out from political or economic processes competition, it will be disastrous. And today, with technologies that can be used by any individual, i would say, before to act, humanity need to think.

Future Economics

The major problem of understanding the economy is that while people are good in perceiving situations, they are not so good understanding processes. Process is flow of events following each other, chained to each other by causal relationship sequence. Process is happening in time, while situation is an immediate state. How much this causality relationship is hard to comprehend can be seen in all those popular theories throughout the human history, taking form of mythologies, religions, conspiracy theories, that are all about, as if revealing these causal relationships between sequencing events. Yet since throughout the history people created all those mythologies, obviously the need for causal explanation is a necessity for human perception.
Science is all about causal explanation between sequencing events, while economics as a science, is also trying to expose these causal relations in economic processes. Economic processes have to be analyzed in their timeline. The timeline can be short term, medium term and long term.
-The short term timeline is defined as an economic event from the beginning to the end. Such event in the private sector can be in between financial reports of a company, or a process of planning-production-commercialization of a product. In the public sector it can be an annual budget, or a term between elections.
-The medium term economic processes is defined as several economic events, connected to outside events, like market development, change of taste, fashions, but also political cycles like change of government, structure, etc.
-The long run processes analysis timeline is within human life span, and sometimes even exceeds it. Such a planning needs to be related comprehensible to the whole global economic system, including all its elements. For example retirement planning is such an economic activity, even if not taken as such, this is why there are so many defaults in it. For example the pension systems have difficulty to cope with increasing human lifespan, since no one can predict its development. Other such a problem is global environment monitoring and planning.
The classical economics, starting with the emerging capitalistic economy in end of 18 century, was all about reciprocal flow of money and goods and services (production) out of which emerges the value of every element of commercialized production. In the process of commercialization emerges the price of the product, using money as an universal scale. Price is result of continuous process of tender in form of invisible offers and bids, in each case when a process of sell&buy happens. If a consumer picks up a product in supermarket and puts it in his basket, this tender process happens, even if many times unconsciously. More conscious act of offers and bids is when the consumer chooses between two or more similar products standing each one next to each other but with different prices. The price is the most important among many attributes the consumer is considering before the act of purchase.Out of the agreed price emerges the currency value itself, representing the universal value of all the products, but also every separate product, that can be commercialized. Even more than that, the currency value relatively to other currencies is also strongly influenced from the product prices in the local currency.
Smooth flow of the economic processes requires trust in money value of every participant of this act of commercialization. The trust is secured by government enforcing acceptance of its legally tendered promissory note, (Money), as representing the price value of production by every resident of the territory, the government is sovereign in.
The major tool to enforce the money value on the commercial activities is tax collection in form of money, issued once by the same government. Why does the government need to collect taxes, when it can easily just issue the same money? Because it needs from one side to enable this whole carousel circle of commercial activities, from production processes to commercialization of the products, and on the other side between issuing the money by the treasury of the government and taking it back to the same treasury.
This economic process worked pretty well in the last 250 years, spreading this system of money circulation all over the world, going through evolution and increasing sophistication, as the professional economists analyzed and comprehended the whole economic process, improving their understanding from one economic crisis to an another. Every economic crisis can be seen as result of intellectual misconception of economic profession, until new discovery makes a paradigm change in understanding the economic process and with it comes the economic system change.
Several such economic concept changes happened in the late nineteenth and twentieth century, when gold-silver coins money monetary system was changed to paper many, at first based on golden standard, meaning exchangeable to gold one to one. Even in this time mainly after WWI, several major currencies, like the dollar and the British pound were used partly as reserve currency that had backing of gold reserves. This connection between the dollar and gold was disconnected in early seventies of twenties century and fiat money became the leading form of money in the world.
Economic crisis of 1929, escalated to catastrophic dimensions because of misconceptions of economic leaders of the time. One of the major reasons of this crisis was insistence of the economic leaders of the time to stick to gold basis of the money. This caused monetary squeeze at the time, when monetary enlargement was needed. The crisis of 2008 didn’t come to same dimensions, exactly because the economic leaders in Federal Reserve and the US Treasury, possessed better knowledge about economic system, and reacted according to upgraded economic concepts. It doesn’t mean there is no opposition to this policy, and the problems of deep economic crisis is solved. In contrary. The policy of Quantitative Easing implemented by Federal Reserve bank brought the world to unknown enchanted territories.
To this short term developments in macroeconomics on the global scale, that is fueled by increasing debt of either private or public sector or both, are accompanied several other medium and long term developments. If to follow the most significant macroeconomic processes in the developed economies, we can find the following phenomena:
A.One distinct long term development is relative decrease in employees wages as percentage of the GDP.
Wage.png
B. Since employees are the majority of the population, their share in GDP is still about 40%, it means this development has a major impact on all aspects of the economy. Naturally the propensity of the employees to savings is lower than of other sectors of the society. This seems to have major influence on the economic cycle. In the next chart can be observed the declining trend of the velocity of money. This two parameters of the economy seem to be closely connected.
Velocity.png
  1. Continues recycling of the money and the production, economy needs consumers demand of the wide population, including the employees. The solution to decreasing wages of the existing economic system is consumers credits, in form of mortgages for real estate ownership, mostly not of newly built houses, but newly evaluated ones, leasing contracts against private cars or other tangible consumers products, or just credit cards debts. Unrestrained consumers credit adds uncertainty to the economy, since the private households, as one hord, may anytime panic and try to repay or reduce their debts. If it becomes a major event, it brings collapse of the economy, and the government has to intervene, by buying up the debts of the private households from the private commercial banks.
  2. The public debt is growing to unsustainable level due to government budget deficits and due to nationalisation of the private debt created by the banks, whenever these debts are endangering the existing economic monetary system. To save the financial system that created these debts, from collapse, the government initiates government treasury securities purchase or mortgage backed securities, by exchanging these securities to cash money Quantitative Easing (Q.E).
  3. Due to the Q.E. policy the commercial banks are overflowed by cash money available for immediate use, yet with no operational capacity to increase the entrepreneurs loans for new business ventures, that judging their business plan needs expertees they don’t have. On the other hand the banks act more cautiously with consumers credit due to learning curve of the banks and due to new regulations that restrain their risk taking policy. The result is increase in their reserves in the central banks vault, above the level demanded according to the minimum reserve rate requirements of the central banks. This cancels the need for interbank loans between commercial banks and last resort loans from the central banks to commercial banks.
  4. The excess liquidity of cash money in the system reduces the treasury security interest rates to zero.
  5. The central banks, in purpose to create a new instrument to regulate the interest rate started to pay interest on overnight reserve deposits of the commercial banks. This interest competes with government treasury securities, its interest rate must be higher than the reserve deposits interest rate, because of rate, because of higher risk. This results, that the interest rates are administratively fixed by the central banks, and are officially accepted as the bottom interest. It means interest is not anymore, result of open market operation of the central bank with government treasury securities, but fixed directly by the central bank.
  6. The disconnection of interest rate fixation from any marketplace operation eliminates the connection to business moods, emerging from the private sector of entrepreneurs and households.
  7. The central bank’s policy is to secure full employment and price stability. If the banks rise their risk taking policy, and increase the credit to more risky projects or increase the consumers credit, the central banks will have to increase the demands on banks on minimum equity requirement, even above the Basel III accord, or minimum reserve rate requirement and these tools may become in the future the prime monetary instruments to regulate the interest rate.
  • But all these processes described above are valid for the classical capitalistic market economies. If to do prediction about the economy of the future we have to try to uncover the major trends and their dynamics at present, that will create the new economic circumstances in next decades. The most dynamic and most substantial issues are all result of technology development and social-political reaction to them. There are many fields that as result of previous scientific discoveries are developing new profound technologies. More than that these technologies start to get interconnected, as new peradigma changing technologies. Let me mention few of them.

    1. Computer power, the quantum computer is to be launched and operational within few years, and many very complex computing problems will be solved.
    2. In energy, within 15-20 years from now, most probably the first fusion electricity reactors will be launched, and within a decade they will become the major source of energy.
    3. The 2 means unlimited energy for almost zero marginal price, after the initial investment costs. One of the major technological problem of fusion reactor is in creating efficient superconducting materials. Research in this field will probably get strong push with the new computing power capacity of quantum computers.
    4. New materials, the new nano technologies of manipulating molecules on most elementary level enable to create new materials with unprecedented, and many times unexpected attributes. Nanotechnology will probably get strong push with the new computing power capacity of quantum computers.
    5. New biological forms created by genetic engineering. The already existing crispr gene editing technology opens the possibility to create new living tissues, with new attributes. This will change completely the agricultural production, if political and cultural limits will be removed. This technology will probably get strong push with the new computing power capacity of quantum computers.
    6. Artificial Intelligence, is getting to a stage, when more and more human activities are done better and cheaper by machines, and computers than by humans. Not to mention the new computing power capacity of quantum computers will have major impact on AI.
    7. They are many other technologies, like robotics, swarm technologies, virtual reality worlds, that are all result of all the above mentioned technologies.

    Any economic system, that will not include these expected developments in its curriculum, will fail. So what effect will have those expected developments on the economy? General price decrease of products, due to new marketing models, distribution forms and production efficiency, that we can see already evolving today, demand to consider new economic model. Price decrease, even if increases the utility value of production through more products sold for the same cost, does not increase the commercialized monetized value of the GDP. This trend is in opposite to the trend that ruled quite recently, that more and more products were monetized. For example food and clothes production were allocated to shops and restaurants from housewife kitchens and salons. All these activities, if before excluded, became part of the GDP or National Income, out of which were paid taxes, wages, capital gains, etc. But when the prices decrease, or many times product is transferred free of charge, as in case of many items distributed on the internet, the classical economy stagnates, and so the GDP. But all the economic financial system is based on assumption of increasing GDP, and if not, the capital can’t get its expected yield and the government can’t collect taxes. High production and distribution efficiency, mechanised and computerised will also create large scale unemployment.

    Major questionnaire hangs above the function of money and the whole monetary system. In the classical economy money fulfilled two functions, intermediary agent between buyer and seller, and value holding asset. The technological development didn’t jump over the monetary system. The money became more and more virtual, financial transactions became or immediate or overnight. Also new financial instruments appeared on the system, as platforms for direct investments, like Kickstarter and above all the cryptocurrencies. Even if price reduction of consumers product diminished the inflation pressures, it didn’t happen to value holding assets. The souring value of cryptocurrencies, stock prices, and above all worldwide real estate increase, are all different form of inflation, not measured in average consumer basket, and not influencing directly the population, unless the individual has no accumulated assets tries to jump the bar, and tries to become an asset holder.

    Currency collapse

    The collapse of the Turkish lira is the first swallow of collapse of national currencies in countries, where the people don’t trust anymore their government. Money is about trust. The same is happening in Venezuela and Iran. Who is the next? I can think about some countries, but don’t want to name them. There is a czech proverb, don’t draw a devil on the wall.

    Popular misconceptions about economy

    The major popular misconceptions about economy.

    In the public view there are several misconceptions about how economy works.

    Taxes are collected to cover government spending.
    Public debt and printing money, necessarily cause inflation.
    Government’s deficit has always negative influence on the economy.
    Private sector is always more efficient than the public sector.
    Inflation is result of increase in the demand due to increased wages.
    Increased wages reduce competitiveness in the economy.
    Trade deficit is devastating for the economy of the country, while trade surplus is healthy always for the economy.
    Money has to be backed by economically valuable precious item. (Rare metal like gold).
    Money has fixed value, unless there is inflation in the sovereign country that issued the money.

    A. Taxes are collected to cover government spending.

    The reality is, taxation is aimed to fulfil several very different goals except to cover government expenses.

    a. Increased equality in distribution of income, by progressive income tax, property tax or tax on heritage.
    b. To protect local production from foreign competition by costume tarifs.
    c. To regulate economic activity by fiscal economic policy, without to change the government spending. Tax release can spur economic activity of the private sector, while increased tax burden has opposite effect.
    d. To regulate consumption, (Value Added tax, tax on alcohol or tobacco, fuel, private cars, etc.)
    e. Return on government investments on national level investment projects, (federal road tolls, payments for national railways, electric grind, etc.)
    f. Social security taxation. This taxation is special purpose taxation, aiming to transfer income from part of the society with higher income, to parts of the population with non or limited income.

    The government activity can be divided between spending, that doesn’t increase the economic production capacity in the future and government investments, that do have positive impact on economic growth. The obvious government spending item is military spending, that usually has rather negative impact on economic growth, even if it increases directly the government spending and by doing that increases the aggregate demand. Other such item is social security system, that is a special kind of taxation, its purpose is to allocate income from economically active segment of population, to the less active segment, either because of their age, limited employment capacity, unemployment, etc. This kind of taxation doesn’t influence directly the government spending, but indirectly, by allocating financial resources from population with high income, their spending rate out of income is relatively low, to population with low income, with relatively high rate of spending out of income. The impact of social taxation is positive to increase in aggregate demand. On the other hand it reduces the income of the most productive segment of the society. Some economist believe, it negatively influences the economic growth.

    Conclusion: Only one of many aims of taxation is to cover government expenses.

    B. Public debt necessarily causes inflation.

    Public or sovereign government debt by definition means government expenses exceeding tax income and government revenues from its activities. This debt is covered by government promissory notes in form of cash money or government securities and bonds. Since Government tends to increase its spending, and not so much reciprocally tends to increase taxes, it creates debts. These debts are translated to promissory notes, that become the basis for financial liquidity in the economy, the Monetary Base, without which economy couldn’t operate. These promissory notes circulate, and have reciprocal twin, the economic production, that circulates in opposite direction, and its value is represented by the value of these promissory notes exchanged against them. The rate of circulation of money, or the Velocity of the money, together with the volume of money in circulation is monetary expression of economic activity, and is called the Gross Domestic Product, or GDP. Change in value of promissory notes circulation changes reciprocally the value of production circulation, that is measured as GDP (including change in inventories). The equal opposite to GDP is GDI, that is the Gross Domestic Income, representing the Money value circulating in the economy. Only part of this circulation creates new economic wealth in form of savings its other side are investments accumulated as wealth. The rest is consumed or waisted.

    Since the level of liquidity strongly influences the monetary circulation level, it influences the aggregate demand in the economy, and so the GDP. This is the state, until the economy reaches its objective potential, limited by certain resource, that has no substitute for similar price. If such a limit is reached, the result is price increase of a particular item, or many items, their supply is dependent on this limited resource. Such a basic limited resource can be a raw material or energy source, cereal grains, or available workforce, specialised or not specialised, etc.

    Conclusion: Government deficit is inflationary only, if it creates additional aggregate demand in economy without enough production capacity. Otherwise it increases the volume of money in the economy, depending on money circulation velocity, it may or may not,
    increase the total volume of money in circulation.

    Comment: Due to development of the technology, usually such a limited resource on the short run causes price increase, that itself causes in market economy concentrated effort to develop technological solution for the shortage in resources, that on long run according to experience in the past solved this shortage. So it happened after oil price jump in seventies and eighties of last century, that caused development of photovoltaic technology, as substitute to carbohydrate fuels.

    C. Government’s deficit has always negative influence on the economy.

    Government deficit, if created in times of available production capacity, causes increase in aggregate demand, and usage of this unused capacity, meaning GDP growth, or increase in wealth. In time periods of limited resources, the government should run public surplus in its budget, that can be achieved by government budget cuts, or increased taxes. When government increases taxes to reduce deficit, the aggregate demand decrease will come from the private sector, while if the budget cut will be the major tool of the government to fight inflation, the aggregate demand decrease will be of the government.

    Since decrease in private sector activity also decreases the taxable income basis, budget cut is more efficient way to reduce the deficit and to fight the inflation than the tax increase, that decreases rather the tax obliged private sector activity. Government economic activity is either providing services for the population, as social services, education, health, or legal, personal and national security. Other government activity is investments to low yield, long term projects in national level. At times of unemployed production capacity, the government’s budget increase is usually focussed to governments investment activities. This means increased government activity is a more efficient tool to activate unemployed production capacity than tax reduction. Tax reduction may increase the aggregate demand too, but not necessarily by direct investments, it means it’s impact on economic growth will be rather short term and limited.

    D. Private sector is always more efficient than the public sector.

    In modern market economy, in principle, public sector should not be in competition with private sector activities. On the other hand exists necessary high risk economic activities on the whole national level, or very long term investment activities without obvious immediate reward. This is why governments many times invest in very visible white elephant projects, like unused airports highways, etc. with no direct profitability. Still government investments bringing indirect profits to the society on long run. As example of such activity is education for the whole population, minimum income security programs for all, but also wars preventing dangers of crumbling of the society, due to external or internal aggression. If these services and activities are neglected relatively to private sector activities, it’s more effective to the economy to increase public sector activity than private sector activity.

    E. Inflation is result of increase in the demand due to increased wages.

    Wages are only one of the elements in the production costs. Other production costs are capital income expectations as interest rates or yields on capital investments, franchise right costs, royalties right costs, rents on land and premises, raw material resources exploitation rights, etc.

    While Labour and wages are always exchangeable for technological solutions, or increase in production efficiency, capital income expectations are hardly changeable, so less flexible.

    F. Increased wages reduce competitiveness of the economy.

    Wages increase may happen for two different reasons. Increase in productivity of production, or limited supply of labour. In case of increased productivity, the price of labour decreases relatively to produced value, and it causes tendency to wage increase, without to influence competitiveness. Increased wage means relatively less capital gains out of economy. Improved competitivity in economy is caused by new investments and initiations done by private sector. Does decrease in wages bring less initiations and investments. There is no necessary connection.

    If wage increase is caused by limited supply of labour, it may causes general price increase. This means, the profitability will not be influenced by such wage increase on whole country scale, but in the particular case.

    G. Trade deficit is devastating for the economy of the country, while trade surplus is healthy always for the economy.

    Trade deficit is one of the components of the current account. It represents the total export minus the total import of goods of a specific sovereign country. If the number is positive it means trade surplus and if negative it means deficit. Trade surplus or deficit can be balanced by service account of current account. Services account includes all the international economic activities, excluding the items in trade deficit. As example, deficit or surplus from foreign tourism. Other example can be the difference on capital gains on foreign investments, compared to capital gains paid to foreign investors by local economic entities or the government.

    If the current account has deficit, by definition it has to be balanced by capital account. Capital account includes all the foreign investments, foreign bank loans or non bank loans, etc. If current account has deficit, its balance by capital account creates indebtedness, either in form of loans and credits to foreign banks, or in form of equity liabilities created by foreign investments, causing foreign ownership rights on economic assets, like real estate, or company shares. If the current account deficit is created partly by government, this is balanced by government debts in form of treasury securities, that will be held by foreign investors, or governments. An unusual phenomenon is when the currency of a sovereign country like US is held by foreign governments as currency buffer stock reserve. In this case, the nation with the currency desirable as reserve currency has to have current account deficit, that is balanced by investments in US government promissory notes, usually in form of US treasury securities. Viz:
    https://rodeneugen.wordpress.com/2018/07/19/money-debt-promissory-notes-reserve-currency/

    Too much debt to foreign investors my cause dependency on foreign entities, be it private foreign investors or foreign governments. In the past, while the dominant global economic system was based on national economies, competing each other fiercely, this was important, but in today’s global economy, of international corporations, the differentiation of debt as foreign or local, lost its importance. More important is the level of investment attractiveness of certain country. This attractiveness depends not only on yield of this investments, but the trust in the stability of the country’s political and economic system.

    Another reason why the differentiation between local and foreign investors is not relevant, can be understood from the silicon valley high tech corporations, that their management and research development are usually in US, while most of them are incorporated abroad and their production facilities are also abroad. Since the know how development costs and the corporation profits are significant part of their revenues, are at first accumulated in their foreign entities, then reinvesting back to US. In official statistics, these investments are registered as foreign investments. In reality this funds never left practically US.

    H. Money is backed or should be backed by economically valuable item, with fixed high price. (The best, precious rare metal like gold).

    This urban mythology still prevails, even if the connection between gold and money was disconnected officially in early seventies of last century, and in fact such a connection never existed. Even in times, when instrument of payment was precious metal coins, the relative price of the coin to products changed. If too much coin was minted, because new gold deposits were found, the product prices went up and vice versa. To understand how inefficient is gold as a fixed measure of value for product price, it’s enough to see the gold price in last years since 2008, jumping ten folds, then collapsing back again.

    I. Money has fixed value, unless there is inflation in the country that issued the money.

    Inflation means average price level increase, of either an average consumption basket, or of any other basket, defined by the economist. Such a basket can be energy items basket or house price basket, etc. Usually even if the average consumption basket is fixed and stable, there is always big price change diversity of specific consumption or investment item baskets. Usually housing and energy prices are characterised by big velocity, high tech products with downtrend tendency, and the classical food and basic consumption items with relative long term stability.

    New way to finance dividends

    Global or local politics

    The right of any nation for any piece of land is derived from the capacity of a group of people to identify themselves as belonging to unique mythology that defines them and their connection to certain piece of land. If the connection of these people to this particular piece of land is strong enough, to make them to be ready to sacrifice their life, in sake of saving this particular piece of land for people, who belong to the same myth, then these people have the full right to own this land. But then what happens when more than one group of people have claim for the same land? They will try to delegitimize the other group by different claims like, who was first, or trying to claim of falsehood of the others identity. They will use ancient texts, believes, fables, fairy tales, myths they believe as if it was a massage from the All Mighty directly to their brains. They will adore the ancient texts, and try to uncover mystery in those texts, interpret them with strong bias to prove their myth being right, and the other’s being a lie. But this conflict cannot be solved by proving the rightness of one claim and denying the other. It only brings claims against claim, not standing by any standard of objective measurement. It can take hundreds or thousand of years and still the same claim will be there. After almost one thousand years the Arabs still accuse the Europeans being crusaders. After more than half century the Africans accuse the White people of being colonialists.

    Only complete change of collective mind state can resolve the conflicts of this kind, where truth of one social group collides with the truth of other social group. But does anyone want to change his own state of mind? Does the humanity capacity to such a change. Is modernity with its ideology of hedonism answer to this question? And what is the final aim of humanity? It seems as if segregation and interreflection of the different  cultures is more relevant today than global perspective, comprehending all the cultural, scientific and economic values the humanity successfully accumulated within thousands of years of human civilization.

     

    The new political leadership, emphasizing rather local particular issues, while neglecting whole globe, universal problems, as:

    1. Global environment, global warming, and global resources exploitation.
    2. Nuclear war.
    3. New forms of political extremism.
    4. New technologies under development, that eventually will marginalize the task of humanity from the goal to a tool.  

    All these problems, that are all at global universal level, don’t get any attention of the political garniture concentrated in local particular interests, even if they are challenging the very basics of human existence.

    GDP growth obsession-1

    The economists obsession about GDP growth is not a misconception or ideological prejudice. The whole capitalistic system, to satisfy the demand for positive yield on capital, needs continuous economic growth. In a stagnant economy, will be no new additional add value, that is necessary to pay return on the loans in form of interest, or on invested equities in form of dividends, (or CEO wages). The whole capitalistic system cannot continue to exist on the long run, if no positive return is on the capital. This is why the existing capitalistic system must continue with economic growth, even if doing so, it will destroy the world’s ecological balance, and at the end cause the annihilation of human specie on planet Earth.

    The world economy long time ago stopped to add new value to the standard of living in the developed countries. It rather productises more and more of the human activities, and releases the individuals from knowhow and capacity to create its own products and enjoyment. If few generations ago, kitchens at homes were facilities to produce food and social gathering spot, today they became design show off, while the food is processed and bought from the restaurants. By doing so the family dinner became part of the GDP. This social-economic change happened, without decision of any authority. An another example i would bring, is the more and more sophisticated private cars, that add very little comfort to the driver, while he has to drive for hours in traffic jams. The same can be said about most of the consumption items that gradually overtake our life. Sometime the takeover of the new technology comes like a storm with a new paradigm products, that appear from while to while on the market, like plastic materials, personal computers or smartphones. Are those deep changes in human acts and behaviour, unconsciously adapted by the people living in modern developed economies for the wellness and happiness of the people, or for achieving higher profits to the suppliers of these products, so they can satisfy the unrestrained urge of the capital co generate ever increasing yield?

    The price to be paid in terms of global environment, to achieve this continuous economic growth, ignated an unsustainable processes of global ecological dis-balance, endangering the very existence of bio-systems. It seems, already we are in the stage, that these processes cannot be stopped, unless a system change will happen.

    Observation brought me to categorize human beings to social cultural groups, that differ from each other according to their conscious awareness to the realities, they encounter in their daily life, or come to their awareness through the information media. I can in rough terms divide the people to three different groups with different personal methodologies they use to comprehend their worldview:

    A. Those with concept of consciousness based on belief in fairy tales, originated in ancient texts like, the Bible, the Quran, etc.
    B. Those whose consciousness is built on modern fairy tales, created by sophisticated tools of modern marketing, distributing rather disinformation than information, useful for a potential customer of a product. Those tools include not only the official marketing tools of advertisements, but every random information and communication object a normal human being encounters in every step in his life in modern society. It includes cultural products, like movies, tv serials, newspapers, books, shops, street signs, showcases, etc. Then falsified consumers evaluations, that always tend to be too much positive to be valid. But also our language penetrated with false icons, brands and other kind of junk information.
    C. At the end are those, who make consciously special effort to avoid random information enforced on them, and rather are exposed to intentionally chosen information with definite purpose. Then they rationally, with self aware critical approach, judge, categorize and filter such an information, based on evidence and previous experiences.

    There is no need to make intense surveys to know what kind of information, out of those three mentioned above, are most of the people exposed too. It is enough to compare the number of followers on the web and especially on YouTube kind of media, of the disinformation kind of information, compared to the followers of the third kind of information. While millions of people are following the first two kinds of disinformation, only very few follow the third kind of informative publications. This is the reason, why no data, evidence or any kind of rational argumentation is accepted by the masses, within the existing economic and political system.

    Then it becomes relatively easy for people, who run the existing economic system, based as explained above, on the need for ever growing return on capital, to sustain this deception of most of the people, whom they draw to over consumption and illusive satisfaction of immediate desires and lust. On the other hand, the economic leaders, who market such a deceptive economic system, have to be well aware to the fact, that this system cannot continue forever, exactly as they knew before 2008, that this system of theft, that created systematic debts creation, without real economic foundation, cannot go on forever. Still they continued to play their game, personally very profitable for them, believing, that somehow-someone, will clean for them and after them the economic mess they create.

    The contemporary capital driven economy, in its foundation, with the need of continuous blind economic growth, because of its cumulative tendency to accumulate waist, has to bring to collapse of global environment, and eventually of the human civilization as we know it.

    It appears, the most important macroeconomic question on the global scale should be, to develop an economic model, that will be based on sustainable processes, securing balancing feedbacks to the whole global system. Even if the awareness to these problems and to their solutions exist, and sometimes even implemented, these solutions are always very partial, sporadic and particular, while the problems are at global scale, and its accumulation continuous. The tools used to solve these problems are always political, and within the existing capitalistic economic system. The latest example is European decision to abandon the usage of plastic bags. It is again a sporadic and particular solution to global system problem. (An exception of world wide cooperation on solving a global problem was the acceptance of restrictions on usage of ozone layer damaging gases as chlorofluorocarbons. Even here it seems there are leakages in the restrictions).

    Why such an inaction of economic-political leadership on the global scale, when every reasonable minded person can easily understand, that any continuous process, if not disturbed by contra-act, has to create an unbalance, that at the end will create a bubble that has to blow up.

    The answers lies in the existing political-economic system, that has no management tools to cope with those long term global problems. It seems a Global Environment Economic Management System (GEEMS), has to be created, to cope with the issue. To create such a system, first we have to ask the question, what are the core problems in the existing political-economic system, that seem to be in the root of the impotence of the existing authorities to act. There are several systemwise problems, that can’t be overcome in the existing global political system:

    A. Fragmented sovereignty problem.

    While the GEEM problems are global, its management is local, by sovereign nation or state focused. Political system based on competing nations, has no capacity to solve global problems that need global cooperation of all.

    B. Term problem.

    The GEEM problems are long term, while the existing democratic political decision making processes are short term, limited to time schedule of the next election.

    C. Social change problem.

    GEEM problems solution demands changes in socio-economic behaviour of every individual, be it in economically developed or developing nations. While in the economically developing nations, consumers based economy and society has to be abandoned, in developing societies birth control policies has to be adopted.

    D. The hungry capital problem.

    The economic system based on interest or other form of yield income, forces a need of continuous economic growth of the economy.

    E. The monetary system problem.

    The monetary system imposed by sovereign governments of the states, that is based on mixture of two. Money as byproduct of government deficit, and government securities, issued to cover government deficit, with byproduct of being a major tool to influence interest rates, with intention to secure economic stability, but also economic growth, that is the basis of economic stability. (Economic stability means full employment without inflation.)

    F. Equality in income distribution problem.

    Can’t be expected a policy of self- restrained economic growth, while in parts of the world, still big parts of the population struggle to satisfy their basic needs, as food, shelter, education and healthcare.

    The existing economic model is based on faith, that market, an imaginary place, where competitive demanders and suppliers meet and negotiate the price, that will become the equilibrium price, that equalizes the production and consumption motivations and utilities. Yet this economic model does not takes in consideration, the global scale price to be paid, to let these individuals involved in exchange of products at agreed price. The individual utility from the usage of the product, expressed in form of product price, doesn’t take in account the price the global community pays, as byproduct of the act of production and exchange. This phenomenon is an obvious failure of the market price system. The solution has to come with communal intervention into the free market processes. But who have the power to enforce such an intervention in global scale? Obviously not the national governments, that suffers from all the defects mentioned above.

    The economist suggested policy is eventually government intervention into market prices of energy through taxation. Yet even this policy is not globally implemented. In contrary, many countries subsidize the energy usage, that not only increases global ecological imbalances and resource depletion, but also creates unfair competition advantages of these countries, while the ecological price is paid evenly by those countries, that subsidize energy and those that don’t.

    Jewish national home

    Israel is the prove, that humans, whatever culture, faith, nation they come from, when acting as one politically organised society, eventually will behave and act very similarly. Jews while in diaspora, even if segregated for centuries in ghettos, or following the enlightenment integrated in the surrounding societies, according to their cultural ethical code were the most pacifist, cosmopolitan non locally oriented people, even if they sustained their tribal identity, in spite of living in diaspora dispersed in all corners of the world. With the opening of the surrounding societies in nineteenth century, and gradual secularization of European societies, many Jews also went through secularization, at least in the more developed parts of Europe, namely, England, France, Germany and Austro-Hungary, and tried to integrate into the surrounding societies. Many of them abandoned their religious identity and officially became christians, even if rather they had secular belief. (viz, Mendelson, Marx, Heinrich Heine, Mahler, etc. who were officially Christians, still considered Jews.)

    While before the beginning of nineteenth century the European society for centuries was divided clearly to peasants subjected to their landlords, urban population belonging to their professional guild, and the leading political, military and spiritual elits. With the industrial revolution, and urbanisation this social identity, old loyalties, and social belonging was disrupted, and new political ideological faith appears in form of nationalistic or socialistic politically active parties, that recruited most of the new urban population. Add to it, the secularization of the European societies, and all those new emigrants to the growing cities, originated form peasantry and agricultural communities, who out of confusion by losing their identity were radicalised, while trying to solve their identity crisis, that was based in their homes on loyalty towards their lords. The easy exit from their confusion, while joining the urban communities, was to join group of people politically active in societies, that later were identified with left or right political ideologies.

    While the religious Jews, continue living their segregated life, believing, it doesn’t concern them, the secular Jews, understanding that there is no place for them among the right wing nationalist activists, turned to the more cosmopolitan, more universal ideology of the left. This is the reason behind so many Jews names among the left spectrum of the political scenery, and so few in the right spectrum.

    The Zionist movement, representing ideology of emerging Jewish national identity, claiming right for self determination in the ancient Jewish land, where the Jewish cultural, religious and national identity came to existence. This political movement was politically reflection of the secular part of the Jewish society, and in its essence was a socialist lefty secular movement, with Jewish national emphasize. Still small chunk of the Zionist movement was nationalistic, with more tolerance to the religion than the totally secular socialist Zionist left. Both parts of the Zionist political spectrum made their agenda the need to normalize the Jewish nation, or as metaphorically they put it, turn around the inverted pyramid, meaning to make the Jewish nation more normal as any other nation, (European nation), more peasantry manual working and less spiritual, religious, intellectual based.

    Following WWII and the Holocaust, the lefty socialist Zionist movement, as contrary to the right wing Zionist representatives, opportunistically exploited the window of opportunity, that opened out of confusion in the world political scenery, when the winning world leading nations, still couldn’t comprehend the level of evil, that the most advanced European nation made to the Jews, and supported the establishment of the Jewish state of Israel. This historical success kept the left in power for 30 years, but then demographic changes increased the more religiously and more traditional propensity part of the society. This resulted a failure in the ballots of 1977 elections.

    Since 1977, most of the time the government of Israel is based on representatives of national conservative parties, that created a more natural coalition with the religious parties, without them never could be established a majority in the parliament, not even in times of lefty governments.
    Since then, the left, that consists 10% of political parties, representing the Arab population, and about 35% secular, liberal or socialistic parties, try to create a majority block, or at least situation, where there is technically no possibility to create a right-religious coalition government. Since the religious political parties represent about 15-20% of the political representation, the right wing coalition can’t exist without them. The left, on the other side tries to create coalition based on Jewish majority, while the arab parties are supportive out of the government.

    But what kind of ideology the religious parties represent? Mostly ideology of segregation and inner reflection, that was so typical for the religious Jews, while living in diaspora in ghettos. But then the Jews were powerless, and this became faithful to them, when the murderous Nazis came to power in Germany.

    The lesson was learned and Israel became militarily a very powerful nation. To add to it the reality of continuous wars with the neighbouring arab states and the Palestinians, who even after 70 years of continuous wars, almost entirely provoked by the Arab countries or the Palestinians, that militarily all ended with Israeli victory, The Muslim Arab politicians and population don’t come with term with the reality, that in this small piece of land, came to existence a non Muslim state, that in spite off all the trials of delegitimization, boycotts, hate speeches, threats, and collaboration with the western naive intelectual left, etc., Israel continued to thrive, culturally, economically, and socially, while the Muslim-Arab world ruled by military or religious despotism fall into disintegration and loss of cleare identity and focus.

    Since then the Jewish nation, successfully accomplished the task of normalization of the Jewish nation, turned around the inverted pyramid. Meaning, not anymore pacifists or cosmopolitan, but rather nationalistic introverted nation. To add to it the religious traditional element of segregation tendencies, and you have here a absolutely normal nation, that under continuous threats of war and annihilation, act more and more aggressively and with less and less restrain towards the neighbouring states and people who continue with their policy of trial of delegitimization and annihilation of the non Muslim, Jewish state.

    Out of all this reality came the new legislation changing the character of Israel, from multicultural universal country of all its citizens, to a Jewish state. Even if this rather declarative than practical legislation, has no real practical meaning, still this is an important issue, that no Israeli or Jew can be indifferent too.

    Introduction to wealth, liabilities, assets, debt

    Introduction to wealth, liabilities, assets, debt

    Wealth is financial savings, represented also as liabilities of entities accumulating assets of the same value expressed by universal scalar, MONEY, equivalent to the financial assets of the savers. So savings are equivalent to investments. If an incorporated business invested in tangible asset and if financed it by equity (Capital), lent by the entity owner, and/or by bank as a loan, by definition all this has to be balance between debt translated to liabilities and asset. If the asset price will go up, it will be a profit translated to additional equity, registered as a liability, that in future will be paid as dividend to the equity holder, vice versus. The difference between equity finance and loan is that the first doesn’t pays interest but dividends, and in case of liquidation of the entity for whatever reason, the lender gets paid first. Also equity financier holds the ownership share and managing power of the entity it finances, while the bank loan or different kind of securities financiers (bonds, debentures) have no ownership rights.

    By definition liabilities of borrowers are assets of the lender. The economic world is divided between the lenders and borrowers, while in between stands the financial institutions, mainly the commercial banks.

    1. Liabilities are either of public institutions empowered to collect taxes (federal government, states, and municipalities) or private. The private entities are either, foreigners (foreign governments or foreign private entities), private households or corporate and non corporate businesses.
    2. According to the above mentioned definition, assets = liabilities are either public or private. Private assets and liabilities can be either of private households or of incorporated business entities, that have different level of ownership distribution.
    3. Assets can be tangible or claims against others, that are debts of others than the assets holders. The debts of the public institutions, are in form of cash money or securities issued by public entities. Then loans to private entities, or from other borrowers in form of future receivables.
    4. If government increases its debt by deficit, it will become debtor to either foreign country,  private households, or businesses, but to the lender it will be part of their assets.
    5. Quantitative easing is a process of transferring liability of government from government bonds and securities, obliged to pay interest, to cash money, usually deposited in commercial bank accounts, free of interest payments from the government or other public entity. These deposits are either lent to borrowers by commercial banks, or deposited as reserves in Federal Reserve bank, that according to new policy introduced after the 2008 crisis, pays interests on this deposits.
    6. If the foreign debtor wants to reduce the level of loans it gave in the past, it has to sell the debts on the free market. By selling the debts, that will be usually either government or corporate securities, it will reduce the market price of the debt, it means the debt value will be reduced. Lower government bond prices means also increase of interest rate in the borrowing country, that can cause economic depression. To prevent interest rate increase the government (central bank) or the corporation has to buy back its debts, (Quantitative Easement). Government bonds buyback would mean changing public debt from liability paying interests to promissory notes without interest charges and without expire date, (Money). But if a private corporation buys back its bonds they will become assets in its balance sheet, in exchange against bank deposits of cash money. Against it will stand the debt itself in liabilities. If offsetted against each other the liabilities and assets will be decreased accordingly.  

    While government purchases its debts, the financial liquidity in the economy increases, while when business corporation is doing so, its financial liquidity decreases.

    Does such an increase in financial liquidity in economy and consequent increase of money circulation have limits? Most probably yes, when more value of money will circulate in the economy than real production capacity. Is US economy close to it? It is hard to estimate,  because limits of production capacity are not all the production items used to produce, (usually what is watched is level of employment), but any substantial item,that has no supplementary alternative, can become that limiting item of the production capacity, and its essentiality is discovered usually when it is out of shelf. Still, most of the money in economy is supplied by the banks and not by the government. But to much Quantitative easing, generates cash money in businesses and other private entities, that are alternative to the bank loans, and reduces demand for bank loans. Since the 2008 economic breakdown, the volume of commercial banks credit is limited by the volume of business opportunities the banks can enter to. Other limited factors of the banking system as minimum reserve requirement and/or minimum equity requirements are becoming less and less limiting, with increased cash in the economic system.

    Too much cash in the monetary system, means too much money in bank deposits. Public deficit financed by new government securities, increases demand for money deposited in financial savings, meaning causes increased interest rate, repurchase of these securities by the central banks or Federal Reserve, increases the security price and so decreases the interest rate.

    Too much cash will cause less debt in private sector and will make the economy financially more stable. At first, the publicly traded corporations, if no better investment opportunities appear, will repay their debts. Then they will purchase from the public their own shares, and increase share prices.

    As to the public sector, its repurchased debts will be changed to form of promissory notes, without interest charges and without expire date, (Money).

    If quantitative easing policy of central banks, results reduced debt levels of public and private sector, what’s the problem? Why not to use it more often,  or even always?

    1. The lenders, mainly those who hold most of their assets in money, be it cash, deposits or savings, will lose their asset value compared to those, who hold their assets in non financial form, due to low interest rates and increasing non financial asset prices caused by increased liquidity. This means, pensioners, wage employees, low income part of the society will be the one to pay the price.
    2. The banking sector has its own problem? On one hand it will have also more deposits in form of cash in their balance sheet, much above the reserves demanded by the Federal Reserve, that makes them much more stable. On the other hand, less demand from potential credit worth borrowers, will shrink the share of bank credit in the economy. Because of enormous political influence of the banks, such a policy is opposed by political system. This situation may cause more loose risk taking approaches of the banks.
    3. The central banks and F.R. have to be very careful not to become too addicted to Quantitative easing, and not to purchase other than government public debts. Otherwise while not democratically elected, the central banks will be involved in resource allocation policy of the democratically elected government, from one sector to other sector, creating unwillingly price distortion between the sectors. The central banks has to have, as much as possible, a neutral policy as to resource allocation between the different sectors of the economy

    Does Quantitative easing causes limitations on economic intervention in the future, in cases inflation or deflation overtakes the economy?

    In case of deflation, if there are no more public sector securities on the market, it may be a problem, unless the government will increase its deficit, and create new debts. It may do it by tax reduction, that can be fast, or/and increasing public sector investments and consumption. The problem is political opposition to such a policy, and investments in public infrastructure may take time, until it will have effect on the economy.

    In case of inflation, assuming the government can’t reduce its deficit, it will have to squeeze the bank credit to balance the deficit. The bank regulator has enough tools to do it. Again the banking sector will have to be squeezed as result of such a policy. The share of the private sector compared to public sector in the economy will decrease as a result of deficit financing of public activities. But the public sector is financing it’s activities by tax collected from the private sector. Squeezed private sector means less taxes and even more deficit. This scissor effect has its limitation too.

    Still it looks the Quantitative easing has huge positive impact on the economy, why such an opposition to it, and why it was never implemented before 2008?

    If we neglect the consumers society phenomenon of consumers credit, the loans are supplementary to equity capital needed to invest in new business venture, or existing enterprises. The lenders are those with excess financial capital deposited in the banks, while they don’t have the capacity it fully utilise efficiently themselves. The borrowers are usually the entrepreneurs, with need for supplementary loans, to invest into the new or existing enterprises. Policy of Quantitative easing has to degrade the relative value of the financial capital, unless it is actively invested. Active investment is about higher risk taking, compared to investments in bank deposits.

    Conclusion:

    As said above, from economic point of view the society is divided to lenders and borrowers of financial capital, while the banks are the usual go between. Since money value is imaginary,  and is based on faith, this process of lending – borrowing is filled with emotions, mythologies, misunderstanding.

    Quantitative easing means increasing the money in the economic system on account of the loans. With more cash money in the system, more money is to lend, and less money is needed by the entrepreneurs for investments. The demand for money is infinite, yet its price is negatively sensitive to level of cash money abundance. Who will lose from abundance of money? The lenders and the financial system, as the go between. The actual gainer of this process will be the borrower, who is culturally seen as the sinner, the bad guy of the game, while the lenders are traditionally seen as the noble ones, who need to be protected.

    Money, debt, promissory notes, reserve currency

    After the conclusion that most of the people don’t understand what actuality money is, how it is created, and how currency like US dollar becomes a reserve currency, i will try to explain the connection between reserve currency, deficit and debt.

    Let’s assume there is only one country, and its government doesn’t collects taxes, (a very imaginative scenario). Yet, the sovereign government has to pay for wages or products it purchases. The only way it can pay is by printing money in form of promissory note, (check) that is an obligatory paper, its repayment is guaranteed by its issuer. The definition of promissory note is: “a signed document containing a written promise to pay a stated sum to a bearer at demand”. Usually such  a promissory note has specific issuer, who promises to pay a determinate sum of money to the payee a fixed sum in a specific determined future time or on demand.

    But sovereign government, with the power to print money, is a special kind of issuer of promissory note.  

    1. The repayment of its promissory note is to be in form of money, issued by the same government. And what is money? It is a promissory note,  without interest, without specific payee, and without determined time of reimbursement.
    2. When the government issues and transfers this promissory note to employee or supplier, it also guarantees that it is transferable between everyone on demand.
    3. It uses all its sovereign authority, that everyone will respect the face value of this promissory note.

    (Since currency exchange is different act than product purchase, let’s assume that this promissory note is not convertible to other currency).

    In other words, to create trust in face value of otherwise invaluable piece of paper, the government guarantees, that the face value printed on the bill will correspond the price of any product in the country of its sovereignty. How it is doing it? When anyone attends with money in hand to shop, and asks to purchase anything, the government with all its enforcement strength, including its army and police, stands behind the promissory note face value. Since so, the one who holds the money, is holding a government promise, that it will be exchangeable against equivalent value of product in the future.

    When the money was received by payee at the beginning, it was given him by the government against products or work given and accomplished in the past, while the government still didn’t give against it any exchange value, but a promissory note on governments debt (bill, money). So the promissory note, if taking form of money as defined above, is form of loan, that from personal point of view will be repaid, or rather the liability transferred to third party, when the money will be used to purchase anything, and not necessarily from the government, but from some private entity. What confuses the picture even more is, that while the government, when purchasing some product from you, payed to you with a promissory note, or form of debt of government to you, represented in the face value printed on the bill. The payee, when using this promissory note (money, representing government debt) is going to transfer it against a real product, its supplier is another private entity. This debt of the government is very theoretical, since it will be repaid not by supplying to you products by government, but when you pay taxes, that is the actual repayment time of governments debts, even if it is paid by you and not by the government, that actually is the borrower.  So at first the government paid you by debt, and second time you are forced to pay to government taxes with promissory note you received against this government debts, that will be used to pay next time by the government to pay for wages and products. But you can also say, that the government doesn’t supply to you directly the product, like any other supplier, against your taxes, that are form of payment you pay to the government, but indirectly, by giving you services, like education, health, security, etc, for what the payment is in form of collective taxes. So taxes are payments done in collective way for collective public services, and again not repayment of debts.

    But this whole circle can happen only, after the government issued at the first time the first tranche of promissory note, that later will put in circulation thru taxes, then payments to government employees and subcontractors the whole system.

    Are you confused? I wonder why.

    Still i have to explain how a match between the face value of the promissory note and the product price is created. It will be achieved in act of tender between purchasers and suppliers. The act of tender is a continuous process, that decides the price of the product in relation to the face value of the money. So the currencies face value represents exactly the price of everything sold in exact moment, when it changes hands against the products. Any kind of purchase-sell is a form of act, when one side gives a loan, and the other side repays it immediately. It can be that you give money first and the product will be handed to you few seconds later or in opposite way, and in those few seconds there is a debit credit relationship between the two sides of the deal. To make it happen, there has to be trust between the purchaser and supplier that this debt will be repaid and/or the product will be supplied. The other problem is, that there can be someone else with money in his hands, who is ready to buy the same product, and if there is no other piece of the product you want to purchase, the one who will pay more will get it. In these few seconds when the purchase-supplier deal is taking place, the seller believes that there is no one else who would pay more for the same product, and the buyer believes that there is no one else on the same spot, who would sell for less the same product. This is the essence of a tender.

    Now someone from other country, who likes your promissory note bill, because of the picture on it or any other obscure reason, is ready to give to you the same product, for the same price or lower price, you would pay to the local supplier. After this foreigner sells his product and becomes an owner of the bill of country with foreign sovereignty, he doesn’t uses it to purchase product in the country that issued the bill, but rather puts it in a vault. Still the government guarantees, that in the country of its sovereignty, all product suppliers are liable to sell to the promissory note holder anytime in the future any product available in this country, for price decided in tender, equivalent to the face value of the money. So this money, that is in foreign country vault, becomes a reserve currency, meaning a every resident of the country of sovereignty becomes a guarantor of liability towards the foreign holder of this money – bill – promissory note.

    As a side effects of this process, because people in foreign country like to hold the bill in their  vault, its value will grow, unless your government will decide to print more to satisfy the demand for its bills – promissory note -money. Then if no new money is printed and part of it goes to foreign countries, it will become rare, and its price will grow against prices of products. It means deflation, or price decrease in the country of the reserve currency. Fortunately the government, because it always purchases more than it can collect taxes, it prints enough promissory note bills to satisfy the demand from the foreign country, that will supply the local market with products. It can happen, because there are enough foreign suppliers of products, who want to use the promissory note of your government as reserves, because they have trust, that the liability behind this promissory note will be fulfilled.

    The next big economic breakdown

    In the essence of any macroeconomic considerations stand three major economic questions.

    1. The time period the economic actors plan to achieve their economic goals, that can be short term, medium term and long term.
    2. What drives the economy, aggregate demand or supply.
    3. What comes first,  money or the product?

    ——

    While economy was rather agrarian activity an economic time period for consideration was one season. The economic cycles were caused by weather conditions, that either enabled plenty or lack. Since the beginning of the industrial revolution,  but mainly since the second half of the twentieth century, the economic and political leaders had to relate their policies to much longer term considerations than one agrarian season. Industrial revolution needed adaptation of the technologies, capital accumulation, workforce training, etc. All these needed more time than one season. Since the late sixties of the last century, consumers society was introduced at first in post war Europe and Japan, then in most of Asia, and South America, and since the collapse of Soviet Union also in this part of the world. Together with population growth from about 2 billion people at end of WWII, to 8 billion today, the human impact on the environment created accumulation of dis-balances, their solutions need time schedule if dozens of years. This sudden increase in pressure on global resources needs change in political decision making processes, from short term to long term considerations, that were not adopted yet.

    The short-term period i would define as 1-4 years period. In short term the planning is annual, when national budgets are discussed and approved by the political representatives of the people, or with annual financial reports, when represented on the shareholders meetings by the executive management. When a new political leader is elected, at the beginning of his term in office, his expected time period rule is usually four years, that shortens with every day. Since economic achievement are represented to the electorate before end of his political term, the economic-political considerations of the decision makers are influenced by rather short term problems. The time period of presidents or corporate managers planning is decided by arbitrary political or accounting habits, like annual reports of corporations, national budget approvals, or election day date. So decisions about implementing activities, solving long term problems, mainly if the solutions demand investments in infrastructures, their effect will be felt by the electorates beyond the term relevant for evaluation of the decision making institutions success, are usually neglected or postponed. This is truth unless a sudden unexpected crisis brakes out, like war, global economic collapse, public uprising, etc.  Then the short-term considerations are neglected, and crisis management system is implemented, neglecting the previous concepts and ideological considerations. The very best example of such a sudden change in policy is the budget deficit of the governments.

    When the crisis becomes manageable, new long term or medium term considerations become leading. These are also situations,  when old school ideas are replaced by new ideas, and new thoughts are allowed to be exposed, while the old ones are reconsidered and criticized.

    The medium term economic period is between 5-15 years, where the market forces have enough time to react to crisis situation, caused by resource limitation, as it happened after oil price jump between 1973-1985. This crisis was followed by trying to develop alternative energy sources.

    The private debt crisis of 2008-2016, that endangering the global monetary system, was treated by monetary instrument, called Quantitative Easing, unthinkable before the crisis. It was used not only because the possibility of its fast implementation, but also because the authority who operates monetary policy is federal reserve governor, who by profession is a professional economist and not a politically elected legislative representant, with conservative rigidity and no capacity to adopt abstract macroeconomic concepts, needed to comprehend money as a monetary tool for macroeconomic policy making, and not a fetish.

    The modern economists have pretty good tools to predict the future developments in medium term considerations, and have tools to cope with these medium term crises. These tools didn’t existed or rather were not used at 1929, when the world economic crisis broke out, that could have been coped with modern economic tools relatively easily, but because of colossal mistakes of the economic policy decision makers, the crisis turned to a long term global crisis, that ended only at 1945, with the end of WWII, in the Western world. The major political conclusion of the elites governing economy in the “West”, from the 1929-1945 years crisis was, to adopt economic policy, of responsibility to provide full employment, that will give chance to every household head reasonable chance to  provide his family with decent income, and to live productive life, when being part of social community, he can positively identify with. The other need recognised by economic policy makers is monetary stability, that meant keeping price levels fixed. But these two goals, full employment and stable prices, contradict themselves, and certain level of inflation is needed to secure full employment. The problem is that inflation disturbs the level of equality of income in the population. It delluts the accumulated wealth of the savers and enriches the borrowers. It also disrupts the price system, giving opportunities to short-term investments, upon long term investment.

    From time to time, usually because of crucial mistakes of economic policy makers, inflation tend to break out from manageable level to unmanageable levels.

    Long-term considerations used to be of lifespan of productive person. This stands behind all kinds of pension savings, that can be in form of investing in pension funds, savings, but also giving birth and educating the next generation of children is form of saving used in traditional societies. People on every country and almost every society and culture start these savings from early adulthood, until retirement. Only the very rich individuals or very rich societies will have long term economic considerations that exceed their individual lifespan.

    In modern economics, long term period changes, are processes, i would define as more than decades time-period, where existing market conditions go through paradigma change, due to radical technology changes, or social and political changes due to collapse of political or economic system. It happened between 1929-1945, period during which new political order was created world wide. Other paradigma change due to technology happened in years 1980-2000, or alternatively can be defined the period between 1950-2000, during which at first appeared the computers, that later evolved to smartphones, and with it created the connection of general public to world web network. This change wasn’t just about adopting new products and technology, but a complete change in way of life, production technologies, management systems, new marketplaces, leisure time, etc. None of these developments could be predicted and prevented or regulated by economists or political activists, before they were invented, and when introduced to the market, no-one, not even the inventors and initiators themselves could predict exactly economic impact,  these technologies will have.

    Since the late sixties, the public started to understand, that processes with cumulative tendencies, cause human impact on global environment, that demand consideration beyond human lifespan. The understanding that if not taken in consideration the very long term trends, the globe can flip over a no return point, from where a new uninhabitable environment will be dominant in most of the globe, just as it already happened for natural spices of animals and vegetations. The existing political-economic system, still driven by yield hungry capital, has no tools to cope with the mounting problem of global ecological disbalance accumulations. The result is local ecological disasters, and threat to the global ecological system.

    ———–

    Other basic question economists are divided upon is, if the demand – or the supply is the major steering force behind the economic processes.

    Those who see in the demand the main engine that runs the economic change, believe that every additional aggregate demand will be satisfied by additional supply or/and price change, that will adopt the demand quantities to available supply. It means that the supply side of the economy can be neglected in macroeconomic considerations, and left to the market forces to cope with.

    These economist does neglect in their models the limits of disponible resources. Their assumption is, that the market with flexible price system, competing suppliers and consumers, will always balance itself at certain price level. If there will be a price jump, due to limited resources occurring in the short-term, on the medium-term, the economy will adopt itself on new absolute and relative price levels, and also new employment levels of production capacity.

    On the other hand, economists, who see the supply as the major motor of economic change, believe in finality of economic resources, that no technology can overcome them. Such resource limitation obviously exists because of limited size of the earth. The supply side economists understand, that resources can be supplemented by new technological developments. (For example, energy crisis of seventies, brought to the world new energy generating technologies.) But there are still limitations, that cannot be overcomed, because of long term one line trending processes, that accumulate disbalances on global scale, their correction is beyond the capacity of human spices.

    The best example of economic policy driven by supply side of the economy was the Soviet economic system. Their emphasize of production and absolute neglection of demand, brought disastrous economic consequences, including famine, lack of basic products etc. On the other hand, one sided emphasize of demand, without considering the cumulative entropic tendencies of continuous economic growth, brings from while to while the economy to its limits, when it collides with resource limitations. The 2008 economic crisis can be considered as such a phenomenon, when the commodity prices included in CRB index https://www.investopedia.com/terms/c/crb.asp jumped before the crisis by almost 50%, and collapsed immediately with the outbreak of the crisis by more than 100%. Even if the financial breakdown is the direct reason for the 2008 crisis, the sharp increase in commodity prices before the crisis, indicates bottleneck situation of production capacity at existing prices, that wasn’t translated to consumer prices inflation, but a economic breakdown. The hypothesis of such a connection, not so obvious, exists, since the financial manipulation implemented before 2008 crisis, created economy based on deep debt in private households, supporting consumerism, in parallel with real wage decline. The debts, that supplemented increase in wages, were either against real estate value increase, or against consumers credit, conducted by the financial system.

    ———————–

    The last central issue, economists are divided upon is the question, what drives the economy, money or products. While money is an agent without practical value by itself, because of habits, norms, faith, traditions, and sovereign right of governments to issue this money, and authority with threatening power to impose taxes, to be paid in the same money, gives to this agent, without value by itself, an exchange value, universally recognized and accepted. While money without production has no value by itself, value of product without money cannot be measured and exchanged, or it would be difficult if not impossible to measure it’s relative value. But because money’s generally recognized and accepted fixed exchange value, money has also capacity to keep under certain circumstances its value stable, or even appreciate through time. This makes money to own two attributes, exchange value measure tool, and fixed value keeper capacity tool. While money acts as value holder, it is deposited in savings where its value is either stable or even appreciated, with the interests paid on the  savings.

    Since economy exists only with exchange of goods, and such an exchange can’t be even imagined without universal exchange value media (money), it can be said, economy came to existence with money. Also aggregate money value in exchange circle represents the same product value in circle. (currency exchange is a special case, not included), it means by increasing money exchange value circulation we necessarily will increase products value circulation. But here comes in the scenery the question of limited versus unlimited resources. If the global resources are final, and be it the capacity of the earth to absorb the effect of cumulative processes, without balancing feedback, the whole economic model based on continuous increase in aggregate money and product value circulation have to break down.

    How can money be a debt?

    The economists claim, that the debt is in its essence the basis for money. Such a claim has to sound like esoteric alchemy to non professional ear. How can debt, that has negative value become money, that has positive value? It sounds like the story of alchemists, who tried to transform droppings to gold. So i would try in short assay to explain in understandable way for every ear, why is it so and what does it means, when an economist claims that money is debt?

    To start with, it has to be understood, that the economist speak about government debt created through deficit and debt created by commercial banks in form of bank credit as the money creating debts.
    Let’s assume we have a modern economy in its starting point, with potential complexity as we know it today, with all its capacity to produce and allocate the products so, that the product at its final stage reaches its final destination, the consumer. To achieve this, we need some instrument of exchange, that will be acceptable to the seller and the purchaser, during the whole process of production, from the raw materials to the final product, including investment to production and infrastructure facility, until completed product reaches its final allocation to the hands of the consumer. Let’s call this instrument money. The money, will have to have universally accepted exchange value. Yet, even if money has universal exchange value, and it represents for both sides of the deal, the seller and the buyer, the same value, and they came to an agreement as to the price of the exchanged item, we are still left with one problem to solve, discrepancy between purchaser and suppliers timeline. Most of the times the purchase of the product and the transfer of the equivalent exchange value, money, doesn’t happens in the same time. It happens, that within the act of exchange, there is a need for prepayment to the supplier, so the product could be produced and supplied to the purchaser in the future, or vice versa the product will be supplied, while still not paid, and the actual payment will be in the future. So either the money is transferred before the exchanged item is supplied, or vice versa. It doesn’t matter what discrepancy is between the timelines of the money transfer, compared to goods or services transfer, it causes in each case immediate situation of borrower and lender.

    But then the lender side in the exchange is accepting within the deal two utility disadvantages if compared to the borrower. The first is the risk, that the product will never be supplied, or other risk, that the product will not satisfy the needs of lender-purchaser, even if paid for it it’s price in advance. On the opposite case the supplier has the risk, that he will never be paid for the product, it already supplied. The second disadvantage is, that the lender, be it the purchaser or the seller, has to postpone certain satisfaction of immediate needs, for getting the payment or the product in the future.
    By definition, economic act is about exchange of economically valuable items in terms that give the same level of satisfaction to purchaser and seller. It doesn’t have to happen every time and in every deal, but in long run in average it has to be so, otherwise the unsatisfied side will look for better deal, and will cause change of the price of the economic item. The engine behind this price system is, that no one likes to be sucker, and we also assume, that no one wants unfairly exploit temporary opportunities, and everyone is looking for a fair price deal. If the purchaser, who bought an item “A for price a”, finds out, that his friend bought the same item for less, he will demand next time the reduced price. And vice versa.

    If this short description of price theory seems acceptable, the conclusion is: the price of any deal, will always represent a balance between buyer and supplier, or in economic terms equilibrium (except in case of suckers and the cheaters, who’s act is short term). But then how can it be fair, that supplier is supplying the product for delayed money transfer, or money transfer is previous to the product supply a fair deal? In both cases it looks obviously as an unfair practice, or what should be considered as an unbalanced deal. How can exist such inconsistency in the market economic system, when the foundation of market economic systems stands on the absolute need of equivalent utility of every side of any economic deal?

    Here comes to rescue the interest, paid by the borrower to the lender. The interest doesn’t have to be in form of interest payment. It can be in form of discount given to the purchaser on item price in case of cash deal,  or increased price for postponed payment.

    Where are borrowers and lenders there is debt. The question is. does such a debt necessarily create new money to the economic system? Until the buyer and the supplier pay in exchange with already existing money, the answer is no. But if a bank is involved in the deal, by giving credit to over-bridge the time delay between the product transfer and the money transfer, this loan of the bank will create new money. This statement has to be explained.

    But before to explain how commercial banks create money out of debt, we have to ask, how government creates money out of debt. Let’s assume the government wants to give service to the citizens of a country, and it doesn’t want to make the citizens angry by rising taxes. So the government instead collecting money, prints money, that is form of security paper, that the government guaranties, with all it’s authority, (assuming that the government does have authority) the right to purchase anytime in the future, any kind of economic item, in exchange against this government security paper called Money. Since this security paper (money) is transferable against any economic item in any time without delay, it is form of debt obligation of the government to secure the equivalent purchase value, to the face value represented on the face of the money.

    The government in principle should secure, that the money will represent in the future the same exchange value as today. To do so it promises, that it will limit itself with printing money or debt obligations to level, that the dept it creates will not exceed the capacity of debts repayment in form of economically valuable items. Unfortunately there are many precedence in economic history, that governments didn’t keep this promise, usually under pretend of necessary war, and they then created inflation, that in other word is degradation of money value or government obligations purchase power. It has to be said, that money not necessarily is used as instrument of economic exchange between government and private entity. In contrary, most of the exchange is between two private entities, who both believe in government’s capacity to fulfill its obligation.

    The next step is, that the money holder has more money than it needs right now, and he has no plans to purchase right now anything, but rather in the future. So he collects money and probably he wants to keep it safe. The best way to keep money safe is to deposit it to vault keeper, who keeps it for him, and even pays interest on these deposits. The promise is, that the money will stay in the vault until the right time comes for the money owner to use it. Let’s call the vault keeper Bank.

    The bank within time collects not only money of depositors, but also statistical information about them, out of which it understands, that not all the deposit holders will come to take out their money from the vault in one moment, but rather one by one in different time period. In the meanwhile, some new depositor will come to deposit their money, and repeating so. Most probably the one who received payment from the previous depositor will immediately deposit back to the bank vault the money he received. In the modern banking, where no real cash is involved in the process, the money actually never lefts the bank, but rather is transferred from one account to another account. So in practice, the banks can give infinite volume of loans, unless the government interferes in the process, by creating limits to the commercial banks.

    So in practical terms, the banks create money, whenever they give a new loan, and when the loan is repaid, they reduce the amount of money available in the economy, either in circulation or in potential circulation. So the bank loans, that are debts to the bank are becoming new money in the economy. In this system, the privately owned commercial banks became major money creators. If so why not to print unlimited amount of money to make unlimited profit, that is the only goal of any economic entity. First the banks are limited as to the level of credit they can give by the government, or its monetary tool, the central bank. But more importantly, the banks need to be careful to whom and to what activity they give the loans, not to create bad debts, that will be never repaid. It is assumed, that from that perspective, the privately owned commercial banks are better guardians of money than the government, with different goals than profitability. This is the reason, why the government doesn’t nationalise the banks and provides by itself credit to the economy. From this also is obvious, that the major asset of the banks are his trustworthy borrowers, that have positive credit history. Maybe this is one of the reasons why the bank keep information about their clients so close to their chest.

    The last question is, who and how in this system knows and decides, how much money a certain economic enclave needs, to secure smooth exchange of goods and services in the economy from the producers to the users, and without to degrade the money’s purchase power. For this the government created a department, called Central Bank, that are the lenders of newly printed money to the government to enable the government to pay for additional services, without to rise taxes, the government provides to the citizens, against it the government issues to central bank obligatory papers in form of bonds. By doing so, the central bank influxes not only newly printed money into the economy, but also government backed interest carrying securities, that are freely marketed to private investors, on the government security paper markets. One of the major traders on the government securities market is the central bank itself, that originally issued these securities. By doing so, it can regulate the price of the securities, and this influences the level of interest, achievable on these securities according to market prices. Since central bank has unlimited capacity to print money, it can in principle purchase unlimited amount of government securities. By doing so, it will increase the price of the securities, and with it decrease the interest rate achievable on securities. But also by doing this, influences the interest paid on any other kind of debt of non government entities. The central bank’s goal is to keep the money value fixed, as much as possible, while securing, that most of the economic production capacity, mainly the labour force, of the economic enclave, is fully activated.

    Since the government has capacity to print infinite volume of money, its securities are without risk, while all other forms of debts do carry risk. So the height of the interest on government securities pays the lowest interest rate paid in economy, compared to any other kind of debt, available in the financial market.

    Conclusion, A. Government debt in form of government securities-bonds, created to finance deficit, creates newly printed money as opposite value. B. Banks, that circulate repeatedly the original deposit, its source is the once newly printed money against government debts, multiplies this money as many times as it is lending it again and again. So on one hand it creates debts of non financial entities to the banks, against which it creates money in form of credit, it gave to the same non financial entities.

    Yield driven capital

    Capitalism is capital driven system, where yield hunger capital is the central pillar of the system. Average positive yield on capital demands positive economic growth on aggregate level. Capitalistic economy, in its foundation has a necessity for continued aggregate economic growth, and as such needs continues increase in demand for goods and services, that will pull with it a parallel increase of supply. To secure continues economic growth, the capitalistic economy developed tools to increase demand. Such tools include modern marketing as branding, advertisement, but also continues search for new products, some of them human life paradigm changing.

    If in the past the major driving force for technological development was the need for advanced military equipment, or fierce competition between world leading superpowers, not anymore. Since the collapse of the Soviet Empire, the major engine of the technical advance became introduction of new paradigm changing products to the consumers markets. Technologies like space technology, GPS, internet, used in the recent past purely for military purposes, or initiated by governments within global competition between two superpowers for political superiority, are introduced to civil markets as new consumers products, to drive the need for growing aggregate demand, that will bring increased supply levels, what in other terms is translated as economic growth.

    While satisfying the need for growing supply, additional new products introduced globally on markets, brought high level of employment and increase in productivity. Introduction of new technologies in production processes increased efficiency of capital and labor usage. Global brands are enabling worldwide distribution of the same products, using global financial institutions and capital in global consumers markets, and the demand and supply for the same products is satisfied. This consumerism driven culture changed the way of life worldwide from local to global.The same food chains, drinks, clothing, music, movies, etc. are produced and distributed in every corner of the world.

    Consumerism became the major social and political ideology in all the societies worldwide, including in those countries and cultures, that are trying to oppose it, and are trying to introduce ideologies opposing the focus of the individuals on consumerism. But these societies can oppose successful only temporarily this trend, while using repressive political institutions, and when this system changes to more democratic and liberal, the local culture inevitable transforms itself into culture of consumerism. This is what happened in the post communist countries. In some religious or ideology based countries, where still exists opposition to culture of consumerism, will eventually follow this trend too, or fall into huge identity crisis, when the leading elites will be disconnected from the masses, demanding to adopt consumerism, promising illusion of happiness through comfort and leisure.

    While local way of life can exist without adaptation of modern economic tools, and some human activities can be self produced and self used, without to be exchanged by mean of exchange, money, not so in global exchange markets economy, where every product is monetised, and has its price. The process of monetisation itself brings economic growth measured and expressed as monetary income. This economic growth, even if not accompanied by growth of physical side of economy, but just a process of giving price lebel to already created product, is important, because it increases the economic basis for tax collection and return on capital investment. Other form of monetisation is the process of privatisation, that is not only change of ownership and management of economic activity from public ownership to private ownership, but also monetisation of services, before distributed freely for all and financed through taxes to distribution through private monetised system

    All these components of capitalistic economic system created an unprecedented drive for global economic growth, that in last decades reached annually 3 – 4%, (except in years of economic crisis, like in 2008). Such a growth is unsustainable, because of it’s devastating impact on global environment. Since without economic growth, existing capitalistic system will necessarily fall into economic crisis, if no organized system change will happen, it will necessarily bring global environmental collapse. Until now no democratically elected government tried to cope with the problem of creating economic system with long term ecologically sustainable economy, and rather acted out of short term populistic policy. When the need for sustainable economic system will penetrate the understanding of the masses and their democratically elected representatives, the capitalistic yield driven economic system will have to change fundamentally, and with it the unrestrained consumerism of each individual in the capitalistic society.

    If it will not happen in organized way, it will happen as a new global economic break down, that can come in form of economic crisis, or complete system break down of countries. (As it is happening in some Arab and African countries). It will also trigger mass migration of people from economically and ecologically collapsing countries to neighbouring rich and relatively stable countries.
    ——-
    Money as sole product value measure agent, representing relative value relationship between different products in the market, in form of price of the product, or exchange value measurement, also represents future exchange value, and as such it has capacity to accumulate wealth. No commerce can be even imagined without such a tool as money. Since all economic activity is about exchange of products, money is fundamental to any economic system. But this value holding asset property of money needs faith in its sustainable value. Faith is a human concept, totally unpredictable. So money value is unpredictable too.

    All the economic models have underlying presupposition, that interest rate influences the human evaluation of money as value holding asset. This is why higher interest rate should cause increase in wish to hold money, meaning increases its relative value as asset value guard. But there are other, not less important factors influencing money’s asset value holding properties, like it’s scarcity or abundance, and also the trust in vault depository institutions, like banks, insurance companies and other financial institutions. Distrust in any of these my cause failure of the whole economic system based on money, like the modern exchange based economy.

    It can be observed that since 2008 crisis money is changing its position and status.
    Quantitative easement is not only about transfer of cash money from central banks to commercial banks, as against overpriced securities and other financial assets, but also causing abundance of cash money in the economy. The 2008 year collapse of economy, was followed by collapse of trust in financial institutions. The restored trust in the monetary system and its institutions happened because there are no real alternatives to existing system. Bitcoin and other cryptocurrencies as alternative, because of their high value volatility, are still marginal as tool of economic value exchange mean. So the official money, issued by the central banks is the only real mean for commercial exchange. But money is losing its position as value preserving asset. The worldwide increase in real estate, company shares and even cryptocurrencies prices is rather decrease in value of money, than increase in value of non monetary assets. Since the fixed value of money is absolutely necessary to sustain faith in its validity, this processes need tight follow up.

    Science versus anthropocentric faith

    The humans life span is less than 100 years, his height up to 2.2 meters, health weight of a healthy adult individual is between 50 to 150 kg, while the realities of universe are in completely different dimensions. The universe, but also planet earth exists billions of years. Its size is in billions of light years. Even the Earth Radius is 6,371 km, Mass: 5.972 × 10^24 kg, Area: 510.1 million km². So the geological or universe dimensions are at entirely different time and space extent than those of humans. Still the anthropocentric belief systems, remained the focus of cultural value systems, even when it became clear to most of the humans on the earth, that not the human beings, and not even the Earth, have any kind of central meaning on the global, whole universe scale of existence.

    Culture refers to all human knowledge in all areas of human consciousness that have ever been created and is preserved and will be created in the future. Human consciousness can be individual but also of a social group, acting, feeling and expressing together within their cultural heritage. Culture is common cognitive expression of each individual belonging to certain social group. This expression is perceived differently within the group than out of it. Even if every individual has the capacity of his own cultural expression, it’s cultural expression is in relation to the culture of the social group, to whom he belongs to. Any individual cultural expression can be positive, negative or neutral in relation to the cultural framework norms, in which it was created, and the cultural framework will always be in the background of it.

    There are societies, where individual cultural expression of non conformism is accepted and even positively encouraged, and they are social groups with no tolerance to non-conformity, and individual expressions, alien to the norms of the group, and they are unacceptable and repressed, either by political-physical abuse, or by psychological-ideological indoctrination.

    Religions, faith in supernatural phenomena, belief systems, at first came to existence, to explain the everyday phenomena, that needed explanation within the human capacity of perception. The stories of creation are all anthropocentric and within framework of human dimension. So the universe was created in six days, stars and planets are within human reach and influencing the personal human destinies (astrology), etc. As the modern sciences, started a process of unwalling one by one events, that appeared to pre-scientific worldview supernatural, as perfectly natural understandable phenomena, it became hard if not impossible to keep this kind of belief system relevant. Still the human need for purposefulness, that can’t be fulfilled by material explanation of reality, continue to give legitimacy to belief in supernatural phenomena a substantial role. So the religion or any other belief systems based on faith in unexplainable phenomena, continue to exist even in the modern age, among those ignorant to the natural reality explained and based on evidence achieved within scientific method. Even more, the faith in supernatural phenomena and transcendental occurrences continue to play central role for human individuals, even if they are aware of scientifically verifiable or refutable findings about natural reality. This denial of scientific explanation of natural reality, is explained by limiting the science to material side of reality, while the spiritual, non-material side of the reality, by its definition is beyond the reach and comprehension within the scientific method. The faith in spiritual phenomena didn’t disappeared, due to the human need for cultural and social belonging and purposefulness. The social framework grouping the individual humans, fulfills a genuine need for identity, that gets satisfaction with all the unique cultural phenomena like symbols, colors, flags, clothes, hair cut, slogans, quotations, tales, stories, theories, conspiracy theories, myths, etc., special and unique for the various social groups. These groups as they come to existence or continue to exist through the ages, create or emerge within the framework of their social group political structures, with defined system of authorities and hierarchies.

    This is how national leaders can still continue to speak about uniqueness of their nation or faith, that has meaning far beyond the real time and space reality of the existence of the specific nation, social group, community or even the human species as whole. This is how, in age of sciences, within the cultural context of social community, still is acceptable to nourish ideologies, using terms like eternal time or geographically boundless purposes and uniqueness of the culture of specific community, Our community.

    Any argumentation based on scientific rational reasoning or evidence is useless against these ideologies, because scientific rational reasoning always claims to be an universally verifiable phenomenon, and if refuted then it will be always universally refuted, with hope that it will bring new scientific findings, while the refuting evidences will be the starting point of the new scientific theory. Since any faith or belief system is in the center of social-cultural belonging to certain social group, any evidence or argumentation against the Truths that are substantial to the faith, will irritate the members of the social group, and they will react with animosity.

    Yet faith in national, above national or subnational cultural group anthropocentric believes, are not the only cultural phenomenon on the social group level. The social grouping with faith in preserving the need to preserve nature, or animal kingdom, or even unique cultural grouping is non anthropocentric ideology.One of such cultural systems is the faith, that the ultimate goal of any socio-economic political system is to preserve human culture with all its diversity and uniqueness. The social group following this faith believe, that the precondition to secure preservation of human culture in all its existing forms and manner similar to what is familiar to us, is to preserve the diverse biologic metabolic systems of life existing on Earth at the most varied level. In the essence of this standpoint stands the understanding, that human culture includes human interaction with nature. If the nature will be diminished or disconnected from the human existence, it will change the cultural approach, leading and fulfilling the purpose of human existence. Such a change, together with the advance of new technologies may create an undesirable world, where humans will lose their position as messengers of higher purpose, than existence of humanity by itself.

    Currency, Deficit and global economy

    The ideas about trade deficit and currency value importance are left overs of times of national and marcentile economies, where commerce and capital flow was limited and restrained. (historically the last marcantilism was the British colonial empire). This times are long time over, even if prevails certain nostalgia in GB for those times. (viz. Brexit). The global markets and global capital took over the lead, (unless some crazy president will be successful turning back the time). In global economy the capital flows to places, where primarily it promises highest political and legal security and stability, and secondarily it promises the highest yields. This is why US can maintain its huge trade deficit already three decades, and China has outflow of capital. This may change if the position of US dollar will change. There are several threats on the horizon, that may endanger the US dollar position. The most important is Trumpamania. But there are others:
    A. The first and imediate threat is making the Chinese RMB a freely convertible currency. On one hand China measured in merchandise production performance, has become the biggest economy in the world, yet it always will be an underdog to US or Euro based economies, until its currency will not be freely exchangable and its exchange value will not float freely. What gives strength to US and the European economies is not their production capacity, (that is still there even if not fully used), but their financial system, supporting their markets.
    B. The cryptocurrencies. Even if still marginal, and all the governments and financial institutions try to keep it marginalized, the idea of blockchain and smart contract technology can become a leading intermediation tool as value of exchange. I can imagine an economy, based on idea of barter commerce, where no intermediating money is involved, and products are exchanged against other products, for contracted exchange value, without money as intermediator. I heard about a platform, where plumbers, electricians, any other kind of technicians, dentists, cleaning ladies, etc. exchanging their services as mutual help. Instead of price, the exchange value will be agreed in blockchain-smart contract system, eventually the exchange value of different products will be normalized, exactly like the exchange value of currencies, and there is no need for price. But this is just one idea among many others, that can appear in the new crypto-backchain-smart contract economy. 
    Of course it would have catastrophic consequences to the banks, but also to the governments, who will have difficulty to collect taxes, and their (banks and governments) monopoly on money creation will be endangered. In Davos we could see the carefully formulated reservation of major representatives of the existing financial system, to what is happening. But it seems, since 2008, the fraud foundation of the existing monetary system was exposed to the public, that felt to be deceived, and reacted with refusing to continue to accept the legitimacy of the existing political and social system, based on tight collaboration between the governments and the financial barons and big publicly traded corporations management. It resulted Brexit and Trump, but also the new phenomena of cryptocurrencies, and investment platforms of crowd financing, that became certain alternative to the existing financial institutions. It seems no power can push back the Genie to the bottle.

    Top-bottom, bottom-up resources allocation

    From the very down of human history, social communities, characterized by their political-economic management systems were created, to cope with problems of security and material prosperity, as main problems of human existence.

    The economic-political management systems major point of interest is how, to what segment of the society, and from whom to allocate the limited resources, the concrete social grouping, with decision authority will do. The management-decision making tools used in these political-economic grouping can be differentiated between two kinds of systems, the top-bottom or bottom-top systems. These two economic-political management system were implemented intermittently in different communities and at different times. At the top-bottom economic-political systems, the authority to allocate resources, is centralized, while in the bottom-top economic-political systems, many individuals are involved in decision process, about resources allocation.

    The hunter-gatherer societies the tribal system implemented most probably in its simplicity, used rather bottom-top management system. Then with growing population and its concentration adjacent to rivers, used for transportation, communication and irrigation in arid places, a centrally managed government, started to implement rather top-bottom management system. The top-bottom management systems, used in new kind of agricultural settlements, cities, was not based anymore on the need to communicate with every significant part of the society, considering their particular interests and opinions, when concluding a joint agreements with every part of the society but on representative social political system, where the top management was supposed to represent the bottom masses. The more complicatedly structured societies, that couldn’t be based any more on individuals acquainted to each other, needed universal laws issued by central authority. So were created the empires, like the Egyptian empire, and later the Roman empire, indirect descendant of the Egyptian empire, or the Summer culture, that was subsequently followed by the Parthian empire. In between the early Summer culture, emerged other empires, that eventually collapsed and were many times temporarily replaced by culturally less developed societies, mostly managed in bottom-top system. So it happened, when the Roman empire, that was very much centralized, and managed as top-bottom management political-economic system, was destroyed, and small barbarian kingdoms, managed rather as bottom top systems replaced them.

    The same question of these two management systems on the scale of whole social grouping, modern states, is present also now in the modern economic systems. Until quite recently, a highly orthodox top-bottom political system was implemented in USSR and its satellite states, the so called “Socialist Countries”, while in the so called “”Western  Countries”, namely Western Europe, USA and other American continent countries, Japan and some Asian countries implemented the so called “Market Economy”, or alternatively some may call it “Capitalistic Economy”, management strategies. While “Socialist Countries”, tried to implement their top-bottom management economic system, in all levels of economic activity, with growing orthodoxy, the “Western Countries” implemented their bottom-top economic system with less rigidity, while according to the temporary public mood, fashion or political opportunism, they shifted from more orthodox bottom-top management economic system to the partial top-bottom system. The Socialist countries used the centrally managed top-bottom management system to concentrate political power in hands of the political leadership of few, while the more flexible market economic systems created a partnership between the political leaders and the economic leaders. Since the early nineties of twenty century the top-bottom economic system collapsed with the collapse of the “Socialist” economic system, and whole block of countries, with about five hundred million people joined the market economy. Adding to it China with the more gradual but with same aming process of decentralization of resources allocation management, and practically most of the world economy, in very short time period joined the market economy. It is not surprising that the capital based market economy thrived for almost twenty years since then.  

    The market economic system adopted with warm welcome hug the newcomers in the global economic system, with all their huge resource allocation, these underdeveloped new markets needed. New opportunities for more efficient resource allocation gave new opportunities for capital to generate higher yield. This gave new opportunities for the capital, accumulated in the pre-collapse capital driven market economic entities to use their accumulated capital from the past,  management know-how, and consumers oriented technology to allocate production capacities to the new participants in the global market economy. The famished consumers in these new markets at beginning absorbed more and more from the production capacity of the Western economic entities. Together with it new production facilities were built in these new economic regions, utilizing the relatively low production costs, with technologically and intellectually relatively well educated population.

    The huge global corporations, used skillfully their accumulated capital and know-how, to increase their wealth and with it their political influence, on the local, but mainly on the global scale. This partnership caused evergrowing concentration of capital and as well political power, process that stand in contradiction to one of the pillars of the market economic system, widely distributed entities with capital and resource allocation capacity, fiercely competing among each other. This process concentration of capital and political power, caused growing concentration of decision making processes about allocation of resources. Again a process heading toward  top-bottom management economic system seems as taking over the economic decision process.

    To all the above, joined with ever growing economic influence, the new technologies, based on accumulated scientific findings generated and accumulated at accelerated rate. These technologies brought revolutionary communication systems like, personal computers, internet web communication, mobile phones. Soon new consumers markets were established on the internet, with major influence on the economy.

    New technologies introduced to production processes, make the production cheap, almost with zero marginal costs in certain segments of the economy, while the major cost is connected to investments. The result is transfer from labor costs to capital costs.

    As a byproduct of these process, in democratically elected political representation political entities, inequality in distribution of income and wealth grew to levels unprecedented in modern times.

    Prices and unemployment

    Prices ceased to be long time ago connected to unemployment level or to limitations or aboundance of labour force. Prices are driven by scarcity or aboundance of product or one of its components, without alternative. In modern economy labour seems to have always alternative, lately even in the highest professional level of economic activity. It is truth in micro level of individual product, as well as at aggregate macro level.

    If the 1973 stagflation didn’t give enough empirical evidence that Philips curve doesn’t work, the 2018 economic situation should. There is no correlation in the technology based economy between prices and unemployment. Prices in technology driven economy, with automatization and free information, available to the suppliers as well as to the consumers, have the propensity to reach marginal cost, which by itself have tendency to become zero or close to zero, after the initial investment was done, and the technology became available to all.

    In an economy with full automatization, mobility and information, with relatively abundant capital for investments, only new inventions and innovations, that produce temporary state of monopoly, can hold prices, that still generate profit, before the new invention will become a general public knowledge, and allow price well above marginal cost of the product that as said is becoming close to zero. This temporary state could exist for some time, even decades in the pre-information economy, but not anymore. In information based economy, price increase well above the average production cost, can happen only if scarcity prevails in products or in inputs needed to produce it. Other way to increase price above average cost is by creating legal obstacle for usage of new technologies, or of unique brand. By the way, the legal protection of knowledge or copyright is becoming less and less obvious and maintainable. Viz. the situation in pharmaceutical industry or entertainment industry.

    The monetary reasoning for inflation, in technologically driven, global economy doesn’t work on ordinary consumption products, unless there is scarcity of capital capacity or substantial raw material or component needed to produce it. Since all the products are energy driven, the cost of energy is crucial in price creation. At 1973 oil had no alternative, so its scarcity caused huge inflation and also unemployment. If the scarcity is of final product, its price will increase and it will become a local event, but if the scarcity is of raw material, so basic as energy producing raw material, it causes bottleneck in production and as result of it, in one hand it will cause scarcity and price increase in large range of products and on other hand unemployment. There are very few raw material items in contemporary information and technology driven market and capital economy, without technological alternatives. Even in energy industry, the non conventional solutions, have only capital limitations, and no resource limitations.

    The result of all this is low inflation in the ordinary consumption products, except those, dependent on scarce components, like land, weather, water, environment. The next major price increase will be caused by one of these items. Just to make it clear, agriculture, even if land dependent, has still long way to utilize technologies in the food production processes, and there are many alternatives to classical land dependent agricultural products.

    Does it mean that monetary easing has no influence on prices? Definitely not. Money, in one of its aspects is a raw material, essential to manage economy. As such, if in scarcity its price increases and if abundant it’s price decreases. And there is other issue with money, very uncommon for other form of commodities. Money has unlimited demand because of its value holding property. Yet money as value holding item has alternatives, like investments in real estate or any other income generating assets. Here the price of money plays an important function. If the price of money, the interest, is low, what means from money holders point of view a relatively high price for money holding, the alternative investments in value holding assets seems to be more attractive. But since all the alternative value holding assets, be it real estate or company shares are limited and final at the certain time period, their prices are wildly escalating at times of low interest rate and plummeting at times of high interest rate.

    Development of perception, conceptualisation and abstract thinking

    The immediate human experience is perceived through perception, then conceptualised. The conceptualisation is either dynamic or static process. Static state is perceived by senses, and is a potential state, with expectation for transition to dynamic state, that will necessarily follow.

    Dynamic processes have to be apriori put in framework of concept, while static processes can be just perceptions, necessary for creating background to dynamic processes, so they can put themselves in relative context. In the dynamic processes what’s important is the trend and speed, not so much the actual state. If the trend is random, speed is less important, if it is with clear direction, the imbalance can be overdone and irreversibly taken over. Yet most of the people judge the state of reality according to the existing state, and not according to the trend and speed, this is why they support short term policies, and short clear slogans, without infiltrating their conceptuala meaning.

    Conceptualization demands analytical, systematic approach, judging with critical view the facts and evidences. Those facts are either dismantled to the most basic elements, or assembled from the most basic elements to structures, in process of growing complexities, branching sideways to similar structures of same level of complexity, as well as hierarchically upwards, towards the most complex phenomenon, its peak is life, consciousness, on the individual human level or society, economics, politics on whole social grouping level. This conceptual systematic perspective of reality is approached within scientific method, that is strict, well defined rules, according which are collected and perceived data, then analysed to its last, smallest elements, then conceptualised into system emerging from the complexity of interrelation attributes. The usual even if not necessary starting point of scientific research is with hypothesis, that is encountered with from data collected under strictly defined scientific methodology, that either verify, or refute the hypothesis. Scientific theory is always conclusion and result of methodological scientific research, systematically following the process of theorem creation. Not so the faith in belief system, be it religious or secular, that opposes evidence with animosity. Perception of reality based on scientific method creates objective description of reality. Objective means, it can be approached universally and approved or refuted through evidence.

    Scientific approach to perceive reality negates the cultural approach, that is based on prejudices, faith in oversimplified explanation of perceived facts that are collected randomly and arbitrary, without criticism. This reality perceived without to be criticized is filtered through prism of culture, and the results are disinformation in form of febles, conspiracy theories, archaic pre concepts of reality, deeply infiltrated in the human individual and communal consciousness. This process brings to being faith and belief systems, that within its own subjective reasoning, based on unverified facts create a whole belief system, either semi rational or mystical. The non scientific approach to reality is also starting with hypotheses, but it remains in this stage, with no data collection and with no following process of verification or refutification. The non scientific hypothesis is in principle lacking the method of accounter it with data with potential refutation.

    As contrary to religious belief systems scientific thinking goes through continues process of change of hypothesis and its essences. Since everything is questioned, the method of thinking itselves is subjected to continuous changev. The verified evidence becomes a new cultural icon, it by itself influences non scientific approaches, if it is not in direct conflict with the most substantial essences of the faith. Scientific thinking is using and developing tools for abstractisation of reality to easify the comprehension of reality. Those tools (like maps for exame) are many times adopted and used on daily basis by the non scientific thinkers. This causes change in their system of perceiving the reality, even if the tools are used for presenting rather disinformation than information.

    The tools of abstractization are by itself a widely spread phenomena only since the urbanization of the world population. People living in agrarian societies, villages, fields, have less need for abstractization, if compared to the urban population. In the dense cities individuals without capacity to perceive abstract icons, symbols, maps is lost. This process of abstraction of reality is conceptualisation, that is beyond the difference caused by different sort of data collection. So the urban population has to change its perception of reality, unless it is stuck in limited region, where it can localise itself according to familiar signs located in familiar places. The biggest leap in such a change in conceptualisation due to abstractization happens to the humans, when they become literate. The transition from illiteracy to literacy is not just transition to availability of different, richer information, but upgrade in capacity of perceptualization, conceptualization and abstractization. The critical way of thinking, that is precondition to transition to scientific thinking, had raised in higher level among commons of Europe after rapid urbanisation and introduction of general education. The widespread mass participation in revolution of 1848 in Europe, and the previous French revolution, was rather result of fundamental increase in literacy and with it change in conceptualisation capacity among the masses, due to introduction of general education, that became widely spread during the seventeenth and eighteenth century in England and later in France followed by rest of Europe, (except Russia) in second half of eighteenth century, than result of inequality of wealth distribution and consequential economic hardship.

    Understanding of liberal-democratic political system, demands higher level of conceptualization capacity and abstractization, than just literacy. Education to critical and creative thinking, as contrary to memorization of texts and facts, is another leap needed to change the perception capacity of the masses, with abstractization and capacity of higher level of conceptualization.

    This process of introducing higher level of understanding among the masses was not accomplished till now, in contrary. In most of the education systems, mainly in countries with uncritical faith based knowledge education, there is no support for criticism and methodological evidence based perception model. Add to it illiteracy of women, who are eventually mothers of the next generation, and the future prospect of abstractization perception doesn’t have to good chance to be achieved.

    The result of it is high efficiency of scientific tools for manipulating masses ignorant of abstract conceptualization, either in politics as well as in commerce. Advertisement tools are more about distributing disinformation than information. So in politics, the politicians sell more flattery to masses and empty slogans, than information and analysis of policies, alternative solutions, etc. all these that need abstractization and conceptualisation.

    Social grouping, purpose and faith in modern technological society

    Human beings existence and survival is possible, only within framework of social gathering. Every social grouping from economic point of view is about system of generating and accumulating enough resources for surviving and its efficient allocation and distribution, to ensure prosperous and secure life of the group and most of the individual members in it.

    Social grouping created an individual human creature with purposefulness, that by its essence needs to find purpose to its individual existence, that is beyond his personal, material existence. For most of the individuals, this purpose can be found in their cultural identity of the social community, to which the individual belongs too.

    The humans life span is less than 100 years, his height up to 2.2 meters, health weight of a healthy adult individual is between 50 to 150 kg, while the realities of universe are in completely different dimensions. The universe, but also planet earth exist billions of years. Its size is in billions of light years. Even the Earth Radius is 6,371 km, Mass: 5.972 × 10^24 kg, Area: 510.1 million km². So the geological or universe dimensions are at entirely different time and space extent than those of humans. Still the anthropocentric belief systems, remained the focus of cultural value systems, even when it became clear to most of the humans on the earth, that not the human beings, and not even the Earth, have any kind of central meaning on the global, whole universe scale of existence.

    Culture refers to all human knowledge in all areas of human consciousness that have ever been created and is preserved and will be created in the future. Human consciousness can be individual but also of a social group, acting, feeling and expressing together within their cultural heritage. Culture is common cognitive expression of each individual belonging to certain social group. This expression is perceived differently within the group than out of it. Even if every individual has the capacity of his own cultural expression, it’s cultural expression is in relation to the culture of the social group, to whom he belongs to. Any individual cultural expression can be positive, negative or neutral expression with relation to the cultural framework norms, in which it was created, but the cultural framework will always be in the background of it.

    There are societies, where individual cultural expression of non conformism is accepted and even positively encouraged, and they are social groups with no tolerance to non-conformity, and individual expressions, alien to the norms of the group, and they are unacceptable and repressed, either by political-physical abuse, or by psychological-ideological indoctrination.

    Religions, faith in supernatural phenomena, belief systems, at first came to existence, to explain the everyday phenomena, that needed explanation within the human capacity of perception. So the stories of creation are all anthropocentric and within framework of human dimension. So the universe was created in six days, stars and planets are within human reach and influencing the personal human destinies (astrology), etc. As the modern sciences, started a process of unwalling one by one events, that appeared to pre-scientific worldview supernatural, as perfectly natural understandable phenomena, it became hard if not impossible to keep this kind of belief system relevant. Still the human need for purposefulness, that cannot be fulfilled by material explanation of reality, continue to give legitimacy to belief in supernatural phenomena a substantial role. So the religion or any other belief systems based on faith in unexplainable phenomena, continue to exist even in the modern age, among those ignorant to the natural reality explained and based on evidence achieved within scientific method. Even more, the faith in supernatural phenomena and transcendental occurrences continue to play central role for human individuals, even if they are aware of scientifically verifiable or refutable findings about natural reality. This denial of scientific explanation of natural reality, is explained by limiting the science to material side of reality, while the ”spiritual”, non-material side of the reality, by its definition is beyond the reach and comprehension within the scientific method. The faith in “spiritual” phenomena didn’t disappeared, due to the human need for cultural and social belonging and purposefulness. The social framework grouping of the individual humans, fulfills a genuine need for identity, that gets satisfaction with all the unique cultural phenomena like symbols, colors, flags, clothes, hair cut, slogans, quotations, tales, stories, theories, conspiracy theories, myths, etc., special and unique for the various social groups. These groups as they come to existence or continue to exist through the ages, create or emerge within the framework of their social group political structures, with defined system of authorities and hierarchies.

    This is how national leaders can still continue to speak about uniqueness of their nation or faith, that has meaning far beyond the real time and space reality of the existence of the specific nation, social group, community or even the human species as whole. This is how, in age of sciences, within the cultural context of social community, still it is acceptable to nourish ideologies, using terms like eternal time or geographically boundless purposes and uniqueness of the culture of specific community, “Our community”.

    Any argumentation based on scientific rational reasoning or evidence is useless against these ideologies, because scientific rational reasoning always claims to be an universally verifiable phenomenon, and if refuted then it will be always universally refuted, with hope that it will bring new scientific findings, while the refuting evidences will be the starting point of the new scientific theory. Since any faith or belief system is in the center of social-cultural belonging to certain social group, any evidence or argumentation against the “Truths” that are substantial to the faith, will irritate the members of the social group, and they will react with animosity.

    Yet faith in national, above national or subnational cultural group anthropocentric believes, are not the only cultural phenomenon on the social group level. The social grouping with faith in preserving the need to preserve nature, or animal kingdom, or even unique cultural grouping is non anthropocentric ideology. One of such cultural systems is the faith, that the ultimate goal of any socio-economic political system is to preserve human culture with all its diversity and uniqueness.

    The precondition to secure preservation of human culture in all its existing forms and manner similar to what is familiar to us, is to preserve the diverse biologic metabolic systems of life existing on Earth at the most varied level. In the essence of this standpoint stands the understanding, that human culture includes human interaction with nature. If the nature will be diminished or disconnected from the human existence, it will change the cultural approach, leading and fulfilling the purpose of human existence. Such a change, together with the advance of new technologies may create an undesirable world, where humans will lose their position as messengers of higher purpose, than existence of humanity by itself.

    Nominal versus Real GDP

    The major threats to economy comes from the accumulated debts of currency regions either of the public sector or the private sector. It is important to define economy according to currency region and not anymore national economy.

    While the private sectors debt have their natural limitations, meaning limited to the capacity of the private entity, either businesses or households to repay contractual interest and principle liabilities, the public debt seems to be immune to this problem. The exception is the Euro region with some individual countries, namely Italy with about 130% debt out of GDP, without sovereign currency, have no capacity to cover payments of these debts by printing money. This may cause major disruption in the whole European economy.

    Yet the public debt is not immune from causing other economic problems, like increased inequality in income and wealth by enriching non-monetary assets holders as compared to monetary asset holders (wages and pension incomes). As well as causing propensity to more intensive volatility in assets prices and tendency to boom and bust states in the economy.

    It seems, too little attention is given to the new reality of decreasing gap between the nominal and the real GDP since 2008 due to relatively low inflation. (The terms GDP in nominal or real prices is rather confusing. Real prices are used to compare annual Change in real terms between different time periods. Nominal prices are just prices on the shelves. The price reduction of products due to technologies causes relative decrease of nominal GDP. If not price reductions of technological items, the nominal change of the GDP would grow, tax collection would grow as well, and the debt in real terms would decrease. Inflation is beneficial for borrowers, and the government. As to the banks, as a go between the borrowers and lenders, they are as if not influenced by the inflation, but inflation reduces the risk on the loans, because of reduced debts burden.)

    If in the past the price change index could be significant, in the last decades, the price index of consumers basket has hardly changed and with it the nominal GDP is close to the real GDP change. Since loans and their repayment are in nominal terms, it may seem as good news for the lenders and bad news for the borrowers. But this also adds instability and unsustainablity to the system. Stagnant prices and low nominal GDP growth, cause less tax income and higher debt burden of the business and private households. So no good news here. But it doesn’t mean good news for the lenders either. Close to zero interest rates, if raised, increased debt exposure, due to non inflating economy, together with the intensity in non-monetary assets prices volatility will cause necessarily unstable economy. So eventually if systematic exaggeration of debt, be it public or private, it will cause major disruption in the whole monetary system in form of system collapse.

    At 2008 exactly this what happened, when the overdebted private sector in US, ceased to have capacity to repay its debts. To save the economic system, this debt was transferred, relatively smoothly from private debt to public debt. As to Europe, even if as whole Europe was not in US level debt, relatively small debt of Greece could endanger the whole Eurozone monetary system. It’s not hard to imagine, what will happen, if Italy, with 2 trillion GDP economy, would come to similar situation as Greece.

    But the US public debt has also it’s limits. If with today’s close to zero interest rates this debt is still sustainable, it doesn’t have to be true when and if the interest rate will grow. If again deflationary pressure would appear, if the interest rate will be limited to positive values, it is hard to see how could the Federal reserve continue it’s policy of quantitative easing, without intervention to fiscal side of the economy, by purchasing sectoral based securities, like mortgage based or big corporate securities. On the other hand negative interest rate created artificially by government involvement, could disrupt the whole monetary system. After all you can fool sometimes someone, but not all the time everyone.

    Since the real GDP growth is limited by non economic factors like, demography, resources limitation, lack of demand, the solution is nominal GDP growth. For the US, currency depreciation can be also a solution, the question is what it will do to other big economies, based on export to the US, like China and other Asian economies.

    Debts, US, Eurozone, China, and economic crisis

    As explained in the previous interchained articles,

    https://rodeneugen.wordpress.com/2018/02/11/will-excess-money-cause-a-new-economic-breakdown/

    the public debt of US but also some other leading economies in the world, are less threatening the world economy than the private debt, be it the householding or corporate debts.

    The following chart shows the increasing trend of debt of non-financial entities world wide.

    Source: IMF, Haver Analytics, BIS, Ned Davis Research, AMP Capital

    More detailed data of the debt of the leading economies, shows that the most developed economies are also the most indebted ones. The country with the highest public debt is Japan followed by US and Eurozone, while the highest corporate debt is in China, with about 170% debt to its GDP, (2016 data), while Eurozone with about 100% and US with 70% debt as to GDP are far behind.

    Total gross non-financial debt outstanding, % GDP

    Source: IMF, Haver Analytics, BIS, Ned Davis Research, AMP Capital

    Public debt is instrument to create money. But also the fractional reserve banking system is creating money. With multiplier of ten, in case of 10% minimum reserve requirement, the commercial banks have potential to create debt money ten times more than the original cash deposited in account in their bank. But the credit money, created by the banks can be relatively easily manipulated by central banks, while changing the regulations and requirements.

    It seems the governments can cope with these public debts by printing new money, creating inflation, or if the inflation level exceeds the planned level, to balance the monetary situation by banks credit money squeeze in case of overheated economy. Such an act would decrease the commercial banks activity, or at least stop its increase as to GDP growth, as it happened anyway after 2008. The US banks balance sheets, that most of it is total credit activity of the banks, increased from 11 trillion US dollar before the crisis, to 17 trillion US dollars at 2017, that correspondence with the GDP growth.

    As explained above and in the previous article,

    https://rodeneugen.wordpress.com/2018/01/02/us-debt-will-it-cause-economic-crisis/

    the governments together with central banks have instruments to neutralize the public debt, by regulating the credit money, by norms imposed on the commercial banks system, namely changing Minimum Reserve Requirement, or Minimum Capital Requirement. The only exception is in case of US, its public debt is partly held as government securities by foreign governments, their economic political decision is exogene to US.

    If public debt can be solved within the framework of the central bank activities, the private debt is a different matter, be it debts of corporate, non-corporate, non-financial businesses, or private households.

    The corporate debts in the three leading economies range from 76% in the US to about 170% in China, where the corporate debt increased by 70% since 2007. This enormous increase in China was due to reaction of China to the economic crisis of 2008.

    https://www.bis.org/publ/arpdf/ar2017e3.htm

    If to check the private household debts, in none of the big economies it exceeds 100% of the GDP. In the US it reached 100% before the 2008 crisis and since then it was reduced to 80%.

    The private households debts to the financial institutions at the end of 2017 was about 15 trillion US dollars. Out of it 10 trillion US dollars are real estate mortgages, about 1 trillion US dollars students loans, credit cards, and auto loans, each. Most of these loans are for consumption and not future income generating investments. Mortgages are usually long term loans, partly supporting investments if paying for newly built dwelling, and partly to refinance previous investments, or purchasing an existing premise. Credit card loans are very short term, so even if their volume is significantly smaller than that of mortgages, their velocity is much more volatile, so its influence on economic activity is relatively large.

    Consumers credit became important part of the economy, as it became substitute to relative reduction of wages. But this development brought new instability to the economy, caused by over indebtedness of the private households.

    As to the businesses, their debt has not changed substantially after 2008 as percentage of GDP.

    The over exposure of banks to mortgages, caused real estate price increases, that are in many places politically and socially unbearable. In many cities and places it created two kinds of people, those with house or apartment ownership and those without. Solution for this problem, needs political leadership ready to confront the Banks, not an obvious option.

    As to the private households and nonfinancial corporate and non-corporate debts, they decreased their exposure to debt from 250% to 200% of the GDP. To add to it the substantial decrease in interest rates, and the result is enrichment of private households, their net worth grow to about 100 trillion dollars at 2017 from about 70 trillion dollars at its peak before the crisis of 2008, that dropped during the crisis to about 50 trillion US dollars. This net worth includes highly evaluated stock prices and real estate prices, so at times of boom the asset value is overestimated, while at time of bust it is undervalued. Still 100% nominal value growth highly exceeds the 50% GDP growth.

    https://rodeneugen.wordpress.com/2018/01/26/us-debt-will-it-cause-economic-crisis-2/

    The monetary system is based on private savings and credit. The savers need to know, that their deposits are safe, and the banks have the know-how, how to nourish the savings to create new values. If this faith is broken, the whole existing system can collapse. Private debt, if not repaid on the big scale, threatens the whole monetary system.

    The question is where is the tipping point of this accumulated debt? Hard to predict, because it is more expectations dependent, than result of real economic measures. Yet the next world economic crisis to our understanding will come from one of the big economies with sovereign monetary currency, US, China and EuroZone. These economic regions are also the most indebted compared to their GDP.

    To put in focus the major threats to the world economy:

    – US economy, with its external sovereign debts of 6 trillion dollars.

    – the Euro zone economy with it’s internal sovereign debts of certain countries, like Italy with 133% public debt of the GDP or France with its 100% public and 130% corporate debts to the GDP.

    – China with its corporate debs of 170% of the GDP.

    Most of these debts are not only higher than the average, at their historical top level, but also continue to grow.

    On the immediate level, low interest rates and/or high inflation damage the lenders, but improve the borrowers situation, so may postpone, or even annulate the risk of a new financial crisis. On the more long term Ievel, assets value, (publicly traded shares or real estate) collapse can cause a new financial crisis. What seems to me crusual is to follow the above mentioned three parameters, of the three major economies, to try to estimate, if they are out of control.

    Inequality, where it comes from

    The model of relating the increased economic inequality development since the seventies to basic character of capitalistic economy is misleading and wrong. If the aim is unchanged distribution of wealth, the equilibrium should be between GDP growth + plus inflation = equals capital income – minus bankruptcies, and not simple Wages equals Capital income.

    In general term:
    GDP= Cap.inc – bankruptcies +wages.

    The reality is, that wages are not compensation for hours of work, but price for work, while capital income is the price for accumulation of the capital in the past, plus entrepreneurship, plus innovation.

    If delta Wages= delta Capital Income-bankruptcies then there is no change in distribution of the income.

    Price of any economic item is scarcity dependent. In times of big economic growth, that are times when new technologies and know how in different fields, discovered in previous era, or when there is a need for post war reconstruction, the demand for labor happens to grow above the capacity to supply it.

    The marxist view would be that the reward for innovation and entrepreneurship is only other form of wages. But it is not. Definitely not in the modern era.

    Who are the super rich in the modern societies? They are the top musicians and performers, then the new technology entrepreneurs, who were followed by internet barons, etc. Before and between the world wars the wealth was generated in the hands of entrepreneurs and inventors of different kinds, who exploited opportunities and/or were lucky, like adventurers as gold miners, oil explorers, but also inventors, new management systems inventors as new production processes initiators, corporate businesses initiators, new marketing technique inventors, etc. After they introduced their novelties to the public, others copied them, and their inventions and novelties were institutionalized and teached in Universities. Other kind of wealth accumulation were done by business ventures, that exploited the opportunity of dramatic political-economic system change, as it happened with the collapse of the Soviet Empire.

    Even in the last fifty years of relatively calm economic development in the West, there is quite a lot of mobility as to who accumulates the wealth. It’s enough to check who are the most wealthy people in the West now, and who they were at the seventies. Also in corporate level there was a big shift from car and oil producing companies to know how and high tech novelty based companies. The profit making activities are always based on local temporary deficiencies, like lack of production capacities to satisfy the demand, or temporary monopolies, when a new technological or scientific invention is introduced to the market. On the long run the new inventions are copied, and lack of facility capacities are satisfied, many times creating over capacity, that cause eventually bankruptcies and causing wealth dilution.

    ———
    To make law, based on temporary situation, as it is locally done in the Western world in the last few decades, is misleading.

    To where disappeared the economic growth?

    High economic growth didn’t end at seventies as some may claim, just turned around the corner. After the traditionally developed West European, Japan and North American countries accomplished twenty years of intense, post war reconstruction and economic growth, and continued with milder growth rates from the seventies, the economic growth started in the Asian Tigers, like Taiwan, South Korea, Hong Kong, etc. This period ended, with the Chinese shift from Centrally planned to market economy from the early eighties. The remarkable economic growth of China put it in the focus of world economic stage. Ten years later with the collapse of the Soviet Empire, the East European countries joined the market economy club countries, and their Purchasing Power Parity GDP per capita grew unprecedentedly from one fifth of the West European level to about half of it and the gap is still in process of closing.

    The economic growth since the seventies in the global level was well above three percent in average.

    https://goo.gl/images/cYAaYT

    Of course this process wasn’t a smooth one, but rather with huge local problems. Not to speak about decreasing marginal utility of the investments that slows down the economic growth in more developed countries compared to less developed ones. Also too fast, too chaotic economic growth, with huge investments, like in China, or in pre 2008 Spain, may cause inefficient, many times wasted investments into white elephant projects.

    It seems the precondition for economic growth and prosperity is a relatively well functioning political system, liberating the creative capacities of people from suffocation under despotic, repressing regimes, with very different priority, than economic and social welfare of the population.

    Germany versus Greece

    An interesting dialogue between two opposing views about European and Global political and social responsibilities. Relevant more than ever, mainly the predictions, that already partly have happened.

    https://wp.me/pb2h4-Jz

    Will excess money cause a new economic breakdown?

    The major conclusion from the previous three essays about US debt was that the major financial event of the last ten years after the economic crisis of 2008, was transfer of private households debts, to the public debts.

    https://rodeneugen.wordpress.com/2018/02/03/us-debt-will-it-cause-a-new-economic-crisis-3/

    This happened, when the policy of Quantitative Easement policy taken by federal reserve, that printed trillions of dollars of new cash didn’t caused the expected credit increase for the private sector. Instead of credit volume enlargement, the additional cash money printed by the FR, was accumulated in the commercial banks, and created excess reserves, deposited mostly back in the FR vaults. Since money creation is loan dependent, without new credit to the system the economy continued its languish state.

    Partly it was caused by new regulations of banking system, called Basel III norms, introduced gradually in more substantial way since 2008 crisis, that among others, changed the rules of Minimum Capital Requirements. This change was necessary to stabilise the banking system, but in the short term of few years it caused credit squeeze. It seems by 2017 this process of capital restructalisation came to the end, and the banks are opened again to do business.

    If we return to our first essay, where i defined the political-economic aim of all the governments, without difference of opinions;

    1. To make the citizens satisfied in their material and cultural life, under conditions of limited resources, by providing social services and security at politically agreed level.

    2. To create stable economic environment without inflation, so that businesses and households can trust the economic system, securing their well being and wealth in the future and also for the future generations.

    3. To secure full employment, so all the healthy adult citizens in their productive age can enjoy productive healthy life.

    https://rodeneugen.wordpress.com/2018/01/02/us-debt-will-it-cause-economic-crisis/

    It seems as today, all these aims were achieved since the economic crisis. So what’s so wrong about transferring the private debts to public debts? Why are the US legislators obsessed with the question of public debt ceiling? The major problem with monetary policy of quantitative easing is the instability it created in the existing monetary system, that by its essence is intertwined with the non monetary side of the economy. Unstable financial state causes potential instability in the merchandise and services demand and supply, with all its potential negative political and social consequences. Other result of QE is low interest rates, causing increasing inequality on wealth distribution, impoverishing the wage and pension income dependent people and enriching the asset holders.

    The goods-merchandises and services can’t be transferred from seller to buyer, unless an intermediation agent, with normative ruler accepted by both, seller and buyer is used. As today, the only such an agent known to us is Money. Even if money changes its form, from metal money, to paper money, checks, plastic money, and lately digital money, still it works according to the same principle. Money, has attribute of universal agent for exchange, with relatively stable exchange value, issued in responsible way and guaranteed by government, defended with all its political and military might. As such, the money is not only media of exchange, but also value securing asset. But to keep money’s value fixed, it has to have the capacity to be scarce. Scarcity is the attribute, that gives to any economic item its relative value. Not absolute quality or quantity, but relative scarcity with relation to the demand of the merchandise and service secures it’s value.

    But money by itself is useless, and so it has to be. After all, if money would have other purpose than being an agent of exchange or/and value securing asset, it’s value would be subjective and relative for everyone. And it is important that money has an objective absolute value, and if possible stable. But it is hard to achieve absolute objective value of the money and even harder to maintain it. After all, money has also mysterious fetish value, and every individual relates different fetish value to money.

    Since ancient times, the governments discovered, that money has to be regulated, so they monopolized the money creation. If not regulated, money can become too abandoned, then loses its absolute value, and even more its attribute as value keeper. Keeping money’s value stable became even harder, since fiat money was successfully introduced, and was finally disconnected from any kind of metal backing.

    If few decades ago, the paper money was still the main instrument of exchange, since then it has been digitized. Digitalization of money made it even more abstract and non material. But the technological change didn’t stop there. Few years ago, functionality of money still needed big centralized computers, interconnecting all the banks together, to manage your digital money. All this has changing now. Just as everything becomes information, saved and stored in cloud, to which everyone is connected by his portable mobile phone, so will be the money. The cryptocurrency is exactly that, cloud stored money. But not only cryptocurrency, also internet banking, that disconnected the money owner from its holder, the banks. The contact between the two goes through call centers completely anonymous. Add to it the post 2008 economic crisis events, as quantitative easement, its meaning is trillions of new dollars and Euros poured into the monetary system, and the trust in money is shaken.

    Yet money’s value, as agent of exchange, defined as purchase power of households consumers basket index, was not shaken. In contrary. Almost zero inflation rate of consumers products secures continuous general acceptance of money as exchange agent.

    According to proclaimed goal of central banks policy, 2% level of inflation is considered as optimal. In average, since 2008 this goal was underdone. How is it possible? In spite of trillions of newly printed dollars since 2008, the central banks failed to achieve their inflation goal? More than that, the inflation level is the lowest since decades (viz the next chart). This needs explanation.

    The new technologies decreases strongly the marginal cost of production. In many cases after the initial investment, the marginal production costs are close to zero, and so are the product prices. But new technologies, not only enable to purchase products, available for symbolic price, or even free of charge on the internet, but also reduce the labour hours needed to introduce products and services to the markets. More than that, the following chart shows dramatically low wage increase, relatively to the productivity increase.

    The relative wage decline has a double edged sword influence on the price increase. It reduces the costs of the labour intensive products, but also decreases the purchase power of the employees, who are the vast majority of the population. So the aggregate demand has relative decline tendency, and the supply prices are suppressed too.

    The data strongly supports the thesis, that price increase is caused rather by commodity price increase, that are supplied by monopolistic producers, than by aggregate demand increase. If there are expectations for price increase of the consumers expenditure basket, it will rather be due to basic commodity price increase, than any other parameter. The last big inflation breakout in the years of stagflation at seventies and eighties in the last century, was rather caused by price increase of commodities as fuel, corn and basic raw materials, than by public debt increase, or too much liquidity in financial system.

    Why is all this important for predicting the next crisis? Because inflation in consumers price index influences central banks policy of interest rates. Interest rate hike changes investors preferences between forms of money savings on one hand and investments and borrowing on the other hand. Since money creation and money velocity has strong correlation with bank loans, these changes can cause spiral downfall events, ending with another economic crisis.

    What about the value holding property of the money? Compared to other value holding assets, like stock prices, real estate prices, and the new phenomenon of cryptocurrencies values, the relative value of money compared to all these was strongly diluted.

    The above chart represents the increase of net worth of US Households, that at the end of 2017 was close to 100 trillion dollars. Net worth collapsed at 2008 to about 55 trillion dollars, but since then added almost 100% to its value. All this happened while the level of real estate and debt remained almost unchanged from the pre crisis values, and most of the additional wealth was created in form of financial assets. Does it represent real value increase in corporate equities?

    The nonfinancial corporate businesses equities index as to 2016 updated data increased from pre-crisis 2017 peak of 15,000 to 22,500, that represents 50% increase. But part of this equity itself is a bubble increase, since the corporate assets include overvalued financial assets. It seems, that the equity prices are higher than it was in pre 2007 economic crisis.

    Financial assets composition in the US, as seen in the next chart, are mostly equities, in form of shares of corporations or private equities. These are the least stable assets as to their value if compared to currency and deposits. Stock exchange prices are the first to volatile and in a very strong way. Other financial assets include corporate securities and bonds are exposed to huge risks, if not been able to be recycled. This may happen if the maturity of the security happens to be in middle of an economic crisis. From this point of view, corporate securities are kind of Russian roulette risk taking assets. If their maturity is at right time, they are secured, unless for some other reason the corporation issuing the security doesn’t ceases to exist. If at time of maturity of the security an economic crisis rampant, most probably the heavily invested corporation is not liquid enough to be capable to repay the debt.

    As to distribution of wealth, the next chart shows clearly, that since the seventies, the wealth gap difference between the top 0.1% rich and the 90% bottom households in the US has changed significantly. If at seventies the top 0.1% rich owned about 7%, and the bottom 90% households owned 36% of the total wealth in the US, the latest data show, that they are equal with about 22-23% of the wealth each.

    Since the seventies of the last century almost an uninterrupted trend of increased inequality started in the US. This trend was temporarily disturbed between 2000-2002. Interestingly this change corresponds with the changes of the Nasdaq index.

    My thesis is this correspondence is not and arbitrary one. The Nasdaq is a marketplace for high tech and startup companies, that are more risky than other assets. Most probable the difference between investors in Nasdaq shares and people with no tendency to such an investment, differentiate also between more risk and less risk taking people. It seems it also differentiates between those with increasing net worth, who are also with higher propensity for entrepreneurship, as against the employees or pensionaries.

    The QE monetary policy changes radically the wealth distribution inequality between the monetary asset holders in different forms of deposits, pension funds, etc., and the corporate shares and real estate and even cryptocurrencies holders. Most probably the wage and pension income sector of the society will be the social group with relatively higher percentage of their net worth holds in some form of money.

    US debt, will it cause a new economic crisis? -3

    Following the two previous essays about the US public and private debt data;

    https://rodeneugen.wordpress.com/2018/01/26/us-debt-will-it-cause-economic-crisis-2/

    https://rodeneugen.wordpress.com/2018/01/02/us-debt-will-it-cause-economic-crisis/

    It’s time to look comprehensively at the debt problem of US and ask the question, can this debt cause a new financial crisis as it happened in 2008.

    Modern economy is rather defined by its whole supply chain, than by its production facilities, which is part of it. A short description of supply chain system of a product introduction to the market would be as follows: The first stage is defining the product by exploring, surveying, planning done by visioners. When the planning process comes to the end, follows entrepreneurship done by business venturers, creativists, technologists, scientists, planners, etc., who manage the supply chain enterprise. They initiate a process of mapping the resources needed to create final product ready for sale, and distribute on the markets.

    The supply chain in modern economy can be divided to four processes: Planning, Investment, Production and Distribution.

    The cost in this supply chain system includes direct or indirect labour costs (including labour cost put in the raw materials and subcontractor suppliers), and capital costs in form of interest payments, rents, royalties, concessions and profit.

    If profit is a cost out of expectation for reward, the visioners and entrepreneurs of the supply chain want to get as compensation for the risks they take in the whole process. Profit is also compensation for unique know how, self created by the visioners and supply chain process entrepreneurs.

    Interest is paid for financial capital used for investment. Rent is paid for tangible and intangible assets in form of depreciation or lease fees, or as yield based on the assets value to the property holders.

    The risk is highest at the first stage of the planning, before the new product is introduced to the market by the supply chain, if compared to the risk of a product already introduced to the market. Most of the interest payments are binded costs, for liability created before the distribution of the product started, stage of planning and investment. Interest payments are also different from other costs, that can’t be easily stopped or reduced if the introduction of the product to the market fails.

    Interest, relatively easily manipulated by the government, is used as price of the money, paid by the entreprise of the supply chain. It is a major tool used by the government to influence economic happenings.

    Interest payments, as contrary to labour cost, that is evenly distributed upon the whole process of supply chain, is caused by activities mostly concentrated on the first stages of the supply chain, planning and investment, and less in the stage of actual production and distribution. So most of the interest payments are binded to activities that happened before the final act to introduce a certain product to the market. This is why interest cost is more risk carrier than labour cost.

    On the other hand direct variable production-distribution costs are the skeleton of the economic system in the microeconomic level, since its derivative is the supply function, and its intersection with the demand function generates the price of the products in the market.

    Assets value at market price and the future gross income are crucial to predict the level of financial vividity or financial stress the enterprise is in. The sum of all the supply chain enterprises in the economy, are the actual private share of the economy on the macro scale. This is the share of the economy, that will pay taxes to finance the public spending, and generates the national income, divided eventually to taxes, wages, profit, rent, yield, royalties, and interest. Out of taxes and insurance fees will be done the redistribution of the income among different individuals and social groupings.

    The economic growth, that is result of investment-savings on the fiscal side of the GDP, has to have its own growth on the contra side of the monetary system. This additional need for money as a monetary tool to enable smooth, continuous circulation in the economy is supplied by the government’s deficit or reduced interest rate, that increases the velocity of the money circulation. If to keep stable the interest rate, the government deficit has to be equal to the economic growth plus the inflation.

    On the other hand the inflation and interest rate strongly influence the distribution of income. Both these phenomena cause depletion of wealth and income of the savers, (mostly the wage and pension income based social groups), and enrich the borrowers, the businesses and the wealthy.

    On the macroeconomic scale the private debt, is more sensitive to economic upheavals than the public debt. The debt exposure of private enterprises above sustainable level, even temporary ones, are the reason of bankruptcies. This is why commercial banks and also businesses approach to credit is very careful.

    According to the analysis of the previous assay the private debt to the GDP of non financial businesses in US did not change significantly since 2008, and according to the chart below it was not influenced significantly by the 2008 financial crisis.

    To my opinion it proves, that the non financial businesses were not over borrowed before 2008, and their present level of debt is also stable. Interestingly the corporate businesses behaved at 2008 like in the times of business as usual.

    Not so the private householders and mainly mortgages dropped significantly, from 100% of the GDP to 80% of the GDP. This significant change in the private householders debt, shows rather the level of problems the householders had before 2008 than prove increased saving propensities of the US householders. If 80% level of householders debt is sustainable this is a question. Definitely the contemporary low interest rates helped to keep it at this level.

    What about the public debt? Before the 2008 crisis the public debt was close to 60%. This public debt at this level exists since the nineties of the twenties century. Actually when it dropped close to 50% of the GDP at 2000 there was the crisis of dot.com bubble. So it couldn’t be the reason for the financial crisis of 2008. Then in the post crisis years until 2013 it increased close to 100% of the GDP.

    This additional debt is translated to additional liquidity in the monetary system, yet there is no sign for outbreak of credit, debt or inflation. It seems the new regulations of the banking system, Basel III rules and maybe also the lesson the banks learned from the 2008 crisis, keeps the lid on the credit, and it seems to grow simultaneously and in parallel with the economic development.

    If the volume of the debt is not the most probable trigger of the next financial crisis, what about the inflation and interest rate? Is it possible, that at the current low interest rates level the debt is sustainable, but not so with the future increase of the interest rate?

    If no major disruptions in macroeconomic level, non financial businesses as described above, are in stable state, most probably due to their professional decision processes about credit. Not so the private households and the public sector. Households with approximately 16 trillion US debt, every one percent increase in interest rate means 160 billion dollars more interest expenses. For the government it is 200 billion US dollars out of 20 trillion US dollars. What interest rate increase can be kept without risk of crisis is not clear. Yet this increased income out of interest is transfer of money from borrowers to the lenders. Who are the major lenders? Definitely not the non financial businesses, but the private households savers.

    The financial system is influenced not only by credit but also by savings and its stability. Are the savings stable?

    Nonfinancial corporate businesses are holding less than 2.5 trillion US dollars financial deposits. The non-financial non-corporate businesses hold even less, about one trillion US dollars financial deposits, and less than six trillion US dollars, all together financial assets. Most of the corporate businesses financial assets are either investments abroad, trade receivables, or miscellaneous assets. These financial assets are used rather as financial turn over capital, needed to run the distribution chain process, than value holding assets.

    As to private savings, significant part of them are pension funds, life insurances and other social security funds, about 24 trillion US dollars. Low interest rate deepens the actuarial deficit of these funds, and additional income to them can only partly help with this deficit, caused by demographic change as result of average life span increase. These funds when reaching liquidity problems in the future, most probably their liabilities to the savers will be transferred to the general productive public, by its universal intermediator, the government or national social security departments. These savings are stable.

    Conclusion; ten years after the economic crisis of 2008, the major development was transfer of private households debts, to the public debts. Out of it, on the macroeconomic level the US economy seems to be much more stable than ten years ago. But there are some clouds on the sky. As a result of policy of quantitative easing, the public confidence in the existing financial system and its major tool, money, is deteriorating. Viz the events around cryptocurrencies, that makes the leaders of financial institutions rather nervous.

    Money, money, money, from where it comes from?

    While listening to the major players of world economy gathering in Davos, they all speak about the markets, how they function, what risk they can see in them, etc. But if you ask yourself what markets they are speaking about, you realise, those are financial markets. No-one speaks about vegetable market, fruit market, meat market, machinery markets, cement market, brick market, etc. These products seems need no market at all, and definitely not their attention. Yet the price of these commodities is decided somehow. After all the consumers and suppliers who meet in the supermarkets or on the internet find their way to make a deal of purchase -sell, without to consult it with all those clever bankers, financial managers and advisers.

    I live in a medieval town, where all the squares used to be markets, and still they carry their names according to merchandise they used to sell there. You have, fruit market square, coal market square, horse market square, of course animal market square, etc. No square is called financial market, option market, futures, securities, bonds, shares, not even stock exchange market. I wonder, those people of medieval or even renaissance or baroque times, who left after them so many beautiful buildings, how they lived without all these?

    If you follow all the participants of panels in Davos, you come to the conclusion that money is the most important commodity to sustain life. And yet, if i recollect correctly, except Marx, no-one speaks about money as commodity. So what is money? Why is it so important? They say money is debt. What does it mean? What is debt? Or should I ask what is financial debt? After all we are not speaking about debt in form of favour someone have done to you and you own him!

    Financial debt is an agreement between lender and borrower, while both have certain expectation from the act of lending-borrowing. The lender expects, that the loan will be returned with certain additional value to the principal value the money was lent. The borrower expects, that the money borrowed to him will help him to overcome certain temporary difficulty, or to create certain activity, that will enable him in the future to generate enough income to return the loan with additional payment of interest as agreed, and eventually some leftovers will make him accumulate additional wealth, that otherwise he wouldn’t be able to accumulate.

    This is an easy concept. But then many times happens, that the borrowers plans didn’t work out, and he has no funds to repay the debt. This is the risk the lender takes, against securing in the future income additional to principal of the loan he gave. To reduce this risk the lender turns to the expert on risk, the bankers, to manage his money, accumulated out of his activities in the past. And here we start the story of financial markets.

    Let us start with short introduction to banking and money for beginners :

    When someone puts money in the bank, and the bank uses the same money to give loan, and this loan is also deposited in the bank, the bank can give it again as a loan and so to infinite, and this is not good, because what if the first borrower and the first lender come in the same moment to withdraw the money? It becomes a problem. After all the bank got only once real money, the rest came from the same money it gave as loan.

    But then, from where came money at first? After all it has to have some origin. Of course it comes from the government. Kings from the ancient times, until quite recently had only one task in the society, to fight wars and to collect taxes or protection to be able to pay to his soldiers. From where they got the money to pay the soldiers? After all the kings never created something useful to sell it on the markets. It is under their honor as sovereigns to do useful thing. Who will respect a king, who would cultivate food? Noone. Their task is to collect taxes and to make wars. But it is hard to collect taxes in the form of products, goods and merchandise, so they discovered coins, their cost was much lower than their face value. This they achieved by making the coins deficient. How? By making monopoly on the metal mines they used to mint the coins. Of course they had even then to fight the forgery, this is why the kings chopped minters hands, or even worse their heads. But maybe the most extreme act of defending the coin value has done by Henri king of England, who as response to complaints of the soldiers about the fake coins they were paid with, not only cut the right hands of all the king’s minters, but also castrated them. The modern response to currency forgery is not as cruel, but also harsh. Even if in today’s world, the cash money is small fraction of the money existing in the economy. Most of it is in form of savings, some freely exchanged on financial markets, like government or corporate securities, and some fixed in deposits.

    Only small fraction of Money, about one trillion US Dollars is in form of cash. Large part of it is hold by foreigners, mainly in countries with unstable local currency. Narrow money M1 that includes liquid bank deposits is less than 4 trillion US Dollars as compared to broad money, including long term bank deposits, M2, that is about 14 trillion US Dollars.

    So what all these data mean? If the financial system is at risk, from where it is expected to come?

    Money has two functions, the first is means of exchange, second instrument to hold value. Both functions need faith of the public in stability in the value of the currency. The government have power to enforce usage of the local currency, by demanding tax payments in it. This is a strong argument for the local currency, since in most of the developed countries the taxes are usually 35% of the economy, except in the US, where there taxes are 25%. Not surprisingly, the public services and the public infrastructure in the US is neglected, if compared to Europe.

    Fiat Money, from where it came

    The economists under suspicious supervision discovered during the twenties century the connection between government debts and the Money. This understanding enabled the historical decision of the Nixon era to disconnect the US Dollar from its golden foundation. Since then money lost its value as expression of a commodity value, and rather became a central tool for economic policy.

    Money has in principle two economic functions. The first is to be a scale measuring relative value of items created and marketed among the people, and the second, to be a security for keeping and if possible with small addition the purchase power value for the future. The cumulative value of money ownership exchange, or the aggregate value of money flow by definition have to be equivalent to the aggregate product value flow. (products include services and merchandise, what in its potentiality can be consumed or thrown to the dustbin, like all the Christmas presents:). So the manipulation with the value of the money flow is crucial for economic activity volume. If the potential capacity of the economy is overflowed by the money flow value, necessarily the product prices will increase, or in economic terms inflation will happen. To influence the value of money flow in the economy the government can increase or decrease the budget deficit, and by that increase or decrease its aggregate debt. The more flexible way to influence the value of money flow in the economy is by monetary policy its major instrument is interest rate in the economy, that influences the volume of investments and the tendency to consume now or postpone the consumption for the future.

    Traditionally it was accepted that the interest rate is major tool to influence economic activity, so when the bust came at 2008 the interest rate was flatted in the US and Europe, hoping that it will cause a substantial increase in the demand for consumption, and in parallel inflation would rise, that would decrease the real value of the debts, the governments, corporations, banks and private households have, and with it the economy will return to equilibrium of economic growth. What about those who have no debts? They got it wrong. They have to live with this injustice.

    But it didn’t happen and it is a big question why. To my opinion the answer is in several issues. The first is the increased life expectancy of the people, whose savings in long term pension funds was planned for a shorter life expectancy, so in principle they are in deficit. To overcome this deficit, people in pension age or close to it, the fastest growing population sector in the world, increased their savings. Add to it the debt shock of the private households, that emerged with the 2008 economic crisis, and degradation of the middle class income, that damaged the income of the largest part of the population and you have a perfect explanation why there is no increased demand for consumption and with it inflation, even if the Government debt and with it the potential money in the economy grew with no precedent.

    I understand the fear of most of the people from the future developments, when the mountains of money accumulated because of the government deficit will suddenly flood the economy. It may happen, and it will be damaging mainly to those who hold their savings in some form of savings. Sorry the pensioners again. But this problem can be solved, if the government will take responsibility to this sector of the society. It will be just, politically popular, and with very little impact on the economy. After all what will be the occupation of most of the people in the future, when the AI and the robotics will take over the production of merchandise and services? Taking care of the elderly population, who need human touch, what the robots still can’t provide.

    Other phenomenon i would like to mention is the changing position, function and attribute of money with relation to the economy. If historically with the industrialization and urbanization of the world population, growing parts of economy introduced money exchange in almost every economic activity, (no self produced consumers items as in the pre-modern agrarian societies), this trend goes thru sudden dramatic change. Today many products are purchased on the internet without or with very little payment, sometime donations. Other phenomenon is possibility of investments into self producing energy equipment, with the new efficiency of battery and photovoltaic cells, etc.
    I would add one more issue, the money with no government influence, as bitcoin, that by now is marginal but in growing trend, threatens the very foundations of the existing monetary system, based on government monopoly on the money creation, and banks monopoly of credit money creation.

    My conclusion; To see the accumulated government deficit as the major macroeconomic problem, the US and the world leaders have to cope with is a very narrow view.

    I am aware that this simple model i described here, doesn’t take in account the influence of the ex-national territory influences on the money flow and money variables as interest rate and the economic activity of the products, still i believe it gives reasonable picture about the connection between the government deficit and the economy.

    US debt, will it cause economic crisis 2?

    Following the previous analysis of US public debt

    https://rodeneugen.wordpress.com/2018/01/02/us-debt-will-it-cause-economic-crisis/

    i continue with the private debt analysis and its impact .

    The economic crisis can have several different causes. My definition if an economic crisis is negative growth rate of economy. Viz the chart below. If we don’t take in account the negative economic growth at the volatile post war years of the late forties and fifties, the first post war economic crisis occurred at 1974-5 following the war in Middle East at October 1973 and the oil price shock that caused high inflation. Since there were only two more negative economic growth rates in the US economy, at 1981-83 and 2008-9.

    In all three cases before the economic crisis oil prices jump up at 1973-74 from less than 20 US Dollars to 60 US Dollars per barrel, then between 1978-79 other hundred percent rise to 120 US Dollars per barrel (at 2015 prices). The next rise of commodity prices started at 2005 and peaked up at 2008, when oil and other commodity prices reached a peak, and then collapsed with the financial crisis of 2008.

    Sudden jump in commodity prices, that may occur, as seen in the above charts, causes increase in energy and food prices, that are leading items in the consumers baskets, (food directly and energy through transportation and housing). To such development the central banks reacts with interest rate increase, that have an immediate effect on investments in real estate, shares and other wealth protecting items, that may cause collapse of net worth, with all its consequences.

    Does it mean that all the economic crises in post WWII economy were caused by one factor, the commodity price increase? Definitely not, even if it can be one of the supportive factors that caused the economic crisis. In any case an extreme price jump of commodity prices, is usually short term, because either alternative commodities, or new technologies are introduced to the economy. A very good example is the exploitation of gas instead of oil, and the introduction of solar energy in massive scale in the last years.

    The economic crisis is more often related to the aggregate demand. But the aggregate demand wouldn’t change overnight without a reason. The aggregate demand in the economy is directly derived from the net national income, meaning gross national income, minus savings. The other important factor is the the net worth of the economy, meaning gross asset value minus liabilities.

    The GDP before every economic crisis according to our definition above must grow and with increase of the GDP also the national income growths, sudden drop on the aggregate demand cannot be explained by the sudden drop of national income. So the reason has to be rather in the net wealth. Since net wealth of the private sector is defined as gross asset values minus liabilities, while the liabilities are mostly in form of financial debts, the level of indebtedness of the economy is crucial to the level of wealth of the society.

    It is generally accepted, that the 2008 crisis was caused by too high level of debt. Let us assume that the level of indebtedness of the private sector as percentage of GDP at 2008 is an unsustainable level. So let’s try to see how we are doing at end of 2017 with the indebtedness after 10 years compared to 2008. (all data are estimated to the end of 2017 and updated prices. Source Federal Reserve Statistical Release third quarter 2017)

    1. The US GDP was about 15 trillion at 2008 and it grew to 20 trillion to end of 2017, increase of 33%.

    2. The private debt is divided to Private Household Debts (PHD), that is about 15 trillion USD, almost without nominal change from the peak at 2008. Out of it 10 trillion is mortgages. More than one trillion USD are student loans, and the rest other consumer credit. It means private household debts dropped from 100% to 75% of the GDP.

    3. According to data at end of 2017 the Non-Financial Business; the Credit Market Instruments liabilities was about 14 trillion USD compared to 11 trillion at the peak of 2008, what is 33% increase, that is in correlation with the GDP growth. Out of it the corporate non financial institution debts to the third quarter of 2017 was about 9 trillion USD, up from 6.5 trillion USD at 2008, 38% increase.

    4. Financial Business’s debt shrunk to 16 trillion out of 18 trillion in 2008. This reduction of debt in financial sector represents the process of reduced financial activity in the US economy following the financial crisis of 2008.

    Conclusion the indebtedness of private sector as a whole is below the 2008 level that was about 250%of the GDP, while at the end of 2017 it was just above 200% of the GDP. The rate out of the GDP of the non financial businesses and the households debts level from the GDP is very similar to the rate at 2008, while the financial businesses indebtedness is lower than the 2008 level.

    Understandable the aggregate wealth value is also derived from the gross asset value and not only from aggregate debt. And the aggregate asset value has also direct influence on the debt, since the assets are the main collateral for the financial institutions to lend new loans, are the updated assets value. So increase in asset value, causes increase in indebtedness of the private sector, that brings increase in asset value, etc. This is a well known bubble phenomenon. Are we at the doorstep of such a phenomenon? As to the asset prices increase, if it is real estate, stock exchange prices, all those are in upward trend since 2012-13. To add to it the skyrocketing cryptocurrency and you have new “wealth creating bubble.

    Still we have to see if it will bring an unprecedented increase in credit and indebtedness of the private sector.

    http://eyeonhousing.org/2017/08/home-prices-grow-in-june/

    Dow Jones industrial index

    http://www.outsidethebeltway.com/wp-content/uploads/2017/08/dow-jones-industrial-average-last-10-years-2017-08-05-macrotrends.png

    The net worth of US households is about 100 trillion US Dollars, 5 times the annual GDP, up from previous peak 80 trillion US Dollars at 2008, 5.3 times the annual GDP. Obviously the net worth of private households include the value of corporate and non-corporate equities and financial deposits and savings partly represented as liabilities in financial businesses, and the real estate assets, that are valued about 35 trillion US Dollars..

    Net worth of nonfinancial corporate businesses is 17 trillion US dollars

    Net worth of nonfinancial noncorporate businesses is 12 trillion US dollars

    Net worth of financial corporate businesses is about 7 trillion US dollars, while the total balance sheet of financial institution is close to 100 trillion US Dollars. This ratio may be surprisingly low, but it is just right according to Basel III regulations of overall regulatory capital of 8% to Risk Weighted Assets Ratio.

    It seems the private indebtedness is below the level of 2008, so it shouldn’t worry in the meantime. There are also some other important differences, that have positive impact on the economic stability. The first is the interest rates, that are much lower than at the 2008 level.

    As to the commodity prices, mainly the oil price is at 2017 significantly lower than before the 2008 crisis.

    Conclusion: The US economy as to its indebtedness and production costs, as to the commodities and financial costs is far better than it was before the crisis of 2008. Yet as mentioned above the excess reserves of the commercial banks deposited in federal reserve vault, can very easy and fast to change to a credit bauble. The most probable response to a credit bauble will be interest rate increase. That can have negative effect on the property prices, as well as on the profitability of the non financial businesses.

    The other factor that seems be a foreplay to an economic crisis are the commodity prices. They necessarily increase the marginal production costs, that will cause price increases of consumption basket. That will be followed by interest rate increase, and the downward spiral will start to turn around.

    Emotions versus logic

    Feelings are unpredictable. If so, our acts are unpredictable. Human culture is all about to restrain our own natural tendencies coming from our feelings. The aim of culture is to be adoptable by the society.
    Reason and emotion are separate realms. Reasoning is explainable exactly to the other, the emotions are not. Poetry, music, plastic arts, etc…. are a not very successful tools to transfer emotional essences from the artist to the OTHER. Some have the capacity to come close to the emotions and intentions of the art creation, some are totally incapable of doing it. If you read sometimes art critics, self claimed professionals of art, you can see how far they are from understanding the emotional meaning of the art expression. And I’m not speaking about those, who play total ignorance in front of art piece or performance.
    Logic is the language of the reason. It is universal language for everybody. Not everyone can speak it, not everyone has the same capacity to speak it, but for everyone, who knows the lanuage of logic only one truth answer is valid. Not so with arts, not so with emotions.
    Emotions are emerging property out of complexity of human biology. As such it has entirely different properties than the biological material that is their domicile. Emotions exists in entirely different realm, than partical physics. Emotions are rulled by entirely different laws from the laws of physics. Be it linear or non linear mathematical laws.
    As technology evolves, we are evolving too. Look at our children, they are not Homo Sapiens anymore, but rather Homo Telephonicus🤳:-).Culture is about controling the emotions of individuals by society. It is anti-individual-emotions based. This means social emotions. Most of the cultural rulles and norms are about avoiding the most natural, hedonistic urge of the individuals. Human is a social creature. Culture is him as much as his animal individualistic urge is him, if not more.

    Humanity is the kingdom of individual ideas, but also cultural social structures and elements like, rulls, norms, symbols, ceremonies, myths, artistic expression of different kinds, feelings of belonging, feeling for home, for the other who belongs, need for possession, need for recognition by the other, etc….. The other can be the one, the only one we care, or the whole society.

    The fittest among the Homo Societicus is the one, who knows the best what social and individual emotions are about, who is the best using the tools of human culture to love or hate, and even more, to be loved or/and to be hated.

    US debt, will it cause economic crisis?

    The debt problem of the us government is a major political issue in the US politics. If to look at it from the economic point of view, the public debt is one of the variables of a complex monetary system, its aim is to create smooth macroeconomic environment without to big boom and bust.

    The debt problem is result of federal government budget deficits, created by politically motivated tax reductions, initiated mainly by the republican party US politicians. Yet the politicians from the same partie are the most loudly speaking opponents of the public deficit, even initiating deficit ceiling during Obamas administration. I will try in the following essay to analyse, if the deficit and the US federal debt is in reality such a big problem, as many may claim, or is it just a technical problem?

    The government deficit, defined as the total expenses of the government minus total government income. The question is, if deficit crosses certain limits, or annual deficit continues to prevail for too long time, will it have a cumulative effect? Can it cause world wide economic crisis? Maybe it can become a problem, if the high debt will prevent from the governments implement economic policy, to achieve its economic goals, when it is most necessary to do so? I would like to try to check if  such a danger is in realm of the reality.

    To start with, let’s agree what are the government’s major economic goals, and then we can check, if public deficit and big public debt are serious obstacle to achieve these goals.

    The main goals agreed to any government, without differences, from which party the political representative comes from.

    1. To make the citizens satisfied in their material and cultural life, under conditions of limited resources, by providing social services and security at politically agreed level.
    2. To create stable economic environment without inflation, so that businesses and households can trust the economic system, securing their well being and wealth in the future and also for the future generations.
    3. To secure full employment, so all the healthy adult citizens in their productive age can enjoy productive healthy life.

    To translate these goals to economic terms means, to secure full employment, sufficiently big government budget to secure necessary services and to do it with minimum inflation.

    It seems, at least two economic parameters out of three, as to end of 2017, the inflation level and full employment are in very good state. From this point of view it can be said, that the US economy is in a positive equilibrium point ten years after the big financial meltdown and deep economic crisis that followed it. Is this state a stable equilibrium point, and can it continue to stay stable in-spite of continuous public deficit and out of it ever growing public debt?

    As to sufficiency of social services, it is rather a political question than economical, even if it is well known, that marginal utility of investments,  as to any other economic function, has declining propensity. So if relatively too many resources go to private investments, due to low corporate taxation, and out of it relatively too little is invested into public infrastructures, the result will be poor state of publicly owned public transportation facilities, like railways, compared to well built private toll roads and private cars.

    But these trends have long term effect, and no immediate consequences on economy.

    So what are the short term risks of the public deficit?

    1. The deficit is translated to debt, and as any debt, it should be eventually returned or at least to pay interest and continuously revolve the principle. Until these two issues are under control, there is no danger of defaulting on debt.
    2. In the private sector the bank credit can be divided to credit for investments and credit for consumption. Assuming that the investment credit will eventually create new income producing assets or the asset price will increase, the credit for investment is relatively well secured. As to consumption credit, the debt return have to come from the future income of the  borrower and obviously it has its limits and is less secured.
    3. How is it with the US public debt, or public deficit, does the deficit represents investments rather than consumption? Hard to say, because in public spending, investment can be investment in fixed capital, but also education. The main government expenditure is to defense and security. But it is easy to see that insufficient non defence  public investments in infrastructure are the reason for deteriorated public infrastructure in USA. Yet again these distortions in the effective resources allocation, and out of it investment allocation have rather long term effect.
    4. So the question is even if today the deficit still doesn’t threatens the US economy, can it happen in the near future?.

    I would start to answer the question with analysis of the US federal debt.:

    Total total US public debt to the end of 2017 is 20 trillion dollars almost identical to the annual GDP. This ratio between debt and GDP is important, because the only way the government can repay the debt is by creating net surplus in the budget, meaning higher taxes than expenses. Taxes are paid out of the GDP, so the ratio of government debt to GDP is important. Other important variable connected to debt is interest rate the government pays on its debts. The government debts are in form of treasury securities with nominal positive interest.

    The first step to analyse the macroeconomic risks is to understand the structure of the US public debt.

    • 5.5 trillions – hold by government mostly to cover future social insurance commitments
    • 2.5 trillions – federal reserve itself holds
    • 1 trillion – the states.

    It means 9 trillions or 45% out of the debt are intergovernmental or reserves for future liabilities. These reserves only partly cover future Social Security obligations because of actuarial deficit. But they are not going to influence the monetary liquidity in the near future, because of the long term character of these obligations. These debts are accumulated savings securing future income for the aging population, or productive age population in times of crisis. The actuary deficit means that probably in the future these pension and social funds will not be capable to fulfill their obligations, but this is not the problem we are relating to.

    The federal reserve bank holdings are like transferring cash from left pocket to right pocket, so they have no influence on economy at all but within economic policy of the government. But against these holdings exists cash money that federal reserve bank issued mainly in the last ten years within the policy of quantitative easement. Total cash (M1) printed by federal reserve is about 3.7 trillion.

    The total deposits in commercial banks are about 15 trillion. Out of it the excess reserve deposit of commercial banks is about 2.5 trillion dollar. Since 2.5 trillion dollars excess reserves can theoretically be translated to additional 25 trillion dollars credit deposited in the commercial banks. This huge potential credit is potentially dangerous. The total credit of the US banks is 13 trillion, so additional credit of 25 trillion dollars would cause big monetary flood to the economy. But the government and federal reserve have tools to prevent such a development. It can either increasing the minimum reserve requirement from commercial banks from today’s 10% up to 30 percent and it would limit the commercial banks credit to today’s levels  or increase equity requirements rate accordingly with the same effect. (Reserve requirements are requirements regarding the amount of cash a bank must hold in reserve against deposits made by customers, Investopedia).

    6 trillions by foreign country –

    This debt is the most problematic because it my fall in the wrong hands in case of political economic change in major creditor countries, China or Japan, who are holding together more than a quarter of the debt. The other countries are far behind these two countries, and they hold the US dollar as a reserve currency, every country for its own reason. Yet if in Japan or more likely China a dramatic change in foreign currency reserve policy would happen, it would be probably more damaging to the Chinese than to the US economy. If China would either start to sell the bonds on free market, or let its currency freely floating and stop to buy US dollars. The US dollar would in both cases react by losing its value against all the other currencies. In case of act out of political animosity, the US government could respond accordingly. I believe if a sudden unexpected and unfavorable political change would happen in a country like China, US would have to solve completely different problems than falling value of US dollar.

    So in reasonable world, any change in policy of US dollar holdings in foreign countries has to be in cooperation with the US, otherwise it would damage US economy as well as the debt holding country. Still, even if a gradual but substantial change in currency reserves policy would happen, in major US dollar debt holding country out of domestic economic needs, it could come when it is not in a perfect timing for the US economy. But US can easily create surplus by changing its taxation policy. Even if it still wants to continue with policy of low corporate taxation. For example a new tax on energy sector, comparable to European level, would nullify the US budget deficit. It would also bring US back to position of leading nation in sciences and solutions of environmental problems.

    The holders of the remaining 5 trillion dollars are private entities, mostly private pension funds, insurance liability holders, or private reserves for bad days. Even if this amount is not under direct government control, it is not expected to destabilise the financial system.  5 trillion dollars is not 20 trillion dollars.

    The other variable of monetary system is 3.7 trillion dollars, cash and cash deposits, called M1 in the professional jargon. This is the liquid side of the governments securities, accumulated in federal reserve vault, due to policy of quantitative easing. This is the money that includes about 2.5 trillion dollars of excess cash poured into the monetary system with the quantitative easement.

    The annual budget deficit of US in 2017 is about 350 billion dollars or 1.75% of the GDP it is less than the 3% GDP growth rate. So 2017 reduced the relative burden of the public debt. We have to see what will do D.Trumps tax reforms.

    Exists a deficit level, that could endanger the economy? Obviously if  interest rates would go substantially up, or the debt would be substantial more than 100% of the GDP, or both, at certain point the government can lose the capacity to react to crisis situations, like sudden inflation outburst, or collapse of the trust of the public in the currency.

    Conclusion: Where are the dangers of the system? It seems, in the short term, the biggest risk for the monetary system is in the excess bank reserves in the federal reserve vault.

    The 2.5 trillion US dollars excess reserves in the Federal reserve bank, and and more than 1 trillion Euro excess reserves holt by ECB are the most unpredictable elements in the monetary system today. The commercial banks “voluntarily” increased their reserve deposits in the central banks, due to lack of investment opportunities. In spite of the conservative credit policy of the Banks, the US economy, as to the end of 2017, is in full employment, and EU is entering into high economic growth and the asset prices as publicly traded corporate equities, real estate, cryptocurrencies, gold, etc. are all sky rocketing. Hard to estimate if 2.5 billion cash money can have devastating effect on the monetary system. It represents 13% of the US GDP. Yet it is in waiting position, and the speed of change of economic data in the last year, shows how little is needed to skyrocket the asset prices to bubble volumes. The SNP500 increase in 2017 was about 18%, Nasdaq’s 27%, add to it the phenomenal rise of the cryptocurrencies exceeding half a trillion dollars value, all these are factors that cannot be ignored. The total bank credit grew from 10 trillion dollars to 13 trillion in the last ten years. It means for ten years it stayed in the same level in real terms. If the banks will start to use their reserve deposits, the credit volume of the US banks and the monetary liquidity will jump in trillions of dollars and the governments and central banks can be incapable to react in time and with enough flexibility to these developments.

    My conclusion is that the public debt is in mean time under control, even if slightly above the level of hundred percent of GDP. (Increase from level of 64% of GDP before the economic crisis to 103% in 2017.) Since 2013 the debt was stabilized at few percent above 100% of the GDP, with moderate upward tendency. The problem is, if this debt will continue to rise. It will be translated to new printed money or need of government to sell new government securities, that will result increase of the interest rate. As explained in previous essay, about 2.5 trillion US dollars are deposited in Federal Reserve vault as reserves above the obliged level. If not lifted the minimum reserve requirement from 10% it can be potentially a ticking bomb. On the other hand additional cash money in the financial system gradually replacing the credit means change of the financial system, that it is hard to predict its consequences. The real result of this three step process of -public deficit followed by -increased public debt, then -buy back of government security notes for cash, means  nationalization of creating money, or reducing the commercial banks right to lend and increase of the government role as supplier of new money in the system. It also means that the policy of reducing taxes on private entities doesn’t help to strengthen the private sector on account of public sector, if it is financed by public deficit.  All this political struggle between the treasury and  the senate about the top deficit is about who is the major controler of the money, the federal government or the commercial banks.

    The result of this process in mean time is loss of trust in money as value holding asset. this is why we see the phenomena of cryptocurrencies and increased real estate prices. Up to where will jump the prices of these value holding assets? Will the faith in the existing monetary system be sustainable? Or are we in the step door of completely new monetary system, where the cryptocurrencies will take over the roll of governments and central banks, creating an alternative economy. But until all this will happen, who will be the super-regulator to channel all these to the right track without major monetary crisis?

    Social grouping

    The capitalistic economic system is based on principles of profit, return on investments, competitiveness, private ownership of assets and means of production. These principles this economic system is hinged on, are pushing the economy to activities at infinite levels. Since the earth is a system with finite boundaries, it has to cause inevitably ever-increasing crisis, their forms and its dimension are difficult to predict.

    If not the capitalistic economic system, what other economic system could substitute it? Marxism tried and failed as an alternative economic system, but was it a failure of the system or was it the failure of individuals, who emerged out of revolutionary governance change, grabbed the leadership and misused it?

    In its essence Marxism recognizes the economy and economic social relations as the major mover of the human existence. In its most fundamental level considers the human labor as a central tool in creating and shaping the socio-economic grouping within the state. As such, it does not recognizes individual human being as the basic element of human existence.The result of it, in its fundamental essence, it is not putting the human individual in the center of the system, and out of it, it is repressive to individuality.

    The social framework in which individual will act as a productive factor is important to most of the people, whose realization of their identity requires possessing affinity to social grouping. Such a social affinity imposes limitations on the individual behavior, individual opinions, and cultural identity out of any kind of social grouping. So the choice of belonging to a social framework is also a choice to give up individual freedom, individual ideas, and adopt collective thinking. If to open collective thinking to large group of people, it has to be based on symbols, slogans, pre designed forms, pre designed thoughts, etc. that are adopted without any comprehension of the systems and its basic elements that lay behind the slogans and imaginary realities.

    On the other hand, human individuals without need for social affinity, are the only people with capacity for free choice, free thinking and free will. These “freed individuals” exist as creators and leaders in the fields of arts, sciences, economic ventures, philosophical cogitation, etc. The people with social affinity see these freed individuals as threat to their social  coherency and try to limit them by different repressive tools. But these individuals are usually those, that also bring grand scale economic, social, scientific, artistic, cognitive breakthroughs and advancement to the society and the economy. Most of the times they are eventually adored by the people with social affinities to a specific group. Therefore, if the aim of economic activity is to create ever growing wealth to growing number of individuals within the society, mostly belonging to social groupings that demand from its members social affinity, it is important to give freedom of action to these freed individuals. It means the people with affinity to any kind of social grouping need to restrain their natural tendency to try to repress and delegitimize the “freed individuals”.

    A liberal-democratic-capitalist society makes it possible for such free individuals to exist and freely develop their activities and ideas. But the big majority of the people don’t belong to this category of people, but rather are used to collective thinking derived from the social group, they belong too, and identify with. And the leading ideas of humans belonging to social grouping are based on simplistic symbols, slogans, predesigned forms, predesigned thoughts, ceremonies, norms, internal laws, unique normative behaviours, etc. In some social groupings all these attributes are easily changed  to new ones and can be used to support new modes, new fashions, or exchanged to completely new social grouping with new attributes. But many social groupings are not liberal and the restrictions, norms, rules and cultural forms are zealously guarded with orthodoxy.

    The new fashions can be either manipulatively created by certain individuals with clear personal interest and political proficiency to handle the simplistic symbols, slogans etc., or erupt spontaneously among the masses and immediately cause creation of social grouping, around which new forms of expression come into being. Both these forms of expression are based on social groupings and not on individual creation out of act of cogitation and deep recognition of the system and its elements, lying beneath the immediate expressions that prevail within the social grouping. As such, the social mood is governed by surfaced expressions, without to try to understand to the dept the underlying essence of the systems and its elements, these slogans represent, and without capacity to create an alternative system.

    These modes and tendencies, change quite often, and appear and disappear as reaction to events, mostly painful, connected to feeling of injustice caused by those “Others”, not us, meaning the “freed individuals”, or other social groupings, even if close in their beliefs to the faith of “our Group”. This causes rise of animosity to the other, sometime in mild form, but sometime it erupts into a very violent form.

    The political phenomena of Brexit and election of Donald Trump, is result of such informal social grouping of individuals, who try to express, through their negation of everything normative, their feelings about the obvious injustice caused by the existing system, that frustrated them when these individuals failed to achieve justice within the system. The 2008 economic crisis, and the way the political establishment, obviously protecting itself and the  leaders of the existing system, coped with the crisis, by pouring trillions of dollars into the system, on account of the majority, most of them with tendency for social affinity, was obviously frustrating and unjust event. Just mentioning the amount of  trillions poured into the financial system, that is beyond comprehension of normal humans, while their income remained freezed in the best case, made it easy to recruit people to social grouping, creating its own culture, based on surfacing slogans, misconception and false news. The result is political choices based on short term truths, bringing sometime disappointments, but sometimes unchangeable new realities, completely out of control of the same individuals, who made wrong choices, and are now trapped in situation, they themselves participated on its creation.

    עוד משהו, לא מזמן פרסמתי שתי תגובות לידידה שלי שהתרעמה על היחס של ישראל לעזה, הרי ההתכתבות: יש קצת הבדל, ישראל נמצאת עם עזה במצב של מלחמה טוטלית, כאשר לפי ההכרזות של הממשלה הנבחרת של עזה, מטרתם הפוליטית העיקרית היא חיסול הישות הציונית. לא שאני מאושר מממשלת ישראל ומדיניותה, אבל לגבי עזה אין לי סנטימנטים. הם בחרו בממשלת זדון, זאת התוצאה של הבחירה שלהם. אני מאמין שמבחינתם המטרה של חיסול ישראל היא צודקת. מי שבוחר בצדק על פני נוחות, מקבל אי נוחות, שכוללת “לא חשמל”. בינתיים אם הם לא יורים טילים אף אחד לא נוגע בהם.

    took me a while to understand your point though it’s very simple; this logic makes possible the notion of bombing Gaza back to the stone age ,we are after all defending our very existence . The more brutal the better they’ll understand, no sentiments but also no intelligence, unless genocide is our purpose . Let us drop the moral and victim pretense, at this time people with sentiments are in danger in our ‘democracy’ as potential traitors

    לצערי, לפי ההבנה שלי את ההיסטוריה האנושית, והנסיון האישי שלי, החיים על פני העולם הזה אינם מובנים. אני חי על תנאי. על תנאי שאדע לגונן עליהם. אומנם רוב בני אדם בעולם הזה אדישים לחלוטין לקיום שלי. ויש רק כמה בודדים שיזילו חצי דמעה אם לא אהיה וילכו הלאה. לעומת זאת יש רבים יותר שהיו שמחים מאד אם לא הייתי קיים. כך לדוגמא רוב תושבי עזה שבחרו בממשלת זדון. הזכות שלי לחיים בעולם הזה היא אל אף כל האנשים האלה ולא בזכותם. כמובן גם בעזה יש רבים שהם אדישים לקיום שלי, כמו גם בארץ בין היהודים ימצאו רבים שהיו מעדיפים שלא אהיה, בגלל שאני לא….. ואני כן….. אבל השאלה מי היא הנציגות הנבחרת, מולה אני עומד. האם היא נציגות שהיא אדישה לקיומי, או שמעדיפה שלא אהיה. המעוט של תושבי עזה, שהיא אדישה לקיום שלי, בלית ברירה אחריית על המעשים של ממשלתה, כמו שאנחנו אחריים למעשי הממשלות שלנו. אני ורבים כמוני, שלא עמד להם הכוח לשאת אחריות על מעשי ממשלות ישראל בשנים האחרונות, בחרו להתנתק. אומנם לא כך נוהגים הגיבורים, אולם מה הברירה שיש לנו מול כוח בהמי של הרוב בארץ? היה אחד, שטפן צוויג שעשה בחירה אחרת.

    Fable of Jerusalem

    The right of any nation for any piece of land is derived from the capacity of a group of people to identify themselves as belonging to unique mythology that defines them and their connection to certain piece of land. If the connection of these people to this particular piece of land is strong enough, to make them to be ready to sacrifice their life, in sake of saving this particular piece of land for people, who belong to the same myth, then these people have the full right to own this land. But then what happens when more than one group of people have claime for the same land? They will try to delegitimise the other group by different claims like, who was first, or trying to claim of falsehood of the others identity. They will use ancient texts, believes, fables, fairy tales, myths they believe as if it was a massage from the All Mighty directly to their brains. They adore the ancient texts, and try to uncover mystery in those texts, interpret them with strong bias to prove their myth being right, and the other’s being a lie. But this conflict cannot be solved by proving the rightness of one claim and denying the other. It only brings claims against claim, not standing by any standard of objective measurement. It can take hundreds or thousand of years and still the same claim will be there. After almost one thousand years the Arabs still accuse the Europeans being crusaders. After more than half century the Africans accuse the White people of being colonialists.

    Only complete change of collective mind state can resolve the conflict about Jerusalem. But does anyone want to change it’s state of mind? And to what, to modernity with its hedonism? Is the final aim of human culture about this?

    Learn who you are

    God – Programmer

    Isn’t the fact, that the Universe is governed according the law of mathematics an oddity, and not necessity of existence? How came these laws to existence? Maybe created by some kind of programmers? Maybe the programmer made a mischief and enabled within the system under very certain conditions to come to existence life, consciousness, human intelligence all what we can observe on the earth? Maybe he is even watching his creation, that evolves independently from his original intention, to what his mischief will come too. Will it be destroyed by the humans? By wars using arms with global influence or by unrestrained population and economic growth, that will top over the cliff the system enabling uniquely on earth biological metabolism. Maybe the planetary systems life span is few billion years, but the human civilization lifespan is not more than hundred years from the present? Then the programmer will say, puff, and have a great laugh.

    Isn’t it annoying to think, that the whole human creation, including Bach, Mozart, Bethoven, but also Michalangelo, Picasso or Shakespeare, you name the rest is just a bug:-?.

    And more, maybe the modernity with all the sciences, economic growth, technology, processes causing inbalancing to the global system, is just part of the joke of the programer, who was too bored by the ignorance of the humans, and decided to end the game ?
    Am i too bleak?

    To this i would reply, the ways of “God-programmer” are incomprehensible. But again we are watching the existence from human perspective, even if systematically, with amazing instruments we developed. When religions like Judaism, Christianity, Islam were created, the only perspective humanity had was at human dimension of time and space. This is why earth was the center of everything and the world was created about 7000 years ago according to them. Galileo with his telescope started a process that had changed all this. To believe in the bible as a book describing reality is denying the existence of telescope and the Large Hadron Collider, and other technological achievements the humanity created. There are religious Jews, Christians or Muslims who do just that. It is useless to try to speak to them. Those more sophisticated, creationists, they still base their claims on human perception of time and space. Evolution is incomprehensible within human life and size span dimension.
    Still, the science is limited to human comprehension, and within it there are too many opened issues, without which the chances that the humanity will exist beyond this century is rather unprobable. The global metabolic and environmental system is out of balance, and a big correction has to come. What shape this correction will take is a mystery. The humans have no tools to prevent it and also not to cope with it.

    Decolonization and wisdom of masses

    I just spent few weeks in Eastern Africa, touring villages, as well as the bush. The villagers live according to their ancient customs selling girls at their fourteens even if educated in schools managed by missionaries for 6-10 cows, to give birth to children. They live out of nature, or what it produces, while destroying it. The village headmasters have dictatorial authority. For example they decide who will get land to build house in the village and who not. The alternative is to leave to the cities, directly to the slums, where the unemployment is close to 100%. The only positive development is, that the villagers understand how important for them is conservation of wildlife, that brings tourists, who are the only source of cash money for them, even if most of the income from tourists collect the white or Indian lounge owners. In 1970’s when Mugabe took over the power, Zimbabwes population was about 6 million, now it is close to 17. The economy grew zero so the problems grew three times. This is an example of decolonization in one African country. But the others, with less violent government are not doing much better. This is what i call cultural trap. On one hand it is romantic, fashionable and valuable to try to preserve the unique cultures, on the other hand it is not sustainable, and Europe will pay for the necessary expected collapse, either by mass immigration or buy extreme nationalistic regimes. I don’t know what is worse.

    I’m now trying to understand and write a book about, how political systems based on “wisdom of masses” fail on the long run. Take for example the Athenians democratically murdered Socrates or more recently elected Hitler, or even voting for Brexit, while the reality obviously contradicts any kind of reasoning claimed by Brexiters.

    Then you have a very commonly accepted argument by the whole spectrum of politicians and economists (except of the Marxists, who live in different and even more devastating misconception), that reduction of taxes is good for economic growth. It is not. I emphasize IT IS NOT. It depends on the circumstances. Taxation is about allocation of resources from the private sector to the public governmental sector. Now it is will know that utility from the marginal investments have the same propensity to decline as any item in the economy. So if private sector will have more resources relatively to the public governmental sector, the utility from it’s investment will be lower compared to an alternative investment in the public sector.  You can see this phenomena in the practical terms ; in the US you have relative under investments in all the infrastructure and services provided usually by governments,  federal or local. This is why you have no fast trains,  but over invested toll roads, no good public education but excellent universities,  so on, so on. The conclusion. Low taxation is bad for economic growth in the US, exactly as in countries with high taxation and high public spending it is bad for economic growth to increase public spending.

    But i can add the question, what it is utility in economics?  Does economic growth necessarily create positive utility. If it produces more and more and bigger and bigger private cars, that cause traffic jums, slows down the transportation and pollute the environment, is this economic growth valuable? What kind of utility is it? If economic growth is about creating jobs, like jobs of miners in coal mines is there any marginal utility from this activity, and if yes what is the balance between the negative impact of certain economic action and its positive utility?

    Whole reality

    The whole reality perceived by humans is an emerging property. The fundamental reality is basic information element.

    מציאות הוא מצב, שהרבה פעמים אתה מנסה לשכוח ממנו.

    לא ברור לי כיצד ניתן לנהל שיחה של תבונה עם אדם שברצינות מאמין, שבורא העולם, (בשמו הפרטי אלוהים) אסר עליו לאכול חזיר.

    GDP obsession

    The economists obsession about GDP is not a misconception or ideological prejudice. The whole capitalistic system, to satisfy the demand for positive yield on capital, needs continuous economic growth. In a stagnant economy, will be no new additional add value, that is necessary to pay return on the loans in form of interest, or on invested equities in form of dividends, (or CEO wages). The whole capitalistic system cannot continue to exist on the long run, if no positive return is on the capital. This is why the existing capitalistic system must continue with economic growth, even if doing it, it will destroy the world’s ecological balance, and at the end cause the annihilation of human specie on planet Earth. The world economy long time ago stopped to add new value to the standard of living in the developed countries. As example i would bring the more and more sophisticated private cars, that add very little comfort to the driver, while he has to drive for hours in traffic jams. The same phenomena can be said about most of the consumption items, except for some new paradigm products, that appear from while to while on the market, like smartphones or laptops. This is why the Great Barrier Reef is doomed, and much more than that, unless a system change will happen. This is why no data, evidence or any kind of rational argumentation can work within the existing economic system and its political servants.

    My understanding is that the human being belong to social cultural groups, that differ from each other according to their conscious awareness. I can in rough terms divide these social groups with three kinds of methodology of world view creation:

    1. Those whose concept of consciousness is based on belief in fairy tales originated in ancient texts like, the Bible or the Koran.
    2. Those whose consciousness is built on modern fairy tales, created by sophisticated tools of modern marketing. Those tools include not only official marketing tools, like advertisements, but every random information and communication object a normal human being encounters in every step in his life in modern society. It includes cultural products, like movies, newspapers, books, shops, street signs, etc.
    3. And then are those, who consciously make special effort to avoid random information and rather are exposed to intentionally chosen information with definite purpose. This information then they rationally, with self aware critical approach, judge and filter, based on evidence and previous experiences.

    Eventually the among the first two categories are overwhelming majority of the people, if you consider the number of followers of the first two category information, compared to the followers of the scientific information on the web. It makes it easy for the people who run the existing economic system, based as explained above, on the need for ever growing return on capital, to sustain this deception of most of the people, whom they draw to over consumption and illusive satisfaction of immediate desires and lust. Of course the economic leaders, who market this deceptive economic system to the people, are well aware to the fact, that the system cannot continue to go on forever like it is now, exactly as they knew before 2008 that this system of theft can’t go on forever, but they still continued to play, believing somehow, someone, will clean for them and after them the mess they created.

    The manifest of a free man.

    Remember,

    every day in your life that passes,

    will never return.

    Everyday you waisted,

    by doing nothing,

    being unhappy,

    learning nothing,

    feeling nothing,

    is as if you wouldn’t live it.

    Everything is in your hands.

    It’s you and your decision only what you do now in this moment.

    What happened to you, you can’t change,

    what will happen to you, depends on others too.

    But right now, It is only on you,

    what you do.

    שיחות על אלוהים ובעיות קיום

    22.8.2016

    חיה שלום, אני מודאג שחשפתי אותך למידע שלכאורה לא היית אמורה להיחשף לו טרם עת. הדת ואמונה נתנה לאימא ואבא שלך מסגרת חיים, שהיו זקוקים לה כדי לבנות חיים מלאים ומשפחה נהדרת כמו שלכם. לכן אני חושש שאת עלולה לזרוק את המים עם התינוק. לדעתי בטרם תעשי צעד קיצוני, שעלול להיות גורלי עבורך, עליך לשאול שאלות יותר רחבות מאשר אי אלו עובדות היסטוריות או מדעיות שסותרות את הנאמר בתנ”ך. יהדות היא יותר מספר תנ”ך. היא דרך חיים, מצוות המוסריות, שמאפשרות חיים טובים ובעיקר מסגרת חברתית תומכת, וטובה למשפחה. קל יותר לחיות בארץ אם את משתייכת למסגרת זאת מאשר אם את חילונית. עולם של חילוניים הוא קשה. כל אחד הוא אדון לעצמו ומוגבל רק על ידי מסגרת  חוקי המדינה. להיות אדון לעצמך משמע שעליך לבנות לעצמך את מטרת חייך, את מערכת המצוות שמעבר לחוקי המדינה שתכבד. אין לך רב לשאול אותו מה היא הדרך הנכונה. זה אוחי יכול להישמע חיובי, אבל יש לו מחיר קשה מאד. עולם ללא אמונה לעומת העולם האמוני הוא עולם של מחשבה ביקורתית, בו שולט הספק, ושום מידע אינו מתקבל כברור מאליו.  שום מידע או בלשוננו השערה, אינו מקבל מימד של אמת, אלא הוא בגדר השערה שטרם הופרכה. משמע אין לנו אמיתות שמהוות עוגנים למחשבה שלנו, אלא אם כן הם כלים לחשיבה עצמה, כגון מתמטיקה, לוגיקה, או משפטים שמגדירים מושגים. לדוגמא למשפט כזה, הגשם הוא רטוב, שזאת היא אמת שנובעת מהגדרת המילה, גשם עצמה. בעולם מחשבה כזה, לא נותר לאדם מקום להתרפק על משהו מוכר, ידע מהעבר, או מישהו בר סמכה. הסמכות נובעת מהטענה עצמה, ולא ממקור הטענה, כגון כתבי קודש או מפרשיהם הרבנים. זהו עולם מושגים מדויק אך קר. אין בו מקום לחמימות של אי בהירות וטשטוש. מצד שני הוא נותן לאישיות חקרנית הרבה סיפוקים, כאשר הוא מאפשר חשיפת חוקים על העולם, שלא ניתן לגלות ולהבין אותם ללא מחשבה ביקורתית. אמרתי לך, את פתאום מצאת את עצמך בפרשת דרכים. לא רק בגללי, אלא בעיקר בגלל עצמך, בגלל הרעב שלך לשאול שאלות ולקבל תשובות. אבל אני לא מתנער מאחריות. התשובות שלי באות מעולם בו הביקורת והחקירה חלות על הכול. עולם האמונה שקיים בו גם לימוד ומחקר, שם את רף הביקורת והמחקר מאד נמוך, כאשר סדרה שלמה של אמיתות עוברות את הרף ללא ביקורת ומחקר ונחשבות אמיתות. מכאן האמירה שמשתמשים בה רבים מהדתיים, יש אמת. לדידי קיים בעיקר ספק, כאשר האמת מוגבלת לכלי חשיבה של התודעה האנושית שמאשפרים חקר האמת. לסיכום, ניתן לקיים אורך חיים של מנהגים דתיים ואף פעם לא לשאול שאלות ולקיים את כל המצוות. או כן לשאול שאלות, לקבל את התשובות המדעיות ועדיין לקיים מצוות. לדעתי לפני שתסתבכי עם רב של בית ספר, כדאי לך ללמוד ולהתמודד עם השאלות שהעליתי כאן בכוחות עצמך

    23.8.2016

    היי עוגן, מצטערת שלקח לי כל כך הרבה זמן לענות לך פשוט נתקעתי בלי אינטרנט.. אני בחרתי, בחרתי לחקור ולגלות אבל לגלות מה שאני רוצה להאמין בו, רוצה לגלות הוכחות לבורא, אימות התורה על ידי ארכיאולוגיה וכדומה, אני לא אעצום עיניים ואתעלם מהסתירות המרובות אלא אנסה ליישב את הדברים. אני כן ולא רוצה לצאת מהבועה שגדלתי בה, זאת אומרת שאני רוצה להאמין לא בגלל שגדלתי לתוך זה, אלא כי אני באמת רואה באורח חיים דתי, ביהדות ובבורא את האמת. היה לי את האמת די קשה לקבל את העובדה שרוב התורה לא נכונה, ועוד אחרי שכל חיי מושתתים עליה, כל התנהגותי, האמונה שלי, שהבורא הוא כל יכול ואנחנו חשובים לו כאבא שאוהב את ילדיו. אני לא אפסיק להאמין, לא מבחירה, פשוט אני לא מוכנה להכיל את זה שהעולם נוצר לו כך סתם ללא ישות עליונה. אני לא מתעלמת ולא סוגרת את עצמי מן העולם ומן הסתירות בתורה שהעלול ממצאים ארכיאולוגים, אני לוקחת בחשבון שאולי לא כל התורה ואפילו חלקים גדולים ממנה לא נכונים, אבל הרי התורה היא ספריה ענקית שמתוכם יש ספרים של “נביאי שקר” וכאלה שנכונים רק למחצה. אני לא יודעת, אבל אני מתכוונת לברר. להסתכל על הכול מנקודת ראי רחבה יותר כפי שאמרת, לא לחסום את האמת ממני, וכמו שאומרים 70 פנים לתורה, כל הדרכים נכונות אך כולן שונות אני אחליט באיזה מסלול לצעוד. אני לא חוששת שאולי אני אגלה שאלוהים לא קיים כי כמו שיש הוכחות שהוא לא קיים יש הוכחות שהוא כן, ואני פשוט צריכה לבחור איזה הוכחות אני רוצה לראות באור ממשי יותר. דיברתי לא מזמן עם אבא שלי על הנושא הזה שעכשיו בתקופה האחרונה אני מתערערת באמונה שלי, הרגשתי מטופשת, כל פעם שאני שואלת אותו שאלה שמציקה לי באמונה הוא עונה לי בצורה חכמה שמסברת לי את האוזן, שאני שואלת את עצמי איך לא עליתי על זה קודם. אז הוא יישב לי כמה דברים אותם העליתי בפניו שאם תרצה אני אכתוב לך אותן בהודעה נפרדת. אני עוד אברר על כל הסתירות שהארכיאולוגים שאת שמם שחכתי שטענו שממלכת שאול המפוארת לא הייתה קיימת, היות דוד סתם גזלן וסתירה על יציאת מצרים וחיי היהודים כעבדים (לא מזמן מצאו תיעודים של מצרים על עשרת המכות). אבא שלי הראה לי ממצאים ארכיאולוגים שהתגלו לאחרונה ונושאים הוכחות חותכות להרבה דברים מהתנ”ך, כגון כלים מפוארים מבית המקדש הראשון והשני. אני לא חושבת שהעולם יכול להתקיים לו ככה סתם, ללא משמעות שנסתרת ממנו. אז כן, אני רוב הזמן מאמינה בבורא, לפעמים אני מבולבלת ולא יודעת מה לחשוב אבל אני עומדת בנקודת בסיס שיש אלוהים ואני רוצה להמשיך לחקור, לפנות לאנשים הנכונים, לשמוע את שתי הצדדים, לראות הוכחות ברורות לפני שאני בוחרת בנתיב. כפי שהזכרת למעלה, חיים דתיים קלים נוחים עם עוגן ומשענת, אני שמחה שאני דתייה, זה לא רק מייחד אותי, זה גם גורם לי לא לדאוג ולבטוח שמישהו מעליי “יעשה בשבילי את העבודה”. בנוסף לעוגן אני רואה בתורה מדריך כיצד להתנהג לזולת, אמנם ישראלים זה עם חצוף וערס אך הדתיים שבאמת אוהבים את התורה מתנהגים בכבוד ואהבה לכל אחד. אני מקווה שאני לא אגזים ואני אצא בסופו של דבר אתאיסטית, אבל אין בי פחד כי אני יודעת שהכי חשוב לי לחיות באמת משלי. אולי אין אמת אחת, אולי יש הרבה אמיתות וכל אחת סותרת לגמרי את השנייה אבל הרי אלוהים הוא כל יכול. יכול להיות אנשים שמאמינים וחיים חיי דת חזקים וטוב להם, ומצד שני יש אתיאיסט שחי על פי הידע וגם טוב ונכון לו. אין נכון ולא נכון, שתי האנשים כאן צודקים כל עוד הם חיים במקום ששייך להם, ואמת אחת לא יכולה לשלוט בעולם

    25.8.2016

    חיה היקרה שלום

    תודה על המכתב הארוך. אני מסכים כמעט עם הכול שכתבת. בעיקר אני מכבד את הרצון שלך להרגיש ולהאמין שיש כוח עליון מעליך, אשר נותן לך הכוונה ומשמעות בחיים.י

    אם יש לי סייגים זה לגבי כמה ממצאים ארכיאולוגיים לכאורה שתומכים בסיפורי תנ”ך מתקופה שלפני שתי הממלכות. אם תצפי בסרט השני ששלחתי לך, בו מדבר ארכיאולוג דתי, אין טוב ממנו להסביר, שגם אם מוצאים ממצאים ספציפיים שלכאורה תומכים בסיפור התנ”כי, אם מסתכלים על התמונה הכוללת, מתבהרת תמונה ששונה מהסיפור התנ”כי. לגבי בית המקדש והכלים, ראשית זאת תקופה שבהחלט קיימים לגביה ממצאים שאינם סותרים ואף תומכים בנאמר בתנ”ך ולא טענתי אחרת.  הבעיה היא תקופות קודמות כמו יציאת מצריים וכיבוש הארץ על ידי יהושע. ועל כך כבר דיברנו. רק פרט פיקנטי קטן, יציאת מצריים לפי הכרונולוגיה התנ”כית התרחשה מתי שהוא לפני 3500-3200 שנים. בכל התקופה הזאת שלטו בארץ ישראל עד לבנון וסוריה המיצרים, כלומר שהיה צבא מיצרי בארץ. מכאן שיציאת מצריים התרחשה בתוך שטחים של ריבונות מצרית. עם זאת אני לא בדעה שזה פוסל את כל שיש ביהדות בגלל שהתיעוד ההיסטורי אינו נכון. להפך. יהדות הוא עולם תרבותי שלם, רחב ידיים, מעמיק ובעל ערך ייחודי בתרבות האנושית. יש מעט עמים שיכולים להתפאר בהישגים תרבותיים כה משמעותיים, וודאי לא של עם קטן וחלש כל כך, שאף פעם לא היה כוח אימפריאלי. יש במה להיות גאה

    אשר לשיוך לשבט המכונה דתיים, השתייכות שבטית כזאת במסגרת אמונה במוחלטות כל שהיא, היא בעייתית בעיני, בגלל שהיא יוצרת חשיבה קולקטיבית, אשר פוסלת את האחר ונוטה לחוסר סבלנות כלפי האחר. לכן אני לא יכול להסכים לקביעה שלך שהאמונה עושה את האדם טוב יותר, אם הכוונה לטוב לבני אדם אחרים. אדרבא, אדם בעל אמונה, וזה לא חייב להיות דווקא אמונה באלוהים, נוטה לפסול אלה שאינם שותפים לאמונתו או פעילותם עשויה להחליש את האמונה של האדם המאמין. חוסר הסובלנות הזאת את יכולה לראות בפסילת כל אחד שהוא חילוני כשמאלן תל אביבי. אגב פסילה דומה קיימת בקרב השבט של החילוניים. כל עוד הפסילה הזאת היא ברמה של פרט אין בעיה עם זה, אבל ברגע שמקור הפסילה היא קבוצת אנשים בעלי אמונה משותפת, המגובה על ידי גורם ממשלתי, אי אפשר להתעלם מכך

    אשמח אם תשלחי לי את הממצאים שתומכים ביציאת מצריים. על הנושא הזה הייתי יכול לכתוב לך רבות. נתתי הרצאות על הנושא. אני אופתע מאד אם תצליחי להצביע על ממצא מהותי בנושא, שאינו יודע על כך. אשר לפפירוס שמתאר את עשרת הדיברות אשלח לך לינק עם הסבר, ותביני שפפירוס זה הוא רחוק מלהוכיח דבר, אלא אם כן מישהו רוצה לכופף את האמת. שיהיה לך יום טוב, ינצי

    נ.ב.

    עוד דבר קטן, לא כדאי שננהל חילופי מידע על ממצאים עובדתיים היסטוריים-ארכיאולוגיים במסגרת הדיון שלנו. אין ספק שבתחומים אלה ההיסטוריונים והארכיאולוגים יש להם מתודות מחקר וחשיבה הרבה יותר שיטתיות ומהימנות מאנשי הטלאולוגיה ואמונה כגון כמרים או רבנים. אנשי מדע הוכיחו את כוחם בעבר באשר לעובדות ונכונות פרשנותם, ואם התגלתה טעות בתיאוריה מדעית כלשהיא, ואפילו הכי בסיסית, כדוגמת תורת ניוטון, בשמחה הם עברו לפרשנות או הסבר אחר לתופעה. מוכנות ואף רצון לסתור תיאוריה מדעית קיימת, היא אמות הסיפים של השיטה המדעית. לעומתם אנשי האמונה שמייחסים קדושה לטקסטים קדומים ואף חפצים, דבקים באמת מוכרת להם, בלי מוכנות לבחון ולהתייחס בכנות לממצאים

    לפי דעתי אם ברצונך לבחון ברצינות איפה את עומדת באמת אם האמונה שלך, ותרצי לעשות זאת בשיטתיות, עליך לבחון מה אמרו הפילוסופים על הנושא. אני לא מומחה בתחום, אבל ידוע לי שרמב”ם, וישעיהו ליבוביץ’ העכשווי, אבל גם כל הפילוסופים מאז היוונים הקלאסיים, דרך פילוסופי ימי הביניים, והעת המודרנית שמתחילה מדקרט, שפינוזה עד עמנואל קנט מתעסקים עם הוכחות קיום האלוהים. רק ממאה תשע עשרי רוב הפילוסופיות נטשו את אלוהים, כנושא מרכזי להוויית האדם, עד שניטשה הרג את האמונה היהודו-נוצרית כמקור לסמכות המוסרית

    30.8.2016

    תודה שאתה כל כך משקיע וכותב לי,  החלטתי לקחת את ה”מחקר” שלי ברצינות,  בשבת מצאתי את התנ”ך עם פירוש קאסוטו, שבעצם מפרש את התורה מבחינה מדעית והיסטורית,  התחלתי לקרוא.  אני כבר לא יודעת מה לחשוב,  אני לא יודעת כלום.  לא יודעת למה אני קיימת,  מה תכלית היקום,  אם התורה לא נכונה אז מי אמר שאלוהים קיים?  או מי אמר שהיהדות זאת הדת הנכונה?  אולי בכלל דת זה לא דבר נכון?  במכתב הקודם שלך כתבת לי שקשה לאנשים לא מאמינים לחיות,  אני חושבת שקשה גם להרבה דתיים,  במיוחד החכמים יותר ששואלים שאלות ולא מתפשרים על התשובה שמקבלים על כל שאלה מתחכמת:  “אנחנו אנושיים מדי בשביל להבין את גדולות אלוהים” הבעיה בלהיות דתי זה בעיקר בגיל ההתבגרות שכל ה *אסור* מונע מהם את הדברים שהכי מחפשים בגיל הזה.  למשל החיוב לשמור נגיעה,  גורר לאיסור קשר בין בנים ובנות, לבנות להתלבש צנוע אף על פי שרוצות להבליט את הנשיות שלהן, ועוד הרבה איסורים שבאמת לא רואים בהם טעם כגון איסור לאכול חלב עם בשר ושמירת שבת… אני מגדירה את עצמי כדתייה רק כדי להשתייך למגזר,  חוץ מזה שאני לא מאמינה כמו כולם בעיניים עצומות,  ספקנית בנוגע לכול,  אני עוברת בערך על כל האיסורים כגון שמירת שבת,  צניעות,  מגע עם בנים,  חלב אחרי בשר.. אני כבר לא יודעת מה לחשוב.  אני נולדתי כחרדייה,  גדלתי כך שאסור לשאול שאלות,  התורה זה הדבר הכי מקודש ואמיתי שיש וכל מי שלא הולך בדרך התורה הוא חי בצורה שגויה,  אין קבלת האחר לכל אלה ששונים ממך.  לאט, לאט כשמשפחתי מצאה את המישור שבין שתי נקודות קיצון( חילונים וחרדים) היה לי מאוד קשה עם השינוי הדרסטי,  עכשיו כשאני יכולה לשאול שאלות,  עכשיו כשמותר לי ללבוש בגדים שפעם חשבתי שמי שלובשת אותם נקראת ‘פרוצה’ התערערתי,  עד עכשיו קשה לי לנפץ את האשליות. אז כתבתי לך שאני בנקודת בסיס שיש אלוהים,  ביומיים האחרונים זה השתנה.  אני מאוד מבולבלת מהחיים. אני לא חזקה בדעות שלי ואני לא מסוגלת למצוא אמת אחת. אם יש כל כך הרבה סוגי אמונות ודעות בעולם,  וכל אחד בטוח שהוא צודק,  מי אני שאוכל למצוא אמת?  מי אני שאוכל להשתייך לאיזה מגזר או אמונה ולהגיד כאן זאת האמת?  אמרת שאמונה יוצרת מחשבה קולקטיבית. יש אנשים שטוב להם שיכתיבו להם מה לחשוב,  אין להם דעה משלהם או עמוד שדרה חזק,  הם לא חכמים במיוחד, אני מבינה אותם. עדיין לא החלטתי לאן אני רוצה להשתייך,  ואני גם לא חושבת שאני אקבל החלטה כזאת עכשיו,  כי כמו שראית אצלי הכול מתהפך כל יום!  אני חושבת שלאט לאט עם הזמן אני אקבל צורה ודעה,  אני אחליט לאן אני רוצה להשתייך או לא להשתייך, כרגע נותר לי לבחון הכול ללא העדפה לכאן או לכאן. אני אעדכן אותך בכל תגלית שתבוא עלי. מחר אני חוזרת לפנימייה,  שם אני מוקפת בחברות דתיות,  ברבנים,  בהרצאות על אמונה,  שם אני צריכה לזכור לבוא עם ראש פתוח ולדעת איזה מידע אני מסננת ומקבלת לתוכי

    30.8.2016

    חיה חמודה התרגשתי מהמכתב שלך. אני מנסה לפתוח אותך אל עולם מושגים חדש, בלי שתזניחי את העולם בו גדלת. כעת, ראשית אני לא בטוח שלזנוח את מצוות הדת זה רעיון טוב. אדם חייב מסגרת שבתוכה הוא יודע להתנהל, וכדאי שתשמרי על מסגרת עליה את רגילה. כשרות, שמירת שבת או לבוש צנוע אך יפה לא יזיק לך וזה לא חייב להיות בגלל צוו אלוהי.  יש לך דוד, האח של חיים, שהוא אדם חילוני, ולמרות זאת הטיל על עצמו מגבלות כה חמורות בתחום האוכל והתנהלות בחיים, עד שנאלץ להתאשפז. יש בעולם הרבה צמחוניים שמטילים על עצמם מגבלות חמורות יותר מהכשרות בתחום האוכל. כל בן אדם חייב לדעת שיש לו גבולות שאסור לעבור. אשר לאלוהים, כאן זאת שאלה נכבדה יותר ולא ניתן לפתור אותה במספר מכתבים קצרים בוואטסאופ. אני שלחתי לך לינקים על ארכיאולוגיה תנ”כית. לא בהכרח זה המידע שאת זקוקה לו לדעתי להתמודד עם שאלות שאת שואלת. שאלות אלה הן יותר בתחום הפילוסופיה ולא הארכיאולוגיה או היסטוריה. עולם הפילוסופיה זה עולם ומלואו אף יותר מהתנ”ך והיהדות עם כל  ארון ספרים היהודי. לא מעט פילוסופים, לפחות אלה מלפני המאה ה-19 התעסקו בשאלת האלוהים, תוך שהם מאמינים או אינם שוללים את קיומו. השאלות שאת שואלת על יעוד, מה היא האמת אם היא בכלל קיימת, אלה בדיוק השאלות שפילוסופיה שואלת

    תחילת החקירה מתחילה עם השאלות:  מה מהות האלוהים, התשובה לדעתי צריכה להיות שהוא בורא העולם, נצחי, כל יכול, מכיל הכול והכול מכיל אותו. בלי התכונות האלה הוא יהיה עוד משהו שהוא מוגבל בזמן או חלל ויכולת השפעה, בדומה לאלים במיתולוגיה היוונית, ואין שום צורך באלוהים כזה. לכן גם אין היום אדם שמאמין באלוהים כזה. יש לנו מספיק פוליטיקאים או אנשים  בעלי מוגבלויות עם יומרות לא מוצדקות להיות נציגי או מפרשי אלוהים עלי אדמה

    פילוסופיה מתמודדת עם שאלת קיום האלוהים, במסגרת שיטת חשיבה הבונה טענות באופן לוגי, לפי מתודה מאד מסודרת ושיטתית, תוך ניסיון להימנע מסתירות ופרדוקסים בטענות. אני אנסה לשלוח לך לינקים להרצאות בנושא, אבל עליך לזכור שמדובר פה בשיטת חשיבה וצבירת חוכמה שהתפתחה במהלך 2500 שנה בדומה ביהדות, לכן עליך לאמץ ארון ספרים חדש לגמרה שעולה בהיקפו מארון ספרים היהודי, ואין בו קיצורי דרך. אם במקומך, הייתי אולי מתחיל עם אפלטון אולי ספר פרמנידס. תנסי למצוא אותו. יש בעברית. אולי אפילו תימצאי אותו בספריה של בית הספר. אם לא אז בספריה של האוניברסיטה או תבקשי מחיים. תשאלי אותו גם מה כדאי לקרוא כדי להתמודד עם השאלות שהעלאת במכתבך בחוכמה כה רבה. הוא יודע יותר ממני בתחום ואולי ימליץ לך על ספר יותר מתאים להתמודד עם השאלות שפתאום עולות לך. אפלטון חי לפני שהיהדות נודע בקרב הגויים

    אבל לדעתי כדאי לך יותר לקרוא סופרים שמתאימים לגיל שלך, כמו, עמוס עוז, מאיר שלו, דוויד גרוסמן, נעומי פראנקל, פנחס שדה וסופרים  ישראלים אחרים מדור חדש שאיני מכיר. בין הלא ישראלים אני ממליץ לך על הרמן הס – סידהרטה, וסופרים יהודיים כמו רמארק, פויכטוונגר, בשוויץ זינגר, סאול בלו, ברנרד מלמוד, סלינג’ר,  שכולם מתעסקים בשאלת האלוהים או הזהות היהודית בדרך שלהם. אולי הרשימה שלי לא מעודכנת, ויש היום סופרים אחרים מודרניים שאני לא מכיר. נדמה לי שנתתי לך משימות לשנה עם לא לשנתיים. תיעזרי בחיים. אני שוחחתי איתו עליך והוא ער לכישרונות והיכולות האינטלקטואליות שלך. הוא גם יותר משכיל וקרא הרבה יותר ממני. כדאי לך להתייעץ בו גם

    7.9.2016

    התחלתי ללמוד ממש ברצינות,  אני קמה מוקדם,  מסכמת כל שיעור,  לומדת טוב,  אף על פי שהרמה הלימודית לא כל כך גבוהה.  אבל אני מרגישה שבאמת טוב לי כאן,  יש לי מלא חברות וכאן אני בונה את האישיות שלי,  את הביטחון והמודעות העצמית דווקא בגלל שזה פנימייה

    בשיעורי היסטוריה אנחנו רק עכשיו התחלתנו ללמוד משהו שהסברת לי,  על מהפכת הדפוס והשינוי בעולם כשהתקבלה הדעה שהעולם סובב סביב השמש ועוד בצורה אליפסית ולא כל הכדורים סובבים סביב כדור הארץ. אז בגלל שנתת לי חומר בסיס אני שולטת בזה יותר וזה כיף

    בקשר לאמונה,  דבר ראשון יש לי כאן חברה ממש טובה שהיא אתיאיסטית. דיברתי איתה על אמונה ומושגים רוחניים היא עזרה לי להבהיר כמה דברים חשובים.  פניתי אתמול לרב של האולפנה ושאלתי אותו שאלות,  הוא ענה לי על חלקן ולא בדיוק סיבר לי את האוזן,  הוא אמר שאני אבוא אליו ביום שהוא יהיה יותר פנוי והוא יקדיש לי כמה שעות בשביל לענות על כל הסתירות. את השאלות והתשובות אני אספר לך אם ניפגש. המדריכה שלי נתנה לי ספר של אמונה אני עדיין לא התחלתי לקרוא. אבל עצם העובדה שאני בפנימייה מלאה באנשי דת גורמת לי לפנות לכיוון המאמין,  אני עדיין אשאל שאלות ואני  לא אעצום עיניים ואחיה בתוך הבועה הדתית,  אבל אני כן רוצה לקרוא ספרי אמונה

    7.9.2016

    יופי, נראה לי נכון מה שאת עושה. אני רואה שיש לך אומץ לשאול שאלות, וזה העיקר. כמו שאמרתי לך, דרך האמונה היא נותנת כוח, גם בגלל שזאת היא דרך שעברו בה רבים, וגם בגלל התמיכה שהקהילה נותנת לאלה שבתוכה. האמונה לא צריכה להפריע לך להפנות את תשומת ליבך לכיוונים שמעניינים אותך. אם זה היסטוריה או פילוסופיה, או פסיכולוגיה, או אולי אחד המדעים המדויקים, הכל מעניין ופותח עולמות ולא צריך לפגוע באמונה. אם יש לך כישרון למתמטיקה, לכי בדרך זאת. זהו מקצוע אולי ההכי חשוב בימינו, גם כמקצוע, וגם כשיטת חשיבה שפותחת לפניך הרבה מאד שערים

    7.9.2016

    אני טובה במתמטיקה,  אבל לא באופן יוצא דופן,  אני ב 4 יחידות והרמה נמוכה לי מדי מצד שני אם אני יהיה ב 5  יחידות הלימודים יהיו לי קשים ועמוסים מדי.  יש לי סדר עדיפויות ברור,  הלימודים חשובים לי אבל לא מאד,  לימודים אפשר תמיד להשלים,  שנים של כיף,  שמחה,  חברות,  אהבה,  אי אפשר להשלים,  אני מנסה לשלב כמה שיותר בין לימודים לבין כיף היום לדוגמא ישבתי על שיעורי בית במשך שש שעות!!!!  עד שהיה לנו ערב חברותי עם כולן שם נתתי לעצמי להשתחרר ולהתפרע, רקדנו,  צחקנו, ונהנינו. אני אוהבת ללמוד , ואני אוהבת להיות כאן,  ואני ילדה חברותית,  ואני אוהבת את החיים

    9.9.2016

    חיה שלום, אני נאלצתי לדחות את בואי לארץ בכמה שבועות. לכן מציע להמשיך להתכתב. קראתי שוב את המכתבים בינינו, ומאד נהניתי לקרוא את שכתבת. הלוואי והייתה לי החוכמה שלך כשהייתי בגילך. החיים שלי היו טובים יותר היום. את זוכרת ששאלת אותי האם אני מאושר, וניסיתי לענות לך תשובה מסובכת. אכן חלק מהסיבה לסיבוכים אלה שבתוכי מקורם בזה, שבגילך לא מצאתי עוז ללכת אחרי האמת שלי, ונכנעתי לרצונה של סבתא רבה שלך, שלא נבעו מדאגה והתחשבות בי, אלא מתוך התעלמות ממני, מהצרכים שלי, והמציאות בעולם המתהווה סביבנו, שסבתא רבה שלך בעת ההיא לא הבינה כלל. היא אז חייה בעולם זיכרונות שלפני השואה ותקופת השואה, ולא קלטה שהעולם בינתיים השתנה. מעבר לכך, אני וסבתא שלך הייני מאד מבודדים בעיירה בה גדלנו, בלי קרובים, ללא סבתא וסבא, ומנותקים מדודים, דודות ובני דודים שכולם חיו בארץ. התמזל מזלך, שנולדת לתוך משפחה גדולה, ומורחבת, ותוכלי למצוא בה הכול שדרוש לך. גם אינטלקטואלים שמודעים למורכבויות בעולם, וגם תמימים המאמינים באמיתות פשטניות

    טוב שאת מסוגלת ליהנות גם מחוויות חברתיות, אולי גם בנים ?:)? טוב שאת נהנית מריקודים ומעשי קונדס. חיים בפנימייה וודאי יש בהם יופי, בטח בגיל שלך, שחיי החברה כל כך חשובים. אני מבין שיש לך עוד שלוש שנים עד סיום הבגרות. אני רואה שאת היא היועצת הכי טובה לעצמך. התרשמתי מאד מרמת המודעות העצמית שלך. את אינך כותבת לי על ספרים שאת קוראת. אולי היום כבר לא קוראים ספרים בכלל?!?י

    קריאה היא העיסוק הכי מפתח את האדם. הייתי מציע לקרוא גם ספרים שפונים לרגש ולאו דווקא לאינטלקט. אם כי עליך לבחור מה מתאים לך יותר. התרשמותי ממך הייתה, שרגלייך עומדות חזק בקרקע. אולי יש מקום לקצת רומנטיקה? בכל אופן מתוך הספרים שאני קראתי בגילך, הכי השפיע עלי  ספרון פיוטי “וויקטוריה” של קנוט האמסון, סופר נורווגי, שזהו ספר אהבה הכי יפה שקראתי בגילך. ספר חשוב אחר שכולם קראו בגיל טיפש-עשרי בתקופה שלי, הוא ספר של סלינג’ר, “בתפסן בשדה שיפון”. זה ספר על מרד  נעורים, שאינני בטוח שרלוונטי עבורך. חוץ מזה אני ממליץ שוב על נעמי פרנקל “דודי ורעי”, “צמח בר”,  שבו היא כותבת על אהבה של צעירים כמוך, מנקודת מבט של הנערה. לדעתי, מתוך מה שזכור לי על העולם שלי, כאשר הייתי בגילך, ספרים אלה, יכולים למלא חללים רגשיים, אם יש לך כאלה בתוך הנשמה שלך

    9.9.2016

    שלום עוגן,  אני ממש שמחה לקבל ממך את המכתבים מלאי תוכן כל פעם מחדש. בקשר לספרים,  פעם הייתי נחשבת ל”תולעת ספרים” כל יום כל היום הייתי קוראת ספרים,  מכל הסוגים,  בעיקר רומנטיקה ופנטזיה,  כן קראתי את התפסן בשדה השיפון כשהייתי בכיתה ו’ ולא אהבתי אותו.  אני חושבת שספרים איפשהו החליפו אצלי את המושג חברוּת,  לפני שנתיים שלוש ירדה מגמת קריאת הספרים שלי בהרבה ככל שעלתה אצלי החשיבות של חברים עד שהיום אני לא קוראת בכלל, אין לי כל כך זמן לזה,  בזמני החופשי אני מנצלת אותו בדרך אחרת מאשר להיות בבית ולקרוא ספרים,  בשבתות לפעמים אני קוראת פה ושם. אבל לכתוב אני אוהבת,  מאוד,  כל פעם שאני עצבנית,  כועסת,  עצובה,  שמחה או סתם משועממת אני כותבת,  קטעים קטנים,  רגשות,  סיפורים. ומה שמצחיק אצלי זה שהתחלתי לכתוב עשרות סיפורים אבל בחיים, בחיים לא הצלחתי לגמור.  גם שירים אני כותבת,  יש לי מחברת עם הרבה שירים אבל אני לא הראתי  אותה לאף אחד היא אישית מדי,  שירים אצלי זה דרך לשפוך על הדף את מה שמילים לא יכולות להביע.  פעם אני וחבר טוב שמנגן בפסנתר הלחין מנגינה תוך כדי שאני מלבישה על המנגינה מילים,  כל כך התלהבנו שהחלטנו ללכת להקליט את השיר באולפן של אבא שלו ולעלות ליוטיוב,  כמובן שהתוכניות לא יצאו לפועל אבל מי יודע אולי ביום מן הימים אני אעשה משהו עם החומרים שלי

    ביום יום שלי אני לא עוסקת בפילוסופיה ושואלת שאלות עמוקות,  זה כן קצת מצער אותי אבל אין לי חברים מספיק עמוקים שאני יכולה לדבר איתם על דברים כאלה. אמרת לי שהחיים שלי טובים, אבל כבר מזמן הגעתי למסכנה שאין דבר כזה חיים טובים או רעים העולם אינו שחור לבן,  אנחנו מחליטים בעצמנו איך החיים שלנו ייראו.  שנה שעברה הייתי מאוהבת בידיד טוב במשך שנה שלמה,  והוא רק גרם לי צער ופגע בי, באותה תקופה הרגשתי ממש רע,  שנאתי את החיים,  את הבית והמשפחה שלי,  הרגשתי בודדה ושנואה,  לא הצלחתי בלימודים ובאמת חשבתי שאני הילדה הכי מסכנה בעולם,  עד שעשיתי לי “סוויץ” קטן בראש,  אני לא מסכנה!!  אני ילדה מאד אהובה,  יש לי מלא חברים וחברות,  אני לא הצלחתי בלימודים כי לא השקעתי,  אבל אם אני רוצה באמת אני יכולה להגיע להישגים משמעותיים וגבוהים,  ואשר לאותו ילד שאהבתי,  התחלתי לשאול את עצמי,  למה אני אוהבת אותו?  מה מצאתי בו שהוא גורם לי לטוב?  הוא עושה לי רע,  אז בשביל מה? ניתקתי איתו קשר,  והרגשתי מאושרת, משוחררת,  ופתאום העולם נראה לי ורוד כל יום אמרתי לעצמי,  החיים שלי יפים,  וככה באמת היה. יצרתי את המציאות שאני רוצה. זה כוחו של האדם,  ליצור מציאות בעזרת רצון ומעשים .י

    י(דרך אגב, אותו הילד שאז אהבתי היום הבין שעשה טעות ומנסה לחזור אלי אבל אני המשכתי הלאה) בקיצור מה שאני מנסה לומר זה שאין דבר כזה חיים טובים או רעים,  אלא אנחנו בוחרים ומעצבים את חיינו וממלאים אותם ברגשות ומחשבות

    11.9.2016

    חיה שלום, גם אני נהנה מהמכתבים שלך. אני מבין שאת חיה חיים מלאים ומגוונים וטוב שכך. כדאי שתחווי חוויות עשירות ומעשירות המתאימות לך ולגילך באופן מלא. כל שאוכל לייעץ לך, שכל יום שאת עושה את שטוב לך ונכון לך, הוא יום שזכית. הרי חוויות אלה הן שתהפוכנה להיות חלק מעולם הזיכרונות שלך, מכאן גם חלק ממך. טוב שיהיו לך חוויות של הגיל שלך, שבעתיד תוכלי להתענג עליהם. זה נכון כמובן לחוויות רגשיות וחושניות כמו גם לחוויות אינטלקטואליות. את הינך ותהיי בעתיד מה שנבנה בעולם הפנימי שלך. כל שאוכל ליעץ לך, שעליך להיות את, בלי יותר מדי ללכת שולל אחר מראות שווא. הדבר הקשה הוא להבחין בגילך בין הדבר הנכון ואמיתי והשקרי. לדוגמא, האם באמת מה שהרגשת כלפי הילד ההוא היא אהבה? או שהיו אלה טאטואי ההורמונים של נערה מתבגרת? בתחומים כאלה קשה לייעץ לך. הדרך הטובה לפנות לאלה שחוכמתם בנושא הוכחה, שאלה הם המשוררים והסופרים. כל ספר עשוי לפתוח לך עולם רגשי של הסופר, עולם אליו תוכלי להגיע בלי צורך לטבול במים קרים. אין זה כמובן במקום החוויה החושית עצמה אלה כמשלים. לכן אם נדמה לך, שזה בזבוז לחוות חוויות רגשיות של אחרים דרך הספר, ועדיף לחוותם אך ורק בעולם האמיתי, את מפסידה הרבה. כל זה נכון כמובן עוד יותר בעולם חווית החוכמה. הרי ספרי חוכמה, כאלה שאנשים חכמים ממליצים עליהם, אם את תצליחי לאמץ לך, זה יהיה קיצור דרך אל האמת שלך, אל עצמך

    25.9.2016

    חיה שלום, אני הרהרתי בשאלת מהות האלוהים, וניסיתי להבין זאת מתוך השמות הרבים שיש לאלוהים. קודם כל השם “השם” משמעו מהות האוניברסאלית של המילה שם, שאמורה לכלול את כל השמות שקיימים. משמע השם הוא השם העליון שעונה על כל השמות ביקום. השם היא למעשה מילה. המילה מבטאת את הכול. האם יש קיום שאין לו ביטוי מילולי? כפי הנראה לא בתודעה האנושית. בגלל שאם האדם יחשוב על מושג, שאין לו שם הוא מיד ייתן לו שם. האם ניתן לחשוב על מושג בלי הגדרתו?  ניתן לא לקרוא לדבר בשם, אבל השם של הדבר הוא רק עניין טכני, בעוד ההגדרה של השם הופך את המילה למושג

    בעוד השם אלוהים הוא שם היסטורי, שמקורו אולי באל עליון, משמע הבכיר מכל האלים. לעומת זאת יהוה נגזר מהווה, הוויה, מתהווה. או במילים אחרות קיום, בזמן. מה משמעות הקיום הזה? האם במרחב או לא, זה לא ברור. לפי המחקר האנתרופולוגי- היסטורי כפי הנראה אל עליון היה אל כנעני, בעוד יהוה היה אל באזור צפון סעודיה, מאזור מידיין התנכית

    השם קדוש ברוך הוא, מיחס קדושה לשם. מה היא הקדושה? קדושה זה טאבו. דבר שאסור לגעת בו. קדושה זה מונח שלילי מבחינה זאת שהוא שולל זכות להבנת התופעה. אם במהותה היהדות ייחסה קדושה רק לאלוהים האחד והיחיד היום מיחסים קדושה למספר רב של חפצים. כותל, קברי צדיקים, אבנים של מחוללי ניסים כמו באבא סאלי וכו’. כל אלה צריכים להיות צנינים בעיני רבנים  משכילים אבל בגלל סיבות פוליטיות הם לא מתמודדים עם התופעה, ומעדיפים את קהל המאמינים להשאיר בבורות

    אם מדברים על אלוהים כדאי להבין שיש הבדל גדול בין אלוהים של הפילוסופים וזה של היהדות. אלוהים של היהדות מצד אחד הוא בורא עולם, כל יכול, ומכאן טרנסנדנטלי, כלומר מחוץ ומעבר לעולם שלנו. מצד שני עבור בעלי אמונה אלוהים הוא גם מאד אישי ונוכח ברמה יום יומית בחיי אדם, או מה שנקראה, “מקיים השגחה פרטית”. לעומת זאת האלוהים של הפילוסופים אם הוא קיים, ואין סיבה לחשוב שאין אלוהים פילוסופי, הוא לא מקיים השגחה פרטית.הפילוסופים חיפשו הוכחות לוגיות לקיום אלוהים ומצאו כמה שיטות. כל ההוכחות מחייבות הגדרה ברורה של אלוהים. ההוכחה הראשונה נגזרה מהגדרתו של אלוהים כבורא העולם. מאחר ואלוהים הוא בורא עולם, ובעולם שלנו כל דבר שקיים יש לו סיבה, כלומר שום דבר לא קיים מתוך עצמו, אז גם הבריאה של העולם עצמו מקורה בבורא, כלומר קיים בורא עולמים, שהוא האלוהים. הבעיה היא שאם אנו רוצים להבין אלוהים כזה, בורא עולמים, עלינו לחפש אותו בבריאה עצמה, כלומר בעולם הקונקרטי שמסובב אותנו, או מה שנקרא בעולם שלנו טבע.  כלומר עלינו להיות מדענים שמנסים להבין את מהות הבריאה, מה עומד מאחוריה, איזה חוקים מפעילים אותה, מה או מי מפעיל אותה, מה המשמעות של הקיום הזה, האם קיימים חוקים שנוכל לגלות אותם. כול השאלות האלה קיבלו תשובות טובות יותר באמצעות המדע, כאשר המדענים משתמשים בשיטות מדעיות קפדניות, שלא כאן המקום להסבירם, מאשר באמצעות כתבי קודש

    הוכחה אחרת של קיום אלוהים שנוהגים לטעון היא, שלא יתכן לקבל שהעולם המופלא בו אנו חיים, שקיימים בו מורכבויות נפלאות שמתפקדות באופן יצא מין הכלל, נוצרו על ידי מקריות סטטיסטית. לפי טענה הזאת חייבת להיות יד מכוונת, אשר ברא את העולם, ואם יש יד כזאת וודאי יש גם כוונה מאחורי הבריאה הזאת

    לעומת טענה דתית זאת ישנה הגישה הדרוויניסטית, לפיה בתהליכים ארוכי טווח של מיליארדי שנים, ייווצרו אורגניזמים ביולוגיים שמותאמים בדיוק להתמודדות עם הסביבה בה הם קיימים. כל שצריך להיווצרות חיים, זה מנגנון כימי-ביולוגי, אשר נותן עדיפות לחיבור אטומים למולקולות מסוימות על פני מולקולות אחרות, אשר בסופו של דבר תיווצר מהן מערכת של חיים, שמתקיים בהם מעגל מטבולי, שמשמעותו מערכת אשר תתרבה על ידי שיכפול, כמו במכונת צילום, תוך שמדור לדור תוך כדי מוות והוולדות חיים חדשים המערכת הביולוגית מעבירה את המידע, כמו מתכון לתבשיל לבניית מערכת ביולוגית זהה, ששוב מורכבת ממולקולות הנקראות דנא, שמוטמן בקוד גנטי. בתהליך שיכפול זה פה ושם נופלים באופן אקראי טעויות, לכן גם הקופי אף פעם לא זהה מאה אחוז למקור. לעיתים הקופי יש לו תכונות שעדיפות על התכונות של ההורים במסגרת המאבק על הישרדות, ואז מערכת ביולוגית זאת מתרבה ללא רסן כל עוד יש תנאיי סביבה מתאימים לכך, ומנצל את המשאבים שהוא זקוק להם כדי להתרבות על חשבון המערכות האחרות, שנאלמות מהסביבה. במהותה של התורה הזאת עומדת ההנחה, שהמשאבים הקיימים בעולם מוגבלים ורק מערכת, לה תכונות המתאימות ביותר לשרוד בתחרות על המשאבים ישרוד ויצליח להעביר לדור הבאה את “המתכון לתבשיל” שלו.  בסופו של דבר עולם המערכת הביולוגית המוכר לנו מורכב מאלמנט בסיסי- אטומים, שנעים במרחב החלל באופן אקראי, ולמרות זאת בתנאים מסוימים הם נוטים להתארגן באופן ספונטני למולקולות, שבשלב מסוים, בתנאים מסוימים רמת המורכבות של מולקולות של סוג מסוים של אטומים יוצר מבנים מאד מוגדרים ומסודרים, כמו גבישים. סוג מיוחד של חיבור מולקולארי כזה אשר ונפוץ בטבע הוא חיבור בין פחמן ומימן, שאלה אטומים מאד נפוצים בטבע, שיוצרים מולקולות הידרו-קרבונים, שמקבלים במצבים מסוימים אפיונים של חיים, משמע, נטייה להתרבות, תוך חילופי חומרים מעגליים. חיים אלה כאמור מקיימים תחרות ביניהם על משאבים, ומאחר ותנאים הפיזיים שונים ממקום למקום, וגם משתנים לעיתים, במאבק התחרותי הזה ינצח מי שהכי מתאים לסביבה בה הוא נמצא. מאחר ובתהליך התרבות מולקולות אלה מעבירות בתורשה את התכונות שלהם מדור לדור,  בתהליך הדרגתי של שינוי נבנות מערכות חיים הולכות ומסובכות יותר ויותר, כל מערכת עם עדיפות לסביבה שלו. בגלל שמערכות מסובכות יותר עדיפות בהתמודדות בסביבה בה היא נמצאת ממערכות פשוטות, משום יכולת תגובה אינטליגנטית יותר להתרחשויות אקראיות בסביבה בה הוא חי, יש לה עדיפות להתפתח על חשבונה. לדוגמא חיידקים או חד תאיים שצפים על פני המים, ומסוגלים להגיב רק לתמהיל הכימי של מי הים והשמש, נאכלים על ידי דגים או שרימפס עם כושר התרבות פנומנאלי, והם בעצמם הופכים למאכל לדגים וכו’. זאת היא תורת האבולוציה על רגל אחת

    יש כמה התייחסויות לאלוהים

    א. אלוהים אנתרופוצנטרי, בעל תכונות אנושיות, אשר מתקשר עם האדם. אלוהים כזה הוא בעל תכונות אנושיות משופרות. כזהו האלוהים היהודי. לדוגמא עקידת יצחק. אלוהים מדבר עם אברהם ומורא לו לבצע פשע נתעב, שנוגד את החוקים שהוא בעצמו קבע. ואז חוזר בעצמו. אלוהים זה הוא מאד אנושי, שחייב הוכחה לנאמנות מאברהם בכך שהוא יעשה מעשה הכי מנוגד לאישיותו, וגם הצווים האלוהיים עצמם, רצח בנו, יצחק אותו הוא הכי אוהב. כל אדם בעל בינה וחשיבה עצמאית מבין שאלוהם כזה הוא אלוהים של סיפורים דרמטיים, שהאדם בודה מדמיונו. נגד אלוהים כזה קמים האתיאיסטים שאומרים אין אלוהים, והאמונה בו היא מסוכנת, מטמטמת ורעה לאדם

    ב. לעומת זאת קיים אלוהים, שגם משתקף מהתנ”ך, וספרי היהדות, שהוא בורא עולמים, כל יכול נמצא בכל והכול חלק ממנו, או במילים אחרת אלוהים של שלמות המושלמת. אלוהים כזה קיים כחלק מהתודעה האנושית, ועצם העובדה הזאת נותנת לו תוקף חזק. אולם דיד מתעוררת השאלה, אם אלוהים קיים כשלמות, משמע כולל הכול והכול חלק ממנו, והוא מושלם, איך זה יתכן שאנחנו חלק ממנו ואיננו מושלמים? התשובה של המלומדים לשאלה זאת היא, שאנחנו מושלמים בפוטנציה, אבל לא כל אחד מנצל את הפוטנציאל הזה. כל אדם הוא בעל תבונה. או יותר נכון, קיום התבונה היא שמבדילה בין אדם ובהמה. כלומר על פי הגדרה, קיום התבונה היא שעושה את האדם לאדם.  התבונה הזאת היא חלק מהתבונה מעבר לתבונתו של האדם, אותה תבונה שלמה יותר אם היא קיימת, ואין סיבה לחשוב שהיא לא קיימת, היא מה שאני הייתי קורא לו אלוהים. כדי לפשט זאת אפשר לתאר, שהאדם הוא תוכנה, שהיא חלק ממערכת תוכנה גדולה יותר

    לסיכום, אלוהים הוא הכול שאדם לא מסוגל לתפוס בחושיו, ולהסיק באמצעות תודעה. לדוגמא, מושגים כמו אין סוף, מושלם, שלמות, הסיבה הראשונית. או מושגים מוסריים כגון רצון חופשי, משמעות החיים, משמעות הקיום.

    בסיס הוויכוח בין בעל אמונה באלוהים ואדם לא מאמין הוא, האם יש להגדיר את מושג אלוהים או לאו. עצם ההגדרה, והמשגה של אלוהים מעוררת שאלות שאין תשובות עליהם ויוצרות פרדוקסים. הנה מספר הגדרות לאלוהים:

    בורא עולמים, כלומר הוא מחוץ לעולם וקיים טרם היווצרות העולם. כמו כן הוא גם מחוץ לחלל. כל יכול הוא הגדול וחזק מכל. הוא הקנה מידה לכל, האידיאל אליו יש לשאף. קובע חוקים, מגדיר מסגרות התנהגות

    הבאה נעבור על שמות אלוהים שהיהדות משתמשת בהם בתפילה. אלוהים, יהוה, אדוני, בורא עולם, בורא עולמים (כלומר יוצר המפץ הגדול?) , אבינו שבשמיים (כלומר בחלל של היקום? יש מקום כזה בפועל?), מלך העולם וכל צבאם (משמע ריבון על כל היקום), ברוך הוא, רחמן, בעל יד רמה וזרעה נטויה (חזק ומעניש), אבינו מלכינו, קדוש ברוך הוא, קדוש הוא המבורך, אל שדי, שחינה,  קְדוֹש ישראל, צוּר, אֲבִיר יעקב, אֲבִיר ישראל, פַּחַד יצחק, אל אלוהי ישראל (כלומר אל של שבט אחד בלבד ולא של כל העולם), אלוהי האבות (אל של משפחה אחת), אלוהי אברהם יצחק ויעקב, אל עולם, אל רוֹאִי, אל בית-אל (אל של מקום ספציפי בארץ), אל ברית ועוד. התחלת השימוש ב”השם”: “ליראה את השם הנכבד והנורא הזה, את ה’ אלוהיך”, (דברים כ”ח 58), ובלשון מאוחרת – הביטוי: “אם ירצה השם”, “בעזרת השם” (בראשי תיבות: ב”ה)

    הביטוי, בס”ד  בסִייעַתָא דִשְׁמַיָא, כלומר, בעזרת השמים האל היושב בהם, הוא ביטוי מדעי לכאורה, לפיו האלוהים יושב בשמיים, כלומר במקום פיסי מוחשי, שניתן להגיע עליו, אם לא בחללית אז באמצעות טלסקופים. היום זה ברור שלא קיימים שמיים מהסוג הזה, אלא אם כן מדובר למושג רוחני, שאין לא ממשות במציאות

     נתבונן בחלק מהשמות מספר התפילות היהודי שמבטאים תכונות של אלוהים

    רחמן – כלומר מתייחס לכל פרט ופרט, משמע השגחה פרטית

    בורא השמיים והארץ וכל צבאם- משמע בורה היקום

    קדוש- משמע יש בו קדושה, מה פרוש קדושה? קדושה הוא ההפך לחול. חול זה יום יומי, דבר, שניתן לחוש אותו בחושים או לחשוב עליו בהגיון. קדושה זה מעבר לחושים או הגיון. קדוש זה דבר שאסור לנסות להבין ולתפוס לא באמצעות חושים ולא בהיגיון, כלומר מעבר לתפיסה של האדם. מכאן שאלוהים שהוא קדוש, הוא מחוץ לתחום עבור האדם, הוא מעבר ליכולת ההמשגה של האדם. לכן כל ניסיון לנסות להגדיר את האלוהים הוא נסיון שגם יכשל וגם יכשיל בהכרח את האדם הטוען לקיומו. מכאן התפיסה הבסיסית של כל דת היא אמן וקדש. כלומר אל תשאל שאלות ואל תנסה להבין או להוכיח את קיומו

    כאן יש לשאול אם בכוחו של אלוהים לברוא הכול, מה הסיבה שהוא ברא הכול? לפי התפיסה של האמונה הדתית בהשגחה הפרטית בשביל האדם, אותו הוא ברא בדמותו וצלמו. אבל אם כך אלוהים הוא בזבזן גדול. לשם מה האדם צריך יקום שלם שגודלו הרבה מעבר להישג האדם, ויכול בכלל לדעת על קיומו רק באמצעות כלים מדעיים, שמראים תמונה אחרת לגמרה ממה שמצטייר מהתנ”ך? הייתכן שאלוהים רוצה להתל באדם? מספר באמצעות התנ”ך על עולם אחד, ובורא עולם שונה בתכלית? הממצאים המדעיים על היקום לא ממש מוכיחים את קיום אלוהים (בלשון מעטה), או לפחות הם מבטלים את הצורך באלוהים כנחוץ לבריאת העולם והופכים אותו לא רק למיותר, אלא גם למפריע עם הגישתו האנתרופוצנטרית

    והטענה המרכזית שלי נגד אמיתות התנ”ך: אם תצליחי להצביע לי על חפץ טכנולוגי אחד שאת משתמשת, כמו לדוגמא פלאפון, שנבנה על בסיס הנחיות  שנכתבו בתנ”ך או כתבי קודש אחרים, אני מבטיח לך להאמין באלוהים

    5.10.2016

    היי עוגן. לא היה לי זמן לענות לך למרות שקראתי את המכתב.

    ציינת את מה שאמר דרווין אני חושבת בנימוק שלו לאיך האדם בא מהקוף, לפני כמה ימים אני וסבא נפגשנו בעכו ושם הוא סיפר לי על זה. זה הגיוני, אני יודעת, מסביר את האבולוציה של האדם והחי על איך הם משתנים בהתאם לסביבה  אבל לא מסביר את התבונה שיש לאדם בשונה מהקוף. תודעה. אכן פיזית אנחנו והחי מסוגלים להשתנות בהתאם לטבע, אבל מה גורם לתודעה שלנו להתפתח? התבונה היא לא דבר מוחשי שאפשר לשנות ולפתח, התבונה שיש בנו היא הבדל בין האדם לחי. סבא סיפר לי על השערה שעלתה בעקבות האבולוציה של הפרפרים בלונדון שהפכו צבעוניים לאפורים תוך כמה מאות שנים אם אינני טועה. כאן, הצבע השתנה אך התודעה של הפרפר נשארה אותו דבר, לא פחות ולא יותר, ואילו אנו אם נתייחס לזה שבאנו מהקוף השתנינו והתפתחנו הרבה מעבר, ובמקום להיות כמו כל חיה אחרת שחלק מהטבע אנחנו מעל הטבע, מכופפים את הטבע לידינו, יוצרים, הורסים, מחדשים..
    אני חושבת שהכי קל זה להאמין שיש בורא לכל, שאנחנו כאן כי ככה הוא רצה. שאנחנו קטנים ואפסיים לעומתו ובכך אנחנו תלויים בו. היהדות היא נוחה, לפיה  יותר מבורא, אלוהים הוא אבא שלנו שלא משנה מה הוא יעזור לנו ויקשיב לנו. אנשים נמשכים לזה, אנשים רוצים שמישהו בעל עצמה בלתי נתפסת ידאג להם לכל צרותם.
    אם אנחנו יוצאים מנקודת הנחה שאכן יש אלוהים (אי אפשר להוכיח את היווצרות התודעה, הרגש, התבונה כמו שאפשר להוכיח את היווצרות החומר)  השאלה שנותרת האם אלוהים באמת מעורב בחיינו על כל פרט ושעל או שאחרי שיצר עולם זה נפנה ליצור עולמות אחרים ועזב.
    אני לא חושבת שמישהו יוכל לענות לי על זה. רק אחרי המוות נתוודע לאמת אם בכלל.י

    מה שמבלבל אותי זה שיכולים להיות מאות ואלפי אנשים  (רבנים גדולים שכל חייהם עוסקים בתורה, פילוסופים חריפים, ארכיאולוגים, אנשי רוח, מדענים ועוד אינספור כיוונים שונים) , כל אחד חכם בצורה יוצאת דופן, לכל אחד שלל דעות ונימוקים למה הדעה שלו היא נכונה. כל אחד סובר שהוא זה שצודק. אם יש כלכך הרבה אנשים חכמים עם דעות הפוכות ומנוגדות אחד לשני ב360 מעלות איך אני, הקטנה, יכולה לדעת באיזה אופן לחיות, מה נכון ומה לא? אז כרגע אני לא לוקחת כיוון. אני לא יכולה להגיד אם אני דתייה מאמינה או בעצם אתיאיסטית.  ומה שהכי מבלבל זה שאני לומדת במקום שהושם מהבוקר עד הלילה אמונה עוצמתית כל פרט ופרט מלווה בעשיית דברי ה מאיך לקום מהמיטה בבוקר  ואיך להתלבש ועד איך להתנהג לזולת. כשאני מוקפת בחברה זו אני לא יכולה שלא להיות מושפעת מהם ומבולבל אפילו יותר.

    5.10.2016

    חיה היקרה תודה על מכתבך. כבר התחלתי לדאוג שאת כועסת עלי או שאיזה רב אסר עליך להתכתב איתי. ראשית עלי לומר, ממכתב למכתב שלך אני מתרשם יותר ויותר מחוכמתך, התעניינותך והבנתך בנושאים כה כבדי משקל, כמו תבונה, תודעה, מה זה האדם, מה זה אלוהים, וכו’. אין ספק שהצלחת להגיע לרמה כה עמוקה של התעניינות בנושאים אלה הודות לחינוכך הטוב. מכאן שהמסגרת החינוכית בה גדלת ואת נמצאת כעת וודאי לא תמנע ממך בעתיד להגיע רחוק בחיים, וגם אולי למצוא אי אלו תשובות לכל אותם שאלות כבדות משקל שאת מעלה במכתבך. תורת האבולוציה של דרווין היא תורה מאד מקיפה, והשלכותיה הם הרבה מעבר לשאלה מה מוצאו של אדם. באשר למוצא של האדם נושא זה נחקר לעומק על ידי ענף שלם של מחקר, שבונה בסבלנות והתמדה את סיפור התפתחות הגזע האנושי שתחילתו מתישהו לפני שלוש מיליון שנים. אם תרצי לדעת על הנושא יותר אשלך לך לינקים. הוויכוח בין התפיסה האמונית לתפיסה המדעית היא לא לגבי העובדות, (התפיסה האמונית לא מתעניינת בעובדות, ואם כן היא מעוותת אותם כדי להתאימם לסיפור התנ”כי) אלא במתודולוגיה של החשיבה. שיטת חשיבה מדעית היא גם ענף מחקר בפני עצמו, ושוב אוכל לשלוח לך לינקים להרצאות אם תרצי לדעת על כך. השאלה שלך כמו מה היא התודעה, האם קיימת כוונה מאחורי הבריאה, והאם העולם נבראה או נוצר מעצמו, אלה שאלות הכי חמות של הפילוסופיה והמדע היום ומתמיד, ולא נמצאו תשובות לכך עד כה, ואולי לא ימצאו לעולם. התפיסה האמונית יש לה לכאורה תשובות ברורות, אולם הם לא יכולות לספק אדם, שרוצה להגיע אל האמיתות האלה מתוך התבונה שלו עצמה, ולא שמשהו יאמר לו, אמן וקדש. שאלה נלוות לנושאים לעיל היא האם היהדות כתפיסה אמונית בעלת ערך או לא. אני מבין שנוח מאד לחשוב שיש כוח עליון, ברוך קדוש הוא, בורא עולמים, אדון וריבון על כל העולם וכו’, שמשגיח עלינו כמו אבא טוב, שלעיתים הוא רחמן ולעיתים הוא זועף ומעניש עד כדי רצח עם, ועוד העם שלו לכאורה. לצערי אני אישית לא מוצא באלוהים זה שום דבר אבהי, מרגיע, או משהו שניתן לסמוך עליו. אבל כאן נכנסנו לשאלות של מוסר, שכל אדם חייב לבחור לו מה מתאים לו. אפילו שאת חכמה ומלומדת כל כך, את צעירה מדי בכדי לנקוט בצעדים, שיהיו לך גורליים. חקי עוד שנה שנתיים. אולי עד הבגרות, ועד אז אולי דברים יתבהרו לך, ותדעי לבחור בכיוון הנכון. לכן, אפילו אם נדמה לך לעיתים, שאת חייה בשקר, תמשיכי לעשות את המטלות שלך כאילו כלום, ותמשיכי לברר לאן נוטה ליבך.

    אם תרצי לינק להרצאות בנושאים כמו פילוסופיה של המדע, שזה לא יכול הזיק לך אשלח לך. אגב אחד הממצאים החשובים על מוצאו של האדם נמצא לא רחוק ממך, במרגלות הר כרמל.    https://en.m.wikipedia.org/wiki/Es_Skhul

    5.10.2016

    היי עוגן, שימחת אותי מאד במכתבך, אני יושבת כאן מיואשת אחרי שיומיים  אני לא מצליחה לפתור תרגיל במתמטיקה ומכתב שלך גרם לי להסחת דעת מהכאב הראש של המתמטיקה.

    אמנם אני מדברת איתך הרבה על פילוסופיה אך רוב הזמן שלי אני לא עסוקה בשאילת שאלות פילוסופיות על היקום. בשבילי זה מין מבוי סתום. ככל שאני יודעת יותר כך זה פחות טוב,  יש את המשפט “מוסיף ידע,  מוסיף מכאוב” אני מאוד מזדהה עם זה, האם זה אומר להיות תמימים וללכת בעצימת עיניים בלי לשאול שאלות? אני לא יודעת. אבל אני לא מחפשת הרבה מידע של פילוסופים וארכיאולוגים, אני מעדיפה להתעסק בדברים אחרים של נערה מתבגרת. דברים שאני מוצאת בהם עניין יותר גדול בחיי היומיום שלי. לא יודעת עד כמה זה יעניין אותך אבל אני השנה אתחיל כנראה להיות מדריכה בבני עקיבא שזאת תנועת נוער של דתיים. סבא ואבא מאוד מרוצים מזה שאני אהיה מדריכה, זה ייתן לי כלים רבים בהמשך החיים כמו אחריות, כושר מנהיגות, ביטחון עצמי, דיבור ושכנוע ועוד.. למרות שעצם המחשבה על להדריך מעבירה בי פחדים אני מקווה שאצליח. חוץ מזה יש את העניין של הלימודים, עדיין לא מצאתי עניין באיזה מקצוע מסוים ולפעמים אני ממש מפחדת שאני לא אוכל לעבוד בכלום כי אין לי מושג במה אני טובה. פעם כשהייתי חוששת בקשר הייתי אומרת לעצמי שאלוהים יסדר את הכול, אני לא צריכה לדאוג, כי הוא אוהב אותי. הייתי בטוחה בעיניים עצומות שהעתיד שלנו יהיה טוב. ואיך יכול להיות רע אם יש לנו אלוהים שהוא אבא כל-יכול? היום אני מבינה שיש מלא סיבות לדאוג. שאנחנו בעצמנו  אחראיים למה שיקרה בחיים שלנו. זה נותן לי פרספקטיבה שונה על העולם.

    5.10.2016

    מעולה, תמשיכי בכל אלה, ואל תזניחי את עניני האהבה וההנאות הקטנות של החיים. זה לעיתים חשוב יותר מכל השאר. את ראויה להכי טוב, ותגיעי לזה אני בטוח.

    עוגן שלום. כל יום בחיים הם שיעור אחר. והחלטתי לא לפספס מסרים שעוברים עלי כל יום. אז אני התחלתי לכתוב כל יום מהמסקנות שלי מהחיים הדרך הנכונה שלי לחיות כדי באמת להפוך לטובה יותר. אז כתבתי משהו קטן ואני שולחת לך אותו בתקווה שאולי זה יעניין אותך.

    7.10.2016

    היום חשבתי על זה, מה הייעוד שלנו בעולם הזה? יש סיבה למה אנחנו כאן? והגעתי למסקנה יפה שנכונה לי, אני כאן כדי להיות אני. זה פשוט. לא צריך פילוסופיה מסובכת. לא צריך להאמין או לא. פשוט צריך להיות אני. כי  אם אני חיה וקיימת בעולם, אני צריכה לנצל את זה! אז איך אני- אני? אני צריכה להכיר אותי, לדעת מה טוב לי, מי אני. צריך שיהיה לי טוב, לאהוב את עצמי. איך אני יודעת שאני אני? זה מאוד פשוט. קוראים לזה דיוק. מה זה אומר? דיוק זה לדעת בדיוק מה טוב לי. לדוגמא: אוכל, אני צריכה לדעת מתי אני אוכלת כי אני רעבה, ומתי סתם כי משעמם לי, אני צריכה לדייק, אם אני אוכלת מדי הרבה אני מפריזה וזה לא טוב ואם אני מרעיבה את עצמי אני ממעיטה וזה גם לא טוב. צריך ללמוד להקשיב לעצמי. לגוף שלי. לצרכים המיוחדים שלו. ובמילה אחת זה דיוק. כשאני מדייקת אני יודעת מה טוב לי.המשמעות של זה שאני יודעת לתת לעצמי. להקשיב לעצמי. ורק כשטוב לי עם  עצמי אני נותנת לעצמי משמע אני מקבלת, זה נותן לאחרים שסביבי. זה נותן להם לא פחות מאשר לי. אני מאושרת  ואז טוב גם לי וגם לאחרים שסביב וזה מעגל שלא נגמר של טוב זה מאוד פשוט. אולי אנחנו כאן רק כדי להיות אנחנו. שיהיה לנו טוב. להשפיע טוב. ככה אני מחליטה לחיות. אם קשה לי להאמין ואני לא מתחברת לזה אז למה לחפור בנושא הזה? בשביל מה לשאול שאלות ולחפש תשובות? אם האמונה לא באה בצורה טבעית מהלב ולא מהמוח אז פשוט צריך להרפות ולחפש כיוון אחר. אנשים שלא טוב להם, ממה זה נובע? אני חושבת שלחשוב מדי זה לא טוב. לחפש משמעויות נסתרות בחיים לרצות יותר ולא להסתפק במועט זה לא טוב. הגעתי גם למסקנה שכדי להיות מאושר לא צריך סיבות. כמו שכתבתי למעלה. להיות אני. שמחה זה כבר משהו אחר שמחה זה רגש שחולף שהוא תלוי בדבר כמו למשל אני שמחה שקיבלתי מתנה מחברה. אבל אושר זה להכיר בחיים. במציאות לדעת שגם עם כל החרא יש טוב.

    8.10.2016

    חיה שלום לך. ההתעסקות עם אלוהים ומשמעות הקיום הן שאלות בגדול. אולי זה חשוב, אבל החיים האמיתיים של האדם הם בעניני יום יום, כלומר האמת נמצאת בפרטים. העולם המשתקף מהחלון הוא  מבט בפרטים, המודעות לתחושות שלך כמו רעב, אהבה, מצב רוח טוב או רעה, אהבת חבר/חברה, כל אלה ודומיהם הם ענינים של החיים האמיתיים. את יכולה למלא את חייך בחברות, ספר טוב או סרט טוב וכו’. כל אלה הם דברים שיכולים למלא את החיים שלך בכל טוב ולרומם את מצב רוחך. ואם בכל זאת באה לך ללמוד דבר מה, אין זה פסול גם. עוגן

    24.12.2016

    היי ינצי. מלא זמן לא כתבתי לך והתגעגעתי.. אני כרגע בחופשת חנוכה בבית אחרי הרבה זמן שלא הייתי בבית, אני משתדלת לשמוח כל הזמן למרות שקצת קשה לי עם האחים שלי וריבים איתם. ממש טוב לי. אני אוהבת ללמוד. יש לי הרבה חברים אני מרגישה אהובה ויפה. זה חשוב לי לאהוב את עצמי ולהיות מודעת! איך אתה?  איך בצ’כיה?  ומתי תבוא לארץ?

    אחרי החומר למחשבה שנתת לי בקיץ חקרתי על האמונה רבות. אני ממשיכה לסתור את עצמי וכל חמש דקות בערך מחליפה דעה אבל עדיין.. אני אשמח להעלות בפניך את צורת חשיבה שלי. יש לי שאלה, אם אשפוך כרגע על דף דיו, מה הסיכויים שייוצר משפט? אין סיכוי, נכון? גם אם זה הדיו הכי איכותי, אין סיכוי שמשפיכת דיו על דף ייוצר משפט. ככה העולם, אני מסתכלת סביב. ואני רואה איזה עולם גאוני אנו נמצאים כל דבר למעט הפרט הכי קטנטן נוצר בדרך גאונית. ניקח יתוש לדוגמא, הידעת שכשהוא מוצץ דם הוא מפריש חומר שגורם לתרדמה באזור בגוף בו הוא נמצא כך שנרגיש ביתוש רק אחרי שהוא התעופף לו וזה עוזר לו לשרוד אבל זה כלום לעומת הדקדוק בדברים אחרים. הכול כל כך הגיוני ומדהים. עכשיו נניח שאין אלוהים. נניח שהעולם נברא מפיצוץ (דרך אגב קראתי שהפיצוץ לא סותר את בריאת העולם מניין לנו שאלוהים לא בחר לברוא את העולם מפיצוץ?) אם העולם היה נברא בדרך טבעית ללא השגחה עליונה איך פיצוץ שזה בדרך כלל מביא הרס, *מסוגל לברוא עולם כל כך מושלם?* נניח שהפיצוץ כן יצר את האדם והחי והכול (למרות שעדיין האבולוציה לא מצליחה להסביר איך נוצרה התודעה) , איך הפיצוץ יצר הכול בצורה כל כך שלמה. יש לנו שתי ידיים, זהות זו לזו, שתי עיניים, גם זהות זו לזו. וכך גם רגליים. אנו בנויים בצורה סימטרית והגיונית. לכל איבר יש תפקיד. האם פיצוץ היה בורא הכול בצורה כל כך נכונה? חייב להיות מישהו מלמעלה שמשגיח על הכול, חייב!! מישהו פעם אמר לי שאתיאיסטים הם מאמינים הרבה יותר גדולים מכל דתי ולא משנה מאיזו דת. מדוע? כי הם חייבים להאמין בכל כך  הרבה צירופי מקרים שכבר הרבה יותר פשוט להאמין באלוהים. כרגע זה מה שאני חושבת. האם זה אומר שהיהדות זוהי הדת הנכונה?  האם זה אומר שהתורה היא נכונה? כרגע אני לא בטוחה בזה אבל יש לי חיים שלמים כדי לעלות על מסלול ודרך שבה אני מאמינה. השאלות אמנם בחיים לא יפסקו אבל אני צריכה להבין גם שלא לכל דבר יש תשובות.

    25.12.2016

    חיה חמודה, זה מחמם לי את הלב שאת כותבת לי ושופכת את ליבך לפני. אני ממשיך בחיי האינטנסיביים, בונה בניינים, וגם מטייל עם חברים לפעמים. טוב לדעת שטוב לך עם עצמך ובשלב זה של החיים שלך. אתן לך אצעה של זקן, שהלוואי ולי נתנו אותה בגילך. זכרי! את בכל החיים שלך בתהליך התהוות, כאשר חומר הבניה שלך הם החוויות שאת חווה. לכן חשוב מאד שתחווי חוויות טובות, במיוחד בגיל ההתבגרות, שאת נמצאת בו היום, שזאת היא התקופה ההכי משמעותית שתשאיר חוטם על התודעה שלך לכל החיים. אם תצליחי לחוות חוויות טובות בתקופה הזאת, בעוד כמה שנים, כאשר תהיה אישה בוגרת ואולי אף אימא ואשת איש, יהיה לך בעיתות מצוקה וקושי חוויות מהעבר להתרפק עליהן. ובאשר לאלוהים וכו’. חשבתי רבות ואף חקרתי את הנושא מאז ההתכתבות שלנו, והגעתי למסקנה שאלוהים הוא סרגל מידה של מוסריות, שלפיו אדם מאמין יכול לנהל את חייו. אדם חילוני כמוני חייב להמציא את סרגל קנה המידה של המוסריות משלו. לצערי הסרגל המוסרי של היהדות הוא נתון לפרשנות, כלעומת סרגל מדידה של גיאומטריה, ולא אחת הפרשנות היא מביאה מעשים של רשעות נוראית. מכאן מלחמות הדת ואני לא מדבר רק על מלחמת דת של נוצרים או מוסלמים, אלא גם של היהודים נגד יהודים אחרים או בעלי דתות אחרים.

    אשר להתפלאות שלך מהטבע והיופי שלו, אני מבין שקל להאמין, שהעולם כאילו נוצר למען בני אדם בעלי תודעה. אבל מה, תהליכים בתורת האבולוציה, שניתן לצפות בהם לפי שיטה מדעית במעבדות בצורה מבוקרת, מסבירים מצויין כיצד נוצרו התופעות שאת מתפלאת מהן, והאמונה בבורא שיש לו כוונות אנתרופוצנטריות לא מוסיפה להבנת התהליכים של החיים והתודעה.

    האמת היא שהמדע טרם מצא תשובה חד משמעית לשאלה כיצד נוצרו החיים ומה היא התודעה. כפי הנראה שאלות אלה הן שאלות מאד מורכבות,  ואף שהמדענים מנסים בכל כוחם לפתור את התעלומה, טרם הצליחו בכך. לפי הידוע לי לגבי מקור החיים, המדע מאד קרוב לפתור את הצופן הזה. כפי הנראה טרם נמצא תשובה בגלל רמת הסיבוך הגבוהה, שהמחשבים של היום אינם מסוגלים להתמודד איתה. אם וכאשר זה ייפתר, ונדמה לי שזה לא רחוק מאוד, (אולי מספר מועט של שנים), האדם יוכל לברוא יצורים כאוות נפשו ואולי אף למצוא מתכון לחיי נצח. האם הוא יהיה אז אלוהים? האם זהו האלוהים? לדעתי לא. אלוהים אם הוא קיים, והוא וודאי קיים כמושג בתודעת האדם, הוא בורא המשמעות לקיום עבור האדם המאמין. אך מה, כל זה שיך לעולם הסובייקטיבי פנים תודעתי של אותו אדם מאמין ואין לו ולא כלום לעולם האובייקטיבי של היקום עם תורת הביג באנג וכו’, שמחוץ לתודעת האדם. באשר לביג באנג, ותורות נטורליסטיות אחרות המסבירות את חוקי הטבע, אין לאמונה באלוהים מה להוסיף בנושאים אלא רק לגרוע. אם יש לאמונה תפקיד עבור האדם, אז זה בתחום המוסר, שכוללת גם את שאלת מהות הקיום האנושי ומטרתו.

    אגב אם אלוהים ברא את העולם, מי ברא את האלוהים? או שהוא היה קיים תמיד? אם היה תמיד, אז אין אפשרות לדבר על תחילת הבריאה בגלל שתמיד אומר שאין התחלה, כלומר אין מקום לזמן בו יתחיל העולם.  אולי זאת טענה מורכבת מדי להסביר בצורה מובנת כך דרך הוואטסאופ. בכל אופן קחי זאת כחומר למחשבה.

    [25/12, 11:45]

    חיה שלום

    אולי רק להוסיף הבהרה לרעיון המורכב שהסברתי לא כל כך טוב לעיל. אם אלוהים והזמן היו תמיד, אזי היה אין סוף זמן טרם הבריאה. אם היה אין סוף זמן, אז לעולם לא נגיע לזמן הנוכחי. אז איך זה יתכן שאנחנו חיים עכשיו? זהו פרדוקס כמובן. אבל האמונה מלאת פרדוקסים הרבה יותר פשוטים, כמו המשפט, “הכול נתון מראש אבל הרשות נתונה”, או “רשע וטוב לו, צדיק ורעה לו”, וכו’. אבל על כך וודאי דיברו הרבנים שלכם. בכל מצב אין לדת היהודית או אחרת כלים אמיתיים להסביר את הטבע, בגלל שהכלי המרכזי של האמונה להסביר את הטבע הוא נס, שמשמעותה תופעה הנוגדת על פי הגדרה את חוקי טבע. עדיין לא נמצא אדם, רב או לא רב שיכול לעשות ניסים, וכל שקיים זה סיפורים ארכאיים על ניסים או ניסים לכאורה. הצורך האפולוגטי של רבנים להוכיח שתורות מדעיות דוגמת האבולוציה לא נכונות, נעשות בכלים לא מדעיים, כמו על ידי מטפורות, דוגמת הדיו, אבל זה לכל היותר סיפור נחמד שלא לוקח בחשבון, שדיו את שופכת בשניות בעוד החיים על פני האדמה לפי תורת האבולוציה וממצאים גיאולוגיים ואסטרו-פיסיקליים התרחשו במשך מיליארדי שנים. לאדם מאד קשה להכניס את הרעיון של תהליכים שמתרחשים  בתקופה ארוכה כזאת לתודעה. מדובר בתקופות זמן בהם אפילו ההרים הכי גבוהים כבר הפכו להיות קרקעיות של הים ולהפך כמה וכמה פעמים. מכאן שהניסיון לתאר לך תהליך של היוצרות החיים על פני הארץ על ידי אנאלוגיה לא נכונה כמו הדיו, הוא נסיון יפה מבחינה סיפורית, אבל לא רלוונטי לגמרה מבחינה מדעית.

    שוב אני חוזר על כך, שעדיין אמונה ודת כמסגרת חברתית יכולות מאד להועיל לך כדי לחיות חיים טובים, הרי העולם הדתי נותן לך מסגרת חברתית נורמטיבית תומכת ומגינה, מול הכאוס והרשעות של העולם בחוץ. חג חנוכה שמח. ינצי

    אגב חשבתי מחשבה. את כותבת בערך כך, העולם כל כך מושלם וגאוני, לא יתכן שאין יד מכוונת…. ואת מתכוונת לעולם הביולוגי טבעי, מושלם לצורכי האדם, ולא העולם שאדם יוצר, שהוא כמובן ייצור לא מושלם.

    אולם אם תתבונני במציאות בעיניים פקוחות העולם רחוק מלהיות מושלם עבור האדם. קחי כדוגמא דבר כה מרכזי עבור האדם כמו לידה. מסתבר שבטבע ללא הרפואה המודרנית אחוז ניכר מהלידות נגמרו במוות של התינוק היולדת או שניהם גם יחד. גם חוסר פוריות של אישה זה דבר מאד נפוץ. לכן ריבוי ניתוח קיסרי, וטיפולי פוריות בעולם המודרני. כל זה קרה בגלל שתינוק נולד עם ראש גדול מדי עבור רחם של אישה וכו’. זאת היא תוצאה מקרית של אבולוציה, מוטציה שיצרה ייצור מעוות מבחינה ביולוגית, עם וולד שראשו גדול מדי כדי שיצליח לצאת בקלות מהרחם, ולכן עם סיכוי קטן להישרדות. אך מה, במקביל אותו תינוק צומח להיות עם יכולות קוגניטיביות (חשיבה ותפיסה חושית) מהפכניות לעומת הקיים בטבע, שעולות ומתגברות על הפגמים הביולוגיים הנ”ל.

    [29/12, 15:54]

    טוב. אני לא באמת מבינה בדברים האלה. יכול לבוא אליי רב גדול ולשכנע אותי שיש אלוהים ולתת לי כל מיני פסוקים מהתורה ואני אאמין לו עד שיבוא אתיאיסט חכם שיסתור הכול ויביא הוכחות מדעיות ואני אחשוב שניהם צודקים בו זמנית. רבנים הם לא אנשים טיפשים. לפחות רובם, והם כל כך בטוחים במה שהם אומרים ומנגד גם אתיאיסטים ואנשי מדע, שהם מביאים הוכחות חותכות גם חריפים בשכלם. אז איך אני אצליח להבין מה האמת? אולי בכלל אין אמת? אולי כל העולם הזה הוא שקר אחד גדול? אני יודעת שאמונה מתחילה היכן שהשכל מסתיים. אדם מאמין הוא לא יודע, רק מאמין.  בעיניים עצומות  הולך אחר האמונה. השאלה אם זה טוב לי או לא.י

    אני לא שומרת  שבת כל כך, רק כשאני  בפנימייה בשבת, כי אני לא יכולה לעשות משהו אם אני לא חושבת שזה נכון לי במאה אחוז.. אני לא מפחדת להיות שונה, לא מפחדת להיות היחידה בתיכון שלי שלא מאמינה או לא שומרת. אני כן מפחדת לחיות בשקר. אבל כשאני מתעסקת בשאלות קיומיות יותר מדי זה רק מדכא ומבלבל. השאלות אינסופיות (כמו אלוהים)  כשמתחילים עם כל השאלות האמוניות זה לא נגמר. ואם יש אמת אחת והיא ידועה ומפורסמת,  עם הוכחות והסבר הגיוני לכל השאלות של הקיום אז איך זה שיש אנשים שלא מאמינים באותה האמת? אולי בגלל שלא באמת מצאו אמת? למה יש כלכך הרבה סתירות? בין התורה לבין המדע? זה כל כך מבלבל אותי.

    [29/12, 15:54]

    בינתיים אני עסוקה בדברים שיותר חשובים לי מלמצוא אמת.. מתמטיקה . גם אם אני בחיים לא אגבש דעה ברורה על כל השאלות שיש לי, אני מעדיפה לחיות את החיים על הצד הטוב ביותר.. יש לי שאלה אמונית והפניתי אותה לכמה רבנים באולפנה אבל אף אחד לא באמת ענה לי. השאלה שלי היא כזאת: לפי התורה היה ריק במשך זמן בלתי מוגבל. אין סוף של זמן אלוהים היה קיים ועד שהחליט לברוא עולם. אז למה? למה הוא ברא עולם? בשביל מה? מה זה נותן לו? הוא ברא בני אדם וחוקים ותורה ורע וטוב אבל באמת מה זה נותן לו? היה לו משעמם או משהו? ואם זה הייעוד שלו איך זה ייתכן של אלוהים יש ייעוד אם הוא ברא את הייעוד? ולמה הוא חיכה אינסוף של זמן ורק אז יצר את הזמן? השאלה הזאת מציקה לי וכך בכל דבר שאני מחויבת לקיים אני שואלת את עצמי מה זה נותן לאלוהים? ואם הוא עשה את זה בשבילי זה לא באמת נותן לי משהו. לכן קשה לי לשמור שבת. ..

    [30/12, 00:44] עוגן

    את צודקת בגישתך. אל תתני לשאלות הגדולות האלה לבלבל אותך ולהשפיע עליך מלעשות את מה שטוב לך. לכי בדרך שלך לחוות את מקסימום החוויות הטובות שאת יכולה, ותמנעי ממעשים ומחשבות שפוגעות בך. זאת אצעתי האמיתית לך. את המשך הדיון על אלוהים וכו’ אני מציע שנדחה לזמן שתחשבי שזה נכון לך אם בכלל. מתמטיקה היא חשובה מאד, והיום ובעתיד יותר מתמיד. זאת היא שפה שחייבים לדעת אותה בדיוק כמו אנגלית אם רוצים להצליח בחיים להגיע למשהו משמעותי וגם מפרנס. עולם העתיד מבחינה תעסוקתית הוא נעלם גדול אחד, אבל לדעתי אלה שיודעים מתמטיקה בוודאות ימצאו תעסוקה גם בעתיד.

    [30/12, 09:22] עוגן

    עלי עוד להוסיף, שאל תשכחי שאת בדיוק בגיל לשאול את כל השאלות האלה שאת שואלת כמו, מי את ביחס לעולם, לחברים למשפחה וקרובים, כמו גם את השאלות הקיומיות כמו מה את עושה בעולם הזה וכו’. זה הדבר הנכון והכי טבעי בעולם ואין לך מה להיבהל מכך, אלא להפך. בעוד כמה שנים תזכרי בתקופה הזאת עם כל סערות הנפש שמתחוללות בך כהרפתקה הגדולה של חייך, ותקווה שתמצאי בה אהבה, ידידות, פינה חמה יהיה לך תמיד כאוצר להתרפק עליו. לכן הכתיבה שלך היא מין מטמון שתוכלי לשמור באמצעותו את זיכרונותיך, ותמיד לחזור אל זה.

    [14/01, 18:30]

    היי עוגן. אני כרגע ממש בסדר.. שבוע שעבר חוויתי כמה אכזבות ובאסות רציניות. לפני כמה זמן מגזין של נערות הציע לי לבוא לדגמן בשבילם מדור וכמובן שממש התלהבתי ורק חיכיתי ליום צילומים. איך שאני ואימא התכוונו לצאת מהבית ולנסוע קיבלתי מהם הודעה שהם דוחים את התאריך למועד שממש לא הסתדר לי ונאלצתי לבטל לגמרה. התאכזבתי ממש כי המגזין עכשיו ממש הולך והתלהבתי מהרעיון שחברות שלי יראו אותי מככבות במגזין שהן מנויות אליו. להתרגש למשהו ממש ובסוף לנחות לקרקע ולהתאכזב זה לא משהו שאני אוהבת לחוות. חוץ מזה דבר נוסף שהקשה עלי זה  ילד שאוהב אותי העלה לפייסבוק שלו תמונה איתי קצת לא לגיטימית ובגלל שאין לי פיסבוק לא ראיתי אבל דיברו על זה הרבה. העבירו את התמונה בקבוצות ובווצאפ ותוך פחות מיום יצא לי שם לא טוב בכמה בתי ספר שיש לי שם ידידים. חטפתי מלא ריכולים מכל מיני כיוונים. אנשים שאני לא מכירה התקשרו אלי כדי לשאול את טיב היחסים בינינו. מלא חברות שלי אמרו לי שהן שמעו עלי ריכולים ותהיות. ואפילו חברה התקשרה להגיד שיצאתי זונה ויותר משלושה אנשים שלחו לה את התמונה המדוברת בווצאפ. התמונה לא פרובוקטיבית אבל היא מעלה שאלות..  עד שביקשתי מהנער למחוק היא נשמרה בגלריות של הרבה טלפונים. הדבר הכי נורא שזה גרם לריב ביני לבין חברה שלי שממש שונאת את הבחור שהעלה איתי את התמונה. החברה הזאת התגלתה כרכלנית וצבועה וכך היא הכניסה אותי לפרשית ריכולים נוספת בין כל הידידים והחברים שלי כשבאו לשאול אותי למה רבתי איתה. לא שאני הבנתי… אבל החלטתי לא לתת לסביבה להשפיע עלי ולהוריד אותי. אם מישהו לא אוהב את האופן שאני מתנהלת שלא יאהב. לא אכפת לי. כל עוד אני לא מרגישה שאני עושה דבר לא טוב. למדתי שלא משנה איך אני אתנהג יהיה לאנשים מה להגיד בצורה שלילית.  ולמדתי להעריך את האנשים שיהיו שם בשבילי גם כשבחוץ אומרים עלי דברים שקריים, לא נכונים, ולא טובים לתדמית שלי. החברות והחברים שלי שיאהבו אותי למרות הכל הם האוצר הכי גדול שיש לי!

    [14/01, 19:28]

    חיה חמודה, צער לי על הכאב שחשת, אבל מדובר בסך הכול על מהומה על רוב מאומה, כמו שכתב שקספיר באחד המחזות שלו. גם במחזה זה מנסים באמצעות שקרים להפליל משהו או משהיא. בכל אופן עליך לזכור, שהעובדה שכולם מדברים עליך, זה אומר שאת חשובה לכולם. היה לך עדיף שאף אחד לא ישים לב עליך? כמובן יש גם הרבה קינא וצביעות בהתנהגות של בני אדם, בעיקר צעירים בני גילך בגיל ההתבגרות. האין זה גיל של טיפש-עשרי? לגבי הצילומים במגזין, כמובן אני מבין שחבל לך, אף שאולי עדיף כך. לא נראה לי שזה יביא לך יותר חברים ואהבת אמת מי מה שיש לך בלי זה. אני במקומך הייתי מתמקד בלימודים ועולם הרגשי האמיתי. יש לך מזל בחיים ותנצלי זאת. את חכמה, יפה ויש לך משפחה נהדרת. כעת אולי אפילו בית יפה. באהבה, דודך ינצי

    [16/01, 23:30]

     שלום ינצי. הכאב שחשתי הספקתי לשכוח אותו… היום בארוחת ערב בפנימייה אח שלי הפתיע אותי והביא לי אוכל מפנק. הוא עשה לי סיבוב באופניים שלו וישבנו בגינה. שם הוא סיפר לי ששמע על השם הרע שעשו לי וראה את התמונה המדוברת. הוא אמר לי שהוא רוצה “להרוג מכות” את הילד שהעלה איתי את התמונה על זה שזלזל בכבוד הנשי שלי. ברור שלא הסכמתי לזה אבל נחמן רתח מכעס על העוול שעשו לי. הוא אמר שלא ייתן שיפגעו בי. זה כל כך חימם לי את הלב שיש מי שדואג לי. שאני מוקפת בחברת אנשים שאוהבים אותי. מה עוד אני צריכה בחיים? לא מזמן הייתה אסיפת הורים ואימא באה. המורים רק דיברו על כמה אני תלמידה טובה, משקיעה וחברותית והרגשתי שעברתי מהפך משנה שעברה כשזלזלתי בלימודים ואילו השנה אני נהנת מצוינים מעל 90. זה כיף לשאת בתוצאות נעימות כאלו. מה שאני צריכה לעבוד עליו אצלי זה היכולות לשלב בין חברות ללימודים לבית ולזמן עם עצמי… זה כיף להיות עסוקה כל הזמן. לפעמים אני מסתכלת סביבי ואומרת עד כמה אני צריכה להוקיר טובה על הכול. יש אנשים שיש להם הרבה יותר דברים ממני אך הם לא זוכים לשמחה פשוטה ואמיתית, כזאת שלא נובעת משום דבר גשמי וחומרי. דרך אגב, מתי אתה מגיע לביקור בארץ?  לילה טוב לך. באהבה חיה

    [17/01, 08:31]

    חיה חמודה, ריגשת אותי במכתבך. טוב לדעת שאני חלק ממישהו טוב ונקי כמוך. כפי שכתבתי לך, תתמקדי באהבה ולימודים. אהבה לכולם, לאו דווקא לבחור ספציפי, אם כי גם זה מותר וטוב אם זה באה. אך מה, דרכי האהבה בלתי צפויים ולא ניתנים לשליטה. כך שאין לך מה לרוץ לחפש מה שלא באה מעצמו בתחום הזה. את יפה, חכמה, טובת מזג….. לא ארבה בשבחים מעבר לזה, ואני בטוח שהאהבה האמיתית תבוא אליך מעצמה. ואם היא תבוא, תדעי זאת.

    החלפתי מכתבים עם חיים הסבא שלך. הוא כתב לי שהוא פוגש אותך פעם בשנה, (בפעם האחרונה בעכו). הוא קצת מצטער שלא מכיר אותך יותר. נדמה לי ששווה שתיזמי את מגע איתו. עדיף בכתב, בגלל החרשות שלו. הוא בוודאות יענה לך. הוא אדם חכם ומשכיל מאד, הרבה יותר ממני, והרבה יותר אפילו מהרבה עמיתים פרופסורים שלו ובוודאות רוב הרבנים מורים שלך. יש לך מזל להכיר אדם בשיעור קומה שלו. תנצלי זאת. אני בעצמי למדתי המון ממנו, אפילו ששנינו בדיוק באותו גיל. בלעדיו לא הייתי יודע מה שאני יודע היום, ולא הייתי מי שאני. תכתבי לו וואטס-אופ. הוא וודאי ישמח. אשמח גם אם תשתפי אותי על מה שאתם מתכתבים, אבל זה לא חובה, להפך. נחמן הוא אח טוב רק לוקח את התפקיד שלו קצת בצורה פשטנית מדי. בכל מקרה האלימות הוא לא פיתרון, אלא להפך, רק מגביר את הבעיה, אם יש בכלל. אם הבנתי נכון, הידיד שלך לא העלה את הפוסט שלך על הפיסבוק מתוך זדון. הוא כמו רבים בגיל שלך צריכים ללמוד, שעם פרסום באים לא רק המתנות, אלא גם המכות. קינא היא תכונה אנושית אוניברסאלית שמניע את העולם. כל העולם הכלכלי בנוי על תכונה אנושית זאת. האמיני לי, הרבה מהבנות, שכאילו הן חברות שלך, במקביל גם מקנאות בך על שאת יפה, מוצלחת ונאהבת כל כך. קינאה כאמור מסתתרת תחת כל שיח וכל מעשה, ויותר מאהבה. ואת, ברת מזל, יש הרבה מה לקנא בך. למדי לחיות עם

    זה ובטוב. באהבה דודך, ינצי

    Alternatives of humanity

    I had some thoughts concerning  God etc. and i feel need to clarify myself.

    Let’s speak not about GOD, what is only a term, but about if there is any intention to existence. I feel much better with the idea that there is in our world a purpose than without. I emphasized that i feel, rather feel than believe. While if you ask what’s the difference between feel and believe, i would say feelings are personal and not transferable to others, while belief and faith are apparently transferable.

    Every human has to decide for himself, if to believe or not and what he believes in. So what do i believe in? I believe there is causality, a cause and effect. I know it is just a faith and there is no prove that there is causality on the metaphysical level in the objective world. Still the human mind is built to think in these terms.

    Science sais to us, that on the very elementary level the events are happening randomly. Meaning prediction of location of the most fundamental elementary level humans succeeded to perceive until now, while measuring movement in space and time, can be predicted not in absolute but only probabilistic terms. Movement in space and time is the essence of all the being in scientific terms. there is nothing without movement, no space no time, so the need to measure it is fundamental.

    Still the result of it is, that those elements created chain connections to atoms, molecules and chemical bonds in a way that life emerged. And finally consciousness emerged, even as an emerging property of the complexity of the brain and nervous system, and not a soul separate from the body, as some esoterics wishfully tend to think. Still i feel, this whole system that eventually brought the human spices to a level of consciousness, that you and i can exchange these letters, gives me the feeling that there is certain intention.

    From here we can start to ask what it is to be human. I would say, that this intentionality is about to become a human in Nietzschian terms, meaning, to become an individual aware of who he is, what he wants, etc., with capacity to implement his potentiality for free will, which seems to exist, even if the trend i described above is by definition a deterministic process.

    But the existence of free will also means we can’t predict to where it brings us. One alternative is evolving humanity towards God like technological capacity, (as described by physicist Michio Kaku so nicely in his educative lectures,) and towards individuality that every human will become a self aware educated being, who will respect the others as beings with individual free will, without the need to disrespect the society and other individuals.

    The second alternative is heading towards world, ruled by people believing in fairy tales, ancient prophets, divine books, sacred rocks, sacred mountains, sacred rivers and water streams, sacred land, sacred people, you name the rest. But also heading towards despotic authority of dictators or any other rulers, preachers, legal entities as corporations, banks, worldwide food chain operators, and also presidents.

    Donald Trump, Brexit and all the rest

    The problem is deeper than what it appears. The democracy as a political system, is just like any other political system, and has its limitations. All political systems are based on people with lust for authority and desire to lead and rule many by few.  Those few who have this lust, from while to while happen to be those, who doesn’t necessarily act out of altruism, utilitarianism or not even out of need to represent interest of certain group of people, but just out of perceiving themselves above the ordinary human beings. This kind of politicians believe in being kind of God like beings, destined to shape the humanity, human society, history, or any kind of communal human activity according to phantasy they drew in their imagination. Then anything or anybody that opposes them, they try to annihilate.

    Democracy is not guaranty to prevent this kind of individuals to get their way to the top. The results of their policies were catastrophic already in the past. In the ancient Greece people of Athens democratically put Socrates to death. Then Hitler was democratically elected. The choice of majority of people is not necessarily the right choice.

      In last hundred years happened many times tgat unscrupulous people became the leaders, mostly in less significant countries than US is today, like in Libya, Iraq, and maybe in Turkey at present. You may say, these were not democratically elected people. But does democracy have tools to prevent from this kind of self obsessed individuals to become leaders? I have my doubts. Mainly in the times of political or economic existential crisis, people tend to vote in masses those who promise everything, achievable and not achievable, but mainly bring promise for change of the existing reality, they hate, from the root. You may say it happens in perepherial countries. But in the past it happened also in countries with world wide influence as Germany and USSR.

    The very best example of popular vote out of ignorance is Brexit, that was the choice for something, that no one, not even the Brexit leaders knew what it means. Now everybody is confused, mainly the leaders of Brexit, who acted out of arrogance and simple mindedness during their campaign, not thinking what will be the next day to the referendum, if and when they win. Probably they never believed, they can win such an absurd vote. They just miscalculated that out there they are many frustrated people, who wish change for any price. Then, when these people asked to lead, they discovered, they have no answers to the most basic questions, as what it exactly means Brexit. They didn’t prepare any agreements and legislative acts to translate pro Brexit vote to policy. The political slogans, just like any marketing slogans became the content. The result will be, UK will lose its influence on Europe, while still be technically part of it.

    In 2016, the crisis was rather political than economic. The injustice caused by elites, while pouring trillions of dollars to save the financial system, and no one from those responsible for the collapse was punished . Adding to it the unscrupulous system of rewards to those responsible, in numbers of millions of dollars, most of the people are not familiar with, is too much to absorb even by the ignorant masses.

     The question is not who Donald Trump is, or what his acts will be, because no one can know who he is, since probably he himself has no clear idea about his next step. To me it seems, his acts are out of arrogance, believing in his own devinity or his above human position, meaning he can act out of pure intuition, without consultation with anyone, mainly not with those who have independent opinion. So my question is, does have the US administration institutional tools to prevent any catastrophe, of the kind it happened somany times already in history or not?

    All I can add is, God help us, and hopefully US government in 2017 is more sophisticated and have stronger institutions than Germany had in 1933.

    Economic discussion from two years ago – more relevant than ever

    EugenR  July 21, 2015 at 22:13 said:

    Surprisingly in all the articles i read about Greek catastrophe caused by entering the Eurozone no one mentioned even with one word, that without the Eurozone, Greek’s GDP per capita and their standard of living would be about the level of Bulgari. (17,000 US$ in Bulgari as against 26,000 US$ in Greece after its fall of 30% since 2010). There is no real economic reasons for Greece to be economically better off, than a country, that its only industry is tourism. Yet during the 10 years of theft and deceit of the Greek political elites, with whom happily cooperated the private commercial banks, and channeled on account of rest of Europe finances, at least some of the stolen money went into Greek infrastructure and public services. As result of it, if the right decisions will be made, and the young highly educated Greeks will get jobs, and not chased out of the country by all the cartels, monopolies, oligopolies, professional unions of taxi drivers, etc. who close the labor market before them, i believe Greece will have chance to overcome its difficulties. By the way what kind of professional capacity is needed to become a taxi driver? To me with GPS and driver license everyone could do it. If the labor markets will be closed to the young educated Greeks, maybe Greece is heading towards the standard of living of a typical tourist country, like some Caribbean island.

    Hubert Marckson July 22, 2015 at 21:40 said:

    @ EugenR

    Consider this: Germany owes a lot of its economic success to the fact that its exporting industry is living off other countries debt. The German current account surplus is expected to reach an all time high of 7.5 to 8 percent of GDP this year, which amounts to more than 200 billion EUR worth of German exports exceeding the amount that Germany’s economy spends on imports from other countries. As a consequence, those other countries can only afford to buy all those shiny new luxury cars, capital goods and high-tech weapons systems by borrowing money, because they do not sell enough of their own goods to Germany to earn the money that they spend on german stuff. Ironically, in the past, german banks have been handing out such loans in great numbers, which is one of the main reasons why they had to be bailed out via the so called ‘rescue’ efforts for deficit countries like e.g. Greece

    By the way, by insisting on maintaining this surplus, Germany is permanently violating one of the sacred rules that germans love to enforce so much on their european partners, which in this case is a limit of current account surplus to 6% of GDP. Germany itself insisted on that number because at the time this rule was implemented, the german surplus was at – guess what! – exactly 6 percent of GDP.

    Now the German government with its master of coin, Doc Schäuble, at the helm prides itself of a budget with zero deficit, or – as we call it “die schwarze Null” (‘ the black zero’), and scolds the Greek people for having lived beyond their means by taking up loans they cannot repay.
    Even if one were to just forget about the fact that one of the main reasons for the inability to repay those loans is the moronic idea of imposing harsh austerity on a country that is already in a depression, the German superiority complex would still be nothing but pure hypocrisy, due to the fact that German corporations have made enormous profits from this ponzi-scheme.

    And let’s not forget about the German Banks, which didn’t buy those Greek government bonds out of the sheer kindness of their hearts but because handing out credit and making money from interest rates is part of any bank’s fucking business model! (please pardon my french)

    So now we (the Germans), the ones who profited the most from the common currency and whose exporting industries and their owners have been lining their pockets with what ultimately turned out to be toxic loans taken up by their customers and was then transferred to the European tax-payers, have the audacity to point our fingers at Greece and its citizens, to call them lazy irresponsible parasites and declare ourselves the poster-boys of fiscal discipline, industriousness and sound entrepreneurship.

    Now tell me again how Germany has not completely forgotten any lessons it may once have learned from its past and how it has not reclaimed its abhorrent former narcissistic notion of being better than everybody else.

    EugenR July 22, 2015 at 23:26 said:

    Dear Hubert, i am not going to write any comment about German national psychology, because being a second generation to holocaust survives Jew, it wouldn’t sound serious. But i definitely disagree with your economic analysis. And the reason to this disagreement is an economic concept i strongly believe in, that if you make a deal where one gets a Mercedes and the other gets an obligation paper without any security for repayment, the one who has the Mercedes is better of. As to calling the Greeks lazy, is racism and stupidity. The Greek dysfunctional economy is due their political elites who acted out of political profligacy. Many nations, who failed in certain period of their history, after a deep crisis changed entirely their political behavior with the change of their leadership. The best example is Germany and Japan.

    Hubert Marckson July 23, 2015 at 08:37 said:

    @ EugenR

    Maybe I misunderstood, but you seem to have already made an assumption on “German national psychology” – as you phrased it – by claiming that Germany’s intentions were essentially benign because it had learned from its past mistakes.
    Please don’t get me wrong, I would never compare what my country is doing now to the holocaust. That would be a horrible insult to the millions of victims of Nazi mass-murder.
    But there is a revival of the German hubris, and it’s not just some politicians playing hard-ball during the ‘negotiations’ with Greece, but it is starting to show throughout all of German society.

    I don’t know if you are familiar with what has been going on during these past months in the German media, but I must tell you that the constant propaganda campaign they have been waging against Greece, its politicians – especially former Minister Varoufakis – and even the greek people as a whole, has not only influenced public opinion against Greece but it also seems to have stirred a dormant German desire to feel morally superior towards the rest of Europe and to reclaim some kind of perceived inherent right of the German people to impose their will on those people of other nations who would disagree with their way of running things.

    On top of that, there is a growing discontent among the German public with taking on refugees, including extreme right-wing protests and the occasional burning of refugee shelters, to which our glorious leaders had not much to say except to issue a law that will expedite deportations. There is also evidence that the German interior secret service, whose only job is to protect the constitution, was in cahoots with a homicidal Nazi-terrorist group and all the government is doing about it is trying to bury the parliamentary commission tasked with investigating the case under a giant pile of bureaucracy and thereby sweep it under the rug.
    But the average German ‘tax-payer’ – as we like to refer to ourselves – doesn’t seem to care about the fact that the people whose salaries come out of these taxes are obviously permanently violating the constitution they swore an oath to protect. What does concern them greatly, however, is a small country on the south-eastern fringe of the European Union trying to regain a sense of democracy and national sovereignty against a coalition of technocrats, led by Germany, that seems to be willing to openly deny them those rights. As a second generation descendant of nationalist, racist mass murderers, I find that highly disturbing.

    As for my “economic analysis”, this is not some personal theory of mine. The German surplus problem has already been addressed by the European commission, various economists all across the globe (excluding almost all of the German ones, of course) and even by the US-Government, including the President himself.
    You wrote: “[…] that if you make a deal where one gets a Mercedes and the other gets an obligation paper without any security for repayment, the one who has the Mercedes is better of.”
    And of course that may be true from a microeconomic point of view. But with this analogy you are adhering to the same kind of neo-classical dogmatism that seems to be all the rage among German economists by discussing a macro-economic problem in micro-economic terms. It is not the Daimler-Benz corporation who got stuck with worthless IOUs for the Limousines they sold to Greek customers. It is the ordinary citizens and tax-payers of Europe who would be left with worthless debt certificates, which they got in exchange for their share of the bailout funds, if Greece were to somehow ‘exit’ the Eurozone. These bailouts, as everyone should know by now, where mainly used to save Greek and other European Banks, first among them German and French ones, from collapsing under the weight of all those toxic loans they had given out, some of which may certainly have helped to fuel a credit based rise in overall consumption rate in Greece prior to the crisis. But neither Daimler-Benz nor Deutsche Bank will have to deal with the results of their bad business decisions.
    And although I have never been to Greece myself, I very much doubt that the streets of Athens or Thessaloniki are teeming with German luxury cars and even if that were the case – you cannot blame ordinary people for trying to better their living standards if they get the chance to do so and you can also not expect them to realize the macro-economic implications of a whole country living ‘beyond its means’ as the glorious German leadership likes to put it. As a consequence, punishing those ordinary people for crimes their elites have committed is just cynical and cruel and does not make any sense economically. But that is exactly what is happening right now and a majority of my esteemed German compatriots deems this kind of collective punishment an act of justice.
    Which, as I wrote before, is especially stupid since German corporations and Banks have long secured their profit shares and shifted any kind of loss over to the public sector.

    But anyway, the argument between Greece and its creditors has long left the realm of economics and has become a purely political one, where a majority of conservative governments – most of all the German one – and a few ‘social democratic’ ones who appear to have made themselves the lackeys of their conservative overlords have essentially knocked out democracy and they made sure that it won’t recover from this blow for a very long time. And here in Germany this is not only widely accepted by the public but also applauded as sound politics.

    EugenR July 24, 2015 at 00:54 said:

    Dear Hubert, thanks for your eye opening comment. I don’t read German newspapers, and have no idea about the German popular mood. What you wrote sounds horrific especially for me. In my views I express in the comments, I argue for the sake of certain economic view, which is based on understanding, that the real economy is about products produced by humans, be it intangible or not, merchandise or services, etc. and not about the flow of money. I find that many people tend to see economy as the “science” of money and it is not. Far from it. Money is only a catalyst to enable the flow of products from one hand to an other, but doesn’t represent a real value. Viz the following argumentation in my blog.

    EugenR July 25, 2015 at 01:55 said:

    Dear Hubert, i think the disagreement on Greek issue between us originates from different points of view we have about the question, what is the major issue Europe has to cope with. If i understand it correctly, your position is to try to secure the Social welfare state in whole Europe, and everything that endangers it has to be removed. My opinion is different. As to me the major issues to be Solved in Europe are as follows.
    1. To secure European Union and strengthening it as much as it is just possible. I am for reducing the political-economic function of national government to minimum. So of course i am for one European central bank, one federal budget and one federal tax system and collection. The local government should act as states in federation, with limited authority, on the level of region, with its own budget, approved by the federal European government. Of course to do it Brussels has to become democratically elected, what is very difficult now to achieve, when the attendance on European election is hardly 20 %. Most of the people in Europe identify themselves on the national level, and very few on the European level. Still Europe, with its declining and aging population, cultural decline due to tendency of self denial, can hardly effort not to act as united, against the threats out of it.
    2. Europe has to integrate economically and politically the East European states, including those that are already part of EU, and those that are not, like Ukraine and even Turkey. The standard of living and infrastructure of some of these countries is catastrophic. To my opinion it is more important to invest in these countries to bring their economy closer to the EU level, than to invest in Greece to sustain their standard of living, just because they get used to it in the times when they could freely borrow without responsibility.
    3. You are right that the Greek people are not to be blamed for the wrong doings of their political elites. Still their position of “Let me die with the Philistines”, is very dangerous and egocentric. It is very amoral, in one side to demand solidarity from the rest of Europe, on the other hand to threaten Europe with destroying its economic system.

    EugenR  July 25, 2015 at 08:30 said:

    One other thing. To help Greece out from its economic mess, Greece have to cooperate with rest of Europe and its creditors. Their policy of claiming that Grecexit will destroy EU is not exactly cooperation. It is also very arrogant and haughty. After all except of its debts Greece has no economic significance for Europe at all. Also it’s pre crisis economic policy of creating so big economic mess that it will become a whole European problem, wasn’t very much about solidarity. Let’s take for example countries like Romania and Bulgaria. Their joint population is about 35 million. The infrastructure in this countries is in horrible state. Their GDP per capita is about half of Greece. Their standard of living is much below from all what the Greeks can imagine. I visited few years ago Romania, spoke there to a women, wife, mother of small children, academically educated, etc. To sustain her and her family’s life she had to wake up every morning at 4 o’clock, to walk 2 hours to the bus stop, to reach her working place at 7. She said in Romania that’s how it is, except maybe in Bucharest, where you have proper public transportation. And it wasn’t in some remote village, but in one of their urban regions close to the Hungarian border. I wonder how many Greeks remember this kind of reality, that few decades ago was probably very common in their country too. European solidarity is about to try to create decent life for all the Europeans and not for one kind of European on account of an other kind.

    Hubert Marcks July 25, 2015 at 10:27 said:

    My apologies for another lengthy rant. I just can’t help it.

    @ EugenR

    Of course our disagreement originates from our different views – and they differ greatly, if I might add.

    I don’t even know where to start. But let me try and make my point of view absolutely clear:

    First of all, the welfare state is not a pipe dream of luxury without responsibility conjured up by leftist romanticists – as today’s defenders of a minimal neoliberal state like to put it.
    It is the result of a long and often bloody struggle of the lower classes for more independence from the wealthy elites.
    It is (or rather: it used to be) also an essential part of european democracy because it enables all of its citizens, even those at the bottom end of society, to participate in social life and democratic processes without fear of losing the means to support themselves and their families at the whim of their capitalist employers.
    Dismantling the welfare state, as is happening all across Europe, be it rather slowly like in Germany or at ‘Blitzkrieg’-speed like in Greece, renders the ‘have-nots’ more and more powerless and – more importantly – diminishes their faith in a society that does not care for their fates, denies them equal opportunities to better their lives and does not wish for their voices to be heard.
    However, what is probably the most important part of an intentionally dysfunctional welfare state is the fact that it is being used as a threat to pressure the workforce into accepting lower wages in order to save themselves from having to join the ranks of the unemployed and become excluded from social life by lack of means to participate in it.

    Myopic neoclassical supply-side economists (like almost all of the german ones) usually welcome this development because in their universe – which is based on blind faith in mathematical models rather than on empirical evidence – low wages equals high competitiveness, which automatically leads to job creation and ultimately renders the welfare state irrelevant because the result is a society graced with full employment and optimal realization of market potential, where everybody has a job and earns a sustainable income determined by the great moderator that is the free (labour-) market.

    Back in the nineteen-sixties and seventies, when Keynesianism was still a viable alternative to neoliberalism (within a capitalist framework!) and not a derogative pinned on ‘leftist’ economists who refuse to accept an ideology as rational science, even among members of the German conservative Christian Democratic Union (Ms Merkel’s and Mr Schäuble’s Party) there existed a broad consensus about the necessity of the state to actively regulate the social economy.
    They realized that State intervention was inevitable in order to balance the tendency of a capitalist market economy to redistribute wealth from the bottom to the top against the need of a society to have decent standards of living for all its participants.
    They also understood that social security, unemployment benefits and a pension system worth its name are not just hand-outs for lazy people, but a macro-economic necessity to counter the negative effects of mass unemployment (which started to show in the seventies) on aggregate demand. In other words: poor people are very poor at being consumers or, to quote a famous capitalist: “Cars don’t buy cars.”

    Today, the welfare state is no longer accepted by (neoliberal) mainstream political economists as an integral part of democratic societies but rather treated as an annoying atavism, a relic of the past and a hindrance to economic success that responsible governments need to get rid of or shrink down to the lowest possible level in order to allow their national economies to become more ‘competitive’.
    In Germany, this change of attitude is not openly discussed but it is evident in the behavior of the ruling political class, their economic advisory boards and the representatives of major business associations (who usually employ the most important economic experts).
    It ist also going hand in hand with a slow but steady transformation from the ‘social market economy’ of the mid-twentieth century to a market society in which every aspect of human life is expected to be open for co-modification and human interactions are more and more treated like market transactions – which require sufficient funds for market participants in order to buy themselves a decent place in society.
    Consequently, the lower income class and the unemployed have already stopped caring for democratic decision making processes. At best, they have become indifferent to a society that does not care for them and they have lost their faith in democracy’s ability to change anything about that. As a consequence most of them do not even bother to vote any more.

    Those who refuse to succumb to (political) apathy often rally behind right-wing populist parties, conspiracy theorists and other demagogues who offer seemingly easy solutions to very complex problems. Those groups are also becoming increasingly efficient at making up threats like the alleged islamification of Germany, a growing ‘leftist’ Zeitgeist purportedly trying to turn god-faring, honest working, family-loving Germans into homosexual, bohemian atheists, or the imminent transformation of the EU into a Soviet-style communist(!) dictatorship. They are also very good at presenting scapegoats to their followers like greedy immigrants, a global conspiracy of (Zionist) bankers, the Euro itself or the US-government, providing them with a canvas to project all their frustration and hate onto.

    The elites are well aware of that phenomenon, but – completely lacking the will to acknowledge their failures or to make substantial changes to a running system that provides them with ever increasing profit rates – all they can do about it is set their own superior mechanisms of propaganda in motion in order to make up some scapegoats of their own, like the threat of globalized competition (i.e.: China), Islamic terrorism (so far non-existent in Germany), the evil expansionist empire of the sinister Czar in the east (highly debatable), or lazy irresponsible Greeks voting the wrong people (socialists) into office. They do this in order to at least placate the middle and upper middle class, rally them behind their cause and put the fear of god into them of losing their precious savings to the world’s moochers and ‘have-nots’, should they dare to disagree with the ruling classes and their grand plan to turn Europe into a technocrat minimal state ruled by the iron fist of the markets with business contracts substituting constitutions.

    Now, one could argue – and many have done so – that the idea of the welfare state as integral part of ‘western’ societies can no longer be afforded in the face of global competition.
    But for this argument to work, one must first accept the idea that market competition between nations – especially but not exclusively those sharing a common currency – is essentially a desirable thing, both socially and economically.
    One must also share the notion that democracy, equal opportunities, and social justice may be desirable things but that in order to keep the system running, hard choices must be made and beloved achievements of civilization must sometimes be sacrificed for the greater good. And one must ultimately agree that ‘the greater good’ which needs to be maintained at all costs is a socio-economic system that – to put it bluntly – takes from the poor and gives to the rich – not just in Greece, or Bulgaria, or even Germany but all across planet Earth.
    And that last blunt statement is an empirical fact, not a mathematical theory.

    So, yes. My point of view seems to be very different from yours.

    Hubert Marckson July 25, 2015 at 11:41 said:

    @ EugenR

    And while I’m at it:

    Comparing eastern European countries to Greece as a justification for the austerity programs is probably one of the most cynical arguments one could come up with.

    I have heard this comparison being made buy countless German politicians, journalists and even ordinary people on the street many times over and it is a prime example for the disturbing efficiency of the European elites’ propaganda campaign against Greece and its leftist government.
    Have we really sunk so low as to pick the countries with the lowest possible living standards, the most miserable social security system, the worst overall level of education and most insufficient infrastructure and take that as a reference for what people in Greece, or anywhere in the Eurozone (except the surplus countries, of course), have to come down to in order to become ‘competitive’ by serving as a cheap labor force for the north-western exporting industry?

    Don’t get me wrong here. What is happening in eastern Europe is a crying shame, there is no doubt about it. But it is not the greek people who are to blame for this mess and further cutting of their wages, pensions and health insurance and raising consumer taxes will not improve the average Romanian’s standard of living one bit. And selling off state’s assets that still generate at least some kind of revenue at fair sale prices will neither improve the Greek government’s long-term income situation nor will it help to improve the infrastructure of Bulgaria or any other eastern European country.

    On the contrary, the one effect this will definitely have on eastern Europe is that it will make absolutely clear that any attempt to demand a more just distribution of wealth in those countries will be absolutely futile and incite harsh punishment from the powers that be.
    Any political movement from the Baltic to the Adriatic Sea that would dare to even discuss alternatives that might benefit the general public instead of the corrupt elites who enrich themselves by renting their workforce out to German corporations at minimum wages like modern-age slaves, is being nipped in the bud.

    But what do we do? We do not show solidarity with the people who are desperately trying to gain at least a little emancipation from a corrupt and in-humane social-economic system and from the elites that this system helps to keep in power. We do not see their struggle as an example for others to follow – especially in eastern Europe.
    Instead, we turn their claim to maintain decent standards of living into a sense of false entitlement, parroting the propaganda of the ruling class.

    EugenR July 25, 2015 at 12:21 said:

     

    Dear Hubert, I understand your frustration about the social and political trends in Europe, and not only in Europe. This process you so correctly describe, I would call process of dispossessing bigger and bigger parts of the European society, started with the globalization, that from European point of view it brought disruption into the long established social contract, but from the global point of view it brought worldwide new population out of poverty, mainly in China and India. So maybe what we see in front of us is the long waited redistribution of the wealth between highly developed and underdeveloped countries. If the assumption of limited world resources is right as I believe it is then the alternative to redistribution of wealth is enrichment of Europe, US, Japan etc. and farther impoverishment of the underdeveloped world. You could see what happens to these countries. All the political violence we see in certain Muslim and African countries is the result of it. And also the waves of desperate refugees flooding to Europe, process that can be destructive to Europe and cause farther underlining of the social and political problems, you so well describe in your comment.
    Last years this process of transfer and spreading the world economical wealth slowed down, and started a new economic process of introduction of new technologies, that will makes new and even highly professional employments irrelevant. This process will be probably even more painful than the previous one.
    As to the situation in Eastern Europe versus Greece, your claim is that this are separated issues. I disagree. To my view when the Greek plutocracy borrowed unscrupulously to enrich themselves, these financial sources could be used for improving the situation in Eastern Europe, and not be used to purchase Mercedeses and Porsches.

    EugenR July 25, 2015 at 14:34 said:

    Dear Hubert, I was in flight, and before I replied with a not revised version of my response. Sorry for that. I understand your frustration about the social and political trends in Europe, and not only in Europe. This process you so correctly describe, I would call process of dispossessing bigger and bigger parts of the European society. This started with the globalization, that from European point of view it brought disruption into the long established social contract. But from the global point of view it brought worldwide new population out of poverty, mainly in China and India. So maybe what we see is the long waited redistribution of the wealth between highly developed and underdeveloped countries. If you believe as I believe, that the assumption of limited world resources is right, then the alternative to redistribution of wealth is enrichment of Europe, US, Japan etc. and farther impoverishment of the underdeveloped world. You could see what happens to these countries if they are impoverished. All the political violance we see in Muslim and African countries is the result of it. Also the waves of desperate refugees flooding to Europe, process that can be very destructive to Europe as you mention, disrupting the existing democratic fabric. It even more deepens the problem of breaking the existing social contract. There is real danger that it will cause farther undermining of the social and political framework in Europe, you so well describe in your comment.
    In the last years this process of transfer and spreading globally the world economical wealth slowed down, and started a new economic process of introduction of new technologies, that will make more and more, even highly professional employment jobs irrelevant. This process will be probably even more painful than the previous one.
    As to the situation in Eastern Europe versus Greece, your claim is that this are separate issues. I disagree. To my view when the Greek plutocracy borrowed unscrupulously, to enrich themselves, these financial sources could be used instead to improve the situation in Eastern Europe, and not be used “to purchase Mercedesess and Porsches”. I do agree with you, that the Greek people shouldn’t be punished because of what have been done by their elites. As to the politicians who caused this tragedy, it would be just right to punish them. But it seems, there are people who are above the law, or better said there are certain obviously unethical acts of the ruling elites that are above the law. You yourself mentioned the Nazis, who were not punished. It is again the same case. There is no justice for those abused by political abusers, even if they are cruel murderers. Actually only one case lately I remember, when the Israeli president was jailed for molesting his secretaries. I wonder how will end Berlusconi etc.
    But back to Greece, I would suggest to look rather into the Greek economic future, than into its past. As I already expressed my opinion in my blog, macroeconomics is not only about aggregate demand and supply, GDP, income distribution, public deficit, etc. These economic values are just result of social and political structures, that create the economic activities. To explain my idea I would use an example from ancient Greeks and Rome, that had technical know-how probably in much higher level in many fields than Europe of beginning of nineteenth century. And yet, economically it was not developed at all. Some say because of the slavery, that prevented to create productive social networking. It had no banking system, no developed international commerce out of the Roman empire, no mass-production industries, etc. All this was invented and established in Europe out if necessity.
    It seems to me Greece’s social and political structure is in some way fundamentally wrong. If there will not be created a necessity to Greece to make such a fundamental change, it will never happen, because it hurts to make such a change. But what is the alternative? To remain all the time the underdog of Germany?

    Hubert Marcks July 25, 2015 at 13:37 said:

    @ EugenR

    I agree with your assumption that global resources are not limitless and I also think that the world outside of the industrialized ‘western’ nations has every right to get their fair share of the profits generated through the use those resources.
    However, firstly, one cannot deny the fact that the new-found wealth in developing and emerging countries is mainly concentrated on a small elite. The majority of Chinese, Indian, or Brazilian workers serves as nothing but fuel for the profit generating machine that is global capitalism. Judging the wealth of nations solely by their GDP does not tell us anything about whether or not the majority of inhabitants of these nations really sees the enrichment of their ruling elites as an improvement of their own quality of living. I doubt that under-age girls in Bangladesh working under horrible conditions for the mass manufacturing of textile products for western markets, consider their newly found life as expendable human resources as an improvement, just to name an example.
    Besides, I have yet to hear about a credible source of statistics for any of these countries, really providing the same level of detailed demographical and sociological data we have in the ‘western world’ with its long tradition of record-keeping and its obsession with bureaucracy. And even our own statistics are often faulty and constantly being misinterpreted, doctored, or simply faked by all kinds of interest groups (including leftist ones) and used to underline completely contrary positions. So I find all that praise about the positive impacts of globalized capitalism on the societies of the developing world at least debatable.

    But even if that were the case and if indented servitude, forced labour, the lack of unions, worker’s rights or any form of workplace protection was something that people in the developing world were accepting as necessary hardships on their way to prosperity, there is simply no way that the western elites will let them become truly independent economic forces of their own. Because our elites know full well that they would not be able to maintain their profit margins if there was real competition and if something like a ‘free globalized market’ would actually exist. Instead they support and make deals with Kings and Dictators and even ‘communist’ regimes like the Chinese one, or they invent complicated trade agreements like TTIP or CETA, all to ensure that the freedom of the industrialized world to exploit the rest of the planet as they please is not seriously impeded by those lower down the food chain.

    I absolutely believe that it would be theoretically possible to distribute the wealth of this world a lot more equally among all nations – not just those of the ‘first’ world. But I absolutely do not believe that capitalism can provide such a wondrous feat. Capitalism is the rule of those who already have the means to rule and they can never stop accumulating more of those means or they will lose their power. It is not about equal opportunities for all.

    P.S.: I really fail to see how the Greek plutocracy enriching themselves by borrowing money could have had any impact on the situation in eastern Europe. It’s not like there was only a limited supply of money in the Eurozone and because the Greeks took so much of it there was nothing left to invest in the east. It’s fiat money, it only exists because someone has borrowed it from a bank somewhere.

    EugenR July 25, 2015 at 15:01 said:

    I will start with the easy one. As banking system works, they have as any profits generating institution a goal to achieve. It was just easy to achieve this goal by “profits”, out of “secure” loans to Greece government. Why to bother then to find new markets for borrowings in the “risky” east European markets. From personal knowledge, the only banks who were ready to finance new privet investments in these countries were the small Austrian banks, that were geographically close. To my knowledge most of them had done well, until they entered the risky Russian market.
    As to the problem of capitalism etc. I myself wrote about the problem, that the capitalism, driven by need for ever higher yield, and the need to pay interest, has no model to solve the major long term economic problems, like environment and more evenly distributed wealth. So the solution should be a different economic system. I have some ideas about some directions, but not good enough for publishing it.

    Hubert Marcks Jly 25, 2015 at 17:07 said:

    Dear EugenR,

    I’m sorry to drag this out so much but I feel a need to point out a major flaw in your whole argument.

    You wrote:
    “It seems to me Greeces social and political structure is in some way fundamentally wrong. If there will not be created a necessity to Greece to make such a fundamental change, it will never happen, because it hurts to make such a change. But what is the alternative? To remain all the time the underdog of Germany?”

    So I have to ask: What do you think it would take to create an appropriately urgent ‘necessity’ for Greek society to make those hurtful changes? And, furthermore, are you really implying that the Greek people have not suffered enough?

    I would like to give you the benefit of a doubt and not accuse you of purposefully following the Troika’s propaganda lines, but I’m afraid that is exactly what you’re doing

    1. a) by insinuating that either the Greeks have simply not yet realized that they really are in dire straits and therefore need to be told to do their homework again and again, or that they do realize it but stubbornly refuse to take responsibility for making significant changes and
    2. b) by approaching a social and political problem via the typical neoliberal paradigm that only given the right economic incentives can people be made to act responsibly and that any leniency given them by their overseers will result in them falling back to irrational, self-destructive behaviour.

    I wonder: why is it so hard to understand that by voting for Syriza – who have made it clear from the very beginning that things needed to be changed significantly – back in January, the greek people have already voted for change?
    That they have been denied the right to decide the nature of that change does not change the fact that a majority of them have already realized the ‘necessity’ for it. Actually it is the merry band of Doc Schäuble & the Friends of Austerity who are in complete denial about the necessity for a fundamental change in the way they think this whole European project ought to be run.

    I find it curious how you can criticize capitalism and at the same time align yourself with its staunchest supporters by using their arguments against Greece.

    As for the banking system and how it works – you are right, banks are profit generating institutions. They are also mostly free enterprises who can choose whichever way they want to achieve that goal. Buying ‘secure’ Greek government bonds instead of financing Bulgarian infrastructure projects was a business decision they made and not something they were forced to do by the corrupt Greek oligarchy. It also enabled them to deposit those bonds as collateral with the ECB and borrow even more cheap money from it, which they could just as well have used to invest in Romanian Autobahns rather than to buy ‘secure’ asset backed securities, credit default swaps, collateralized debt obligations – you name it – from Lehman Brothers or any other one of those banks that were still awarded triple A ratings right until the very moment they almost crashed under the weight of all their toxic papers.

    You can certainly blame the previous Greek governments for having doctored their numbers to swindle themselves into the monetary union and to gain access to cheap ECB money, you could also blame Goldman Sachs et.al. for helping them do it and the rest of the Eurozone governments for knowing exactly what was going on and still sweeping it under the rug in order to expand the currency union – foolishly believing that this would promote European integration.
    You cannot take all that blame, forge it into a giant sledgehammer and use it to crush a democratically elected government who had nothing to do with all of this.

    p.s.: Concerning the involvement of Austrian banks with investments in eastern Europe, please google: Hypo Alpe Adria.

    EugenR July 25, 2015 at 20:23 said:

    Dear Hubert, I representing only myself and my intellectual and professional understanding as an Economist in all my assays. To your questions.
    When the Greek people suffering will be satisfactory to change some fundamentals, my answer is right now, since in these days Mr. Tsipras, the most radical opposer of European dictatum decided to except them. I hope the Europeans, including the Germans will understand what such a move means to Mr. Tsipras and the Greek people and will find the resources to help Greece out when restructuring their economy. It will give also a signal to others who my need help in the future, that problems are to be solved with cooperation and not with conflict.
    When I spoke about social-economic structures, I meant the economic networking, that is essential part of well functioning modern economy. This networking is not based on regulations and restrictions, but rather on creative social interaction. Out of this networking will rise the leading elites, who are not only looking for personal gain, but to take social responsibilities too. All this can’t be created, when institutionally it is suffocated by political structures. In the modern economy only those who have creativity can be successful. To endorse creativity you need to have competitive environment and political and economic freedom. No workers union is supporting this. Still I am against the impoverishment of the working middle class. Its thrive is essential to well functioning modern society. Ways have to be found how to eat the cake and leave it whole. It’s not easy but there are tools to do it.
    As to my opposition to capitalistic system, this forum is not exactly the place to write about it, mainly because my ideas are not fully developed. Probably a face to face discussion could be a better way, and if you are ready for the challenge, why not.

    Money, deficit and some more

    The economists under suspicious supervision of politicians discovered during the twenties century the connection between government debts and the Money. This understanding enabled the historical decision of the Nixon era to disconnect the US Dollar from its golden foundation. Since then money lost its value as expression of a commodity value, and rather became a central tool for economic policy.

    Money has in principle two economic functions. The first is to be a scale measuring relative value of items created and marketed among the people, and the second, to be a security for keeping and if possible with small addition the purchase power value for the future. The cumulative value of money ownership exchange , or the aggregative value  of money flow by definition have to be equivalent to the aggregative product value flow. (products include services and merchandise, what in its potentiality can be  consumed or thrown to the dust bin, like all the Christmas presents:). So the manipulation with the value of the money flow is crucial for economic activity volume. If the potential capacity of the economy is overflowed by the money flow value, necessarily the product prices will grow, or inflation will happen. To influence the value of money flow in the economy the government can increase or decrease the budget deficit, and by that increase or decrease its aggregative debt. The more flexible way to influence the value of money flow in the economy is by monetary policy its major instrument is interest rate in the economy, that influences the volume of investments and the tendency to consume now or postpone the  consumption for the future.

    Traditionally it was excepted that the interest rate is major tool to influence economic activity, so when the bust came at 2008 the interest rate was flatted in the US and Europe, hoping that it will cause a substantial increase in the demand for consumption, and in parallel  inflation, that would decrease the real value of the debts, the governments, corporations, banks and private households have, and with it the economy will return to equilibrium of economic growth. But it didn’t happen and it is a big question why. To my opinion the answer is in several issues. The first is the increased life expectancy of the people, whose savings in long term pension funds was planned for a shorter life expectancy, so in principle they are in deficit. To overcome this deficit, people in pension age or close to it, the fastest growing population sector in the world, increased their savings. Add to it the debt shock of the private households, that emerged with the 2008 economic crisis, and degradation of the middle class income, that damaged the income of the largest part of the population and you have a perfect explanation why there is no increased demand for consumption and with it inflation, even if the Government debt and with it the potential money in the economy grew with no precedent.

    I understand the fear of most of the people from the future developments, when the mountains of money accumulated because of the government deficit will suddenly flood the economy. It may happen, and it will be damaging mainly to those who hold their savings in some form of savings. Sorry the pensioners again. But this problem can be solved, if the government will take responsibility to this sector of the society. It will be just, politically popular, and with very little impact on the  economy. After all what will be the occupation of most of the people in the future, when the AI and the robotics will take over the production of merchandise and services?  Taking care of the elderly population, who need human touch, what the robots still can’t provide.

    Other phenomenon i would like to mention is the changing position, function and attribute of money with relation to the economy.  If historically with the industrialization and urbanization of the world population,  growing parts of economy introduced money exchange in almost every economic activity, (no self produced consumers items as in the pre-modern  agrarian societies), this trend goes thru sudden dramatic change. Today many products are purchased on the internet without or with very little payment, sometime donations. Other phenomenon is possibility of investments into self producing energy equipment, with the new efficiency of battery and photovoltaic cells, etc.

    I would add one more issue, the money with no government influence, as bit-coin, that by now is marginal but in growing trend, threatens the very foundations of the existing monetary system, based on government monopoly on the money creation.

    My conclusion; To see the accumulated government deficit as the major macroeconomic problem, the US and the world leaders have to cope with is a very narrow view.

    I am aware that this simple model i described doesn’t take in account the influence of the ex-national territory influences on the money flow and money variables as interest rate  and the economic activity of the products, still i believe it gives reasonable picture about the connection between the government deficit and the economy.

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