Alright, so Germany has now introduced a zero interest bond. That means, given inflation, people will get back less effective money than they started with.
At this point, outside the US, the average interest rate is negative.
That means that capitalists and banks, including central banks, have failed. It is their function, in a capitalist society, to allocate resources. Money represents resources: people, stuff, and land.
Now if we lived in a utopia, with no real problems, this would make sense, but we don’t. There are tons of real problems which need solving, lots of money floating around, and other capacity indicators show there are people and resources which are not being used, or which could be redeployed.
So capitalism is failing to do what it’s supposed to do, and so are capitalists.
The correct action in a situation like this is to get that money working. The government could borrow it massively, and do what needs to be done. It could (and I would suggest this is the better option) tax it away, and then spend it.
If capitalists absolutely insist on private enterprise doing the work, then they should massively raise taxes on any income or capital gains not used productively, and not count less productive things like loans–they should stipulate that the money must be invested into business activity. They should make stock option grants, stock buy-backs, and all similar activities intended to allow cash-outs impossible. They should get rid of private equity; just make it illegal. Almost all of its activity destroys viable business to create a pay day for a few people.
Heck, you should do away with all those things anyway.
People are very confused about profit. Profit is mostly socially constructed. It is not an independent variable. Taxes, laws, and regulations determine what is profitable and what isn’t. Billions of subsidies, tax breaks, and favorable land deals make extraction industries profitable, for example. Banks get to print money. Media companies like Disney rely on characters and ideas which, in the past, they would long have lost control over. Companies are allowed to pollute for free, to use vast amounts of water for nominal prices, and so on.
Meanwhile, a vast array of regulations and nickel and dime costs makes it impossible for small business to compete. Try starting a bank. Yeah, good luck with that.
This, too, is by design. Before Reagan, regulations were set up to make small businesses easier to start and keep running.
The point is that if investors can’t find anything in which to invest, government has failed to tweak profits correctly. You shouldn’t get rich in land speculation unless you’re building stuff that should be built. You should get rich in alternative energy, but mostly you don’t. You should get rich in making homes that are healthy and energy neutral, but instead we keep building unhealthy and environmentally-degrading housing.
You should make money rebuilding infrastructure, or building high speed trains, or reducing carbon, or reforesting, or making fish and phytoplankton stocks recover.
Yet, you don’t, so these things which need to be done in order to, like, avoid a few billion deaths, don’t get done.
That’s government failure.
Capitalism does not work without effective government control, if it is the dominant economic mode in a society.
So. We have lots of stuff that needs to be done. We have lots of resources and money which aren’t doing those things and, indeed, resources and money which apparently can’t find anything to do
Only a moron can’t look at those facts and know what to do.
Oh, and the 2008/9 bailouts made this situation far, far worse than it should have been. This endless printing of money is only to keep the useless rich afloat when they serve no useful, productive function. They are actually counterproductive, as they are actively stopping productive activity from happening.
Tax them. Stop propping them up and let incompetents die. Destroy, utterly, those members of the ruling class who are actively destructive, like Private Equity. Alter the rules so that productive activity is profitable, and while you’re doing all that, just have governments do the most important stuff themselves, with negative real interest rate loans.
None of this isn’t obvious to anyone who pays any attention.
Yet we don’t do it, because governments have been captured by failed rich people.
Normal. But not acceptable when the cost of inaction could be billions of dead people.
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We live in a stupid, perverse world where people don’t understand that there has to be a balance between debtors and creditors. Creditors are making a bet, and if they lend to the wrong entity, and that entity eventually can’t pay back the debt, they should have to eat their losses. Don’t lend to people who can’t pay you back. Everyone knew that Argentina was going to have debt problems, every time, but they took the chance because they wanted high returns.
Turkey has NATO’s second largest army.
People like Pinker have been trotting out stats to claim that we’ve never been better off. Those stats are questionable, based on a definition of poverty that is beyond questionable. Meanwhile, in India, people eat less calories than they did 30 years ago. (I traveled in India and lived in Bangladesh 30 years or so ago. Eating less calories is unimaginably bad. That a small middle class and a new wealthy class has been created means little to those eating… less.)
Matt was one of the writers at BOPNews, in what seems like a long time ago now. He also wrote for MyDD for years. After that he, among other things, spent time on the Hill as a Congressional aide, to learn how politics and governance actually works.