DJP
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“I agree with YMS, it should always be a return to class struggle.”
Despite their apparent esoteric appeal discussions about how finance, money creation and inflation work are of importance to the class struggle. They form part of the answer to the question “Why not reformism?”
“Can someone please explain how it is affecting the present cost of living crisis in the simplest of language?”
I don’t think the current cost of living crisis is actually caused by the kind of “inflation” we are talking about here (a fall in the value of money) but by something else, namely rises in the international price of gas and oil and basic foodstuffs which has been caused by various geo-political conflicts.
In common parlance “inflation” is used to describe any rise in prices, but we are talking about something more specific here.
FWIW The latest Michael Roberts blog post is on this topic too. It has a graph of US M2 and CPI growth compared. A lot of it seems to be talking about ‘inflation’ in terms of general price rises, rather than a loss in the value of money though – which may not necessarily be the same thing. But I guess as you cannot observe the value of money directly, we are stuck with using things like the CPI as a metric.
In one of my previous posts I said “Eventually, the total sums of credits and debits will have to match each other.” – On reflection, this ‘eventually’ is only a theoretical reference. In reality, the process never ends the ‘eventually’ never comes. New deposits and loans are continually being made and paid off.
All that a credit does is move a date of payment into the future. And, ‘in the end’ (which may not ever come) payments cannot be put off by seeking further credit indefinitely. Credit money speeds the circulation of commodities, so isn’t what we are dealing with here an increase in the velocity of money rather than a decrease in the value of it? Or is there some relation between the two?
If purchasing power (the ability to circulate commodities) is something created by banks issuing credit (possibly it is), how is this different to value and what is the relationship between the two?
“This quote from the Bundesbank paper is not stating that banks must immediately seek to cover the full value of a loan”
Maybe I’ve been missing the point, but I never thought that any of the SPGB texts suggested that banks must *immediately* do this? Nobody has been claiming this, or that banks must have 100% reserves. Have they?
Is the confusion because a process that happens across time, has been described using words that make it seem like it is something that happens in an instant?
“You are assuming throughout that all ability to pay or spending power is money, by which you mean central bank money.”
I don’t think that’s a correct reading of what is being said. Purchasing power is the ability to purchase something – it could be represented by either central bank money or credit money (i.e a deposit created by a loan). The important thing to think about is what can cause an increase in the aggregate total of it.
As far as I understand it, deposits created by loans do not represent an increase in the total amount of purchasing power in an economy – since all credits and all debits cannot be spent at the same time. The fact that there is more than one commercial bank and banks can and do borrow from each other doesn’t change this.
“promises to pay create ability to pay.” I wonder if “create” is the right word here? A debt is a promise to pay. And money I receive as credit can be spent – this is true, but it is not something that can expand infinitely. Eventually, the total sums of credits and debits will have to match each other. In the end, it is the deposits of central bank money that create the ability.
“Thus, an increase in credit volumes does not directly translate to a proportional devaluation of money, in the sense of a simple quantity mismatch: more money confronting the same heap of commodities, but this increased credit volume may be the fundamental reason for an increased heap of commodities.”
So they are saying that “more money confronting the same heap of commodities” does not directly lead to a fall in the value of money? What about indirectly, whatever that may mean?
“The rate of inflation is thus explained by the motley competition of capitals for solvent demand and credit and how quickly they turn this credit into additional commodities.”
So quick turning of credit into more commodities produces more or less inflation than a slow one? I can’t make sense of this in light of the first claim.
Edit: Seems to me they are subscribing to two things at once, what is called the “Bank-deposit Theory of Prices” and “Marx’s quantity” theory. But I could be misunderstanding. http://www.marxists.org/archive/hardcastle/1983/marxmonetarist.htm
“Why are the French not having to pay exorbitantly?”
Because the state has subsidised the difference.
Nobody understands Lbirdianism, because it’s self-contradictory and inconsistent.
Surely you’ve heard the phrase “turtles all the way down”?
I was just adapting this in reflection of bird brain’s comment about humans being the ancestor of humans.
“Where did humans come from”
It’s humans all the way down.
Evolutionary biology is capitalist ideology as it contradicts the supreme proletarian teachings on LBirdian idealism-materialism.
From the article above:
“Using the formulae found in Samuel Glasstone and Philip Dolan’s The Effects of Nuclear Weapons, some interesting results present themselves. First, if the Russians were to detonate their 10-kiloton nuclear weapon at a height of burst 587.6 feet above ground level, the ensuing fireball would not reach the ground. Thus, this “fallout free” detonation would not create the nuclear fallout zone that many Americans think results from a nuclear detonation. It would essentially result in a “clean” detonation.”
If this is true it cancels my previous comment about fallout being a reason for Russia to not use nukes.
I think in some older texts “spirit” is used more like we might use “consciousness” or “mind”. Hegel’s “Phenomenology of Spirit” isn’t about disembodied souls for example.
But anyone can use whatever words they like, the more important question is which ones are more likely to be misunderstood.
Watched a video last night and it made the point that if Russia was to use nuclear weapons in the Ukrainian conflict they would literally be shooting themselves in the foot since the nuclear fallout would be blown back all over Russia. Sounds correct.
