27 thoughts on “Monday Message Board

  1. Well if they were to access futures or shares than we would call the funds DRAWINGS and tax them at the income tax rate. The point is that our financial system is utterly useless. The more fancy “innovative” and sophisticated it has become the less effective it has become at producing wealth. Hence the weak labour markets in the Western world since the 70’s, and in Australia since the 80’s.

    Yes you were silly. Because you got confused between an accounting function and the real world. If you subscribe for shares directly the company could use this for money to invest in real estate, it could use it to fandangle a greater part of the fractional reserve interest rate subsidy. It could use it to pay higher executive salaries. It could use it to buy back shares. It could use it to pay higher executive salaries as part of automatic rewards that kicked in when the share price increased as a result of buying back shares. Each step you go further away from PRISTINE SAVINGS the less plausible is the wealth creation story behind what we are calling here an investment.

    A well-made loan is one that takes an existing cash-flow and makes it bigger, at least prior to the repayment of that loan. Either you are buying producer goods, to reduce costs or increase revenues, or in a more general way you are renovating the business in order to do so. So the key to this sort of loan is that it builds cash flow and therefore it can be paid back quickly.

    The “best” if best means “the most carefully constructed from a logical perspective” … the best economic models that we have from Ricardo to Mises and onwards, implicitly suggest that all investments are wealth creating. They act as if every new debt increases the stock of producer goods. In other words our best economic models are a white-wash for usury. In reality most usury is highly destructive of wealth. Riccardo, Mises, Reisman Rothbard et al never claim that all debt is used to create wealth. But the conclusions they make are AS IF this were the case. We can take their implied fantasy and make it real like the South Korean dictator of the 1970’s did. Or we can admit that most investments are crap from a wealth creation point of view.

    There was a time where most investments were wealth creating. That was after the economy was just beginning to recover after having a horrendous credit crunch under fractional reserve gold. During some part of the upswing the chastened population would have only been making wealth creating investments for the most part. In the US the mid-80’s would have been a bit like this, just after the worst part of the Volker crunch and prior to the real estate market kicking up again.

    But for the most part these models, the very best models we have, whitewash extreme banker and capital markets dysfunction. They act as though compound interest was the saviour of the species rather than a curse on humanity. And I say this even while recognising that some small measure of usury may be needed to grease the wheels.

  2. More on Indian coal. I’ve checked the table of coal generation capacity under active construction on Coal Plant Tracker, with data for July 2017, against a list of “troubled” (suspended) projects at Sourcewatch, as of December 2017. (****sourcewatch.org/index.php/Troubled_Indian_Coal_Plant_Construction_Sites). The latter is based on monthly status reports from the government’s Ministry of Power.

    I found four plants totalling 3,705 MW in the second and not the first list (Athena Chhattisgarh, Gadarwara, KSK Mahanadi, and Tuticorin). So the pipeline is now at most 39.1 GW. I’d expected faster progress, but we are now two months further on into Modi’s renewable revolution, and I’d be surprised if another couple of gigawatts of coal has not been consigned to the Hindu equivalent of Limbo.

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