Debt: The Good, the Bad and the Ugly

2013, Economics  -   53 Comments
Ratings: 7.90/10 from 86 users.

You may think that money is invented to make exchange easier. You could imagine that at some point in prehistory. A hunter just shot a deer and a farmer has some carrots and they want to exchange but the meat is worth much more than the carrots. They need to invent something to pay each other the difference. In this story, that's something would be money, be it in the form of shells or lumps of gold or silver or whatever.

Later in the story, banks would appear to store the money and to lend out money from people who have too much money, who are the savers, to those who have too little money, the investors. That's when credit and debt systems appeared. Money came first and then credit and debt in this story. The problem with this story is it may sound plausible, but there is very little historical or archeological evidence for it, plus it has some logical problems.

There's a lot evidence and arguments to believe that debt came first and money later when people started to use their debt tokens, their debt symbols as money. Now, why would this be the case? In the first place, it would be logical because of seasonal production. In Asian societies dependent on seasonal production, food and other products come onto the market at different times of the year. The farmer perhaps has not yet harvested the carrots while the hunter already shot the deer with no fridge to keep it in. What do they do? The farmer accepts the meat now on the promise that he will pay the carrots later as they come available. At this moment, the farmer has accepted a debt, which is a promise to pay the hunter in the future.

Here, we have a relation between a creditor and a debtor. Now, with more people than just these two in anyone's society and with different products, you can imagine you quickly get a complex web of credit relations. Also, each debt contracts may have a lot of detail, not only how much is owed but also when it needs repaying, in what form, what the interest is and so on. For all these, you will need a system to record it.

The upstart is as soon as you had specialization of production with different people producing different things at different times of the year, then you need to record credit and debt, what we now call double entry bookkeeping. Albert Einstein seems to have said that, "Humanity made three great inventions in prehistory: fire, the wheel and double-entry bookkeeping."

Now, this is all really interesting but how does money come in and why do we need to know all these. Money is simply debt symbols, debt tokens which are used as payments. After all, a debt is a claim on future goods and services as we just saw. It's really worth something and that means you can pay with it. Let's say the debt is written on a clay tablet. The hunter can now use the tablets to pay somewhere else like a fisherman.

As the debt tokens are moved out that particular trading relationship, there will also be the need for some external authority to assert their value, like kings or chiefs proclaiming the value of money. This also opens up the possibility of central clearing, which greatly simplifies things.

More great documentaries

53 Comments / User Reviews

Leave a Reply to Zen Cancel reply

  1. Zen

    This is somewhat informative. However it is quite a bit skewed. First the trade in the old day were done on a local basis, most of the community lived and hunted together in a form of (co-operative) living. Second when the times came for a "broad trade" the need for some type of money was created by the "Merchants" higher class (you can call them the early bankers with connections to the local rulers). One needs to look at the "North American Natives" and their lives prior to the "White Man". See how they did live and trade. So this bull about the money and "debt". This is another conditioning of the masses telling us that it is "OK" to be in "debt" because it was before the "money". What a CRAP. Apologies for the ranting, but this prof is full of it, must have been getting quite a bit of $$$$ to pay of his debt. We would have not being in pre-history because, you can not stop evolution ass$$le.

  2. Soren Dahse

    This video smells. He does come up with good explanations, but sometimes he doesnt go all the way. YES banks and economy have always have some of the same structures, but you cant compare our mega consumer economy today with thousands of years ago. And a lot of people know these things, but why doesnt anyone ever question it to make it better. Its like everything in the world has to evolve, except the infrastructure

  3. Mario

    the real question is, WHO decides who is the bank and WHO decides who gets the loan ?
    The system is still s*upid because it allows favoring a group of people over another, and as we know it today, that group of people own almost everything while us normal ones are suffering for enough food.

  4. 909994

    The government, releasing into circulation and spending money for their needs, or lending (through invest banks), increasing inflation thereby. Paying for it ordinary consumer. Inflation rate put into the the mortgage payments in the bank.

  5. Greg R.

    A fairly good documentary but it focuses too much on the housing sector. The issue is debt trap, period. It doesn't matter who you are or how much you earn. This minimum payment trap has been sprung on post secondary students with credit card booths during the first week of classes (before they even own a house) all the way up to your country's government. The "set it and forget it" debt trap drains our economy more than anything else. All earned income is diverted toward old debt, leaving no money for the purchase of new goods and services. The only way out of this crisis is to break this trap. Governments now could easily regulate a maximum profit from debt. For example, the most any lender can make off any debt is 200%, once that level is reached all future payments must go directly towards the principle debt. This way the banks still make a profit but people get out of old debt faster, freeing themselves to make purchases on new goods and services.

    1. Dennis Weglehner

      They only used the housing sector as a example as it was relevant for the recent crisis. They then went on to give further examples of historic debt bubbles.

      Obviously debt spent on mindless consumption will have a similar effect as debt spent on a false investment. The end product is debt with no value. But at least the money that gets spent on mindless consumption goes somewhere into the economy rather that just disappearing totally. (unless its all spent on international products which is increasing the case).

      The point I took from the series was speculative debt (housing, shares, tulips, whatever) is bad and that debt which serves to increase production and wages is acceptable.

      When all our earnings go to serve speculative debts bubbles we can not afford to spend in areas which actually benefit the economy. The end result being a debt imbalance which leads to recession.

      Speculative debt bubbles are a product of the way our economy is run. Whereby a positive feedback loop is initiated just by people borrowing to buy an over inflated asset. This is the "boom".

      The borrowing and buying leads to ill perceived increases in the value of an asset which perpetuates until people are no longer able to replay the loans. The following thing to occur is a negative feedback loop where the assets are sold at ever reduced prices to pay back the over inflated debts. This is the "bust".

      This cycle is an inherent part (flaw) of the way this system works. Its not only the regulators fault for allowing and encouraging this to happen. Every person who contributed in trying to get rich quick by buying into over inflated assets is also to blame. Along with compulsive spenders that use debt to buy worthless products where the profits go overseas.

      That's my take on the doco anyway with my added opinion on mindless consumption debt.

    2. Greg R.

      The problem I see here is the attempt to split debt into two different categories (Good and Bad). As they say hindsight is 20/20. No bank can predict with absolute certainty the outcome of a business loan ("Good debt"). To add to this banks have been supplementing the economy with credit. You could technically have a "Good debt" business (as per this documentary) that's creating wealth, but relies 100% on consumers using Bad Debt (unearned money e.g. credit cards) for profit. That's a big problem that was skipped over in this documentary.

    3. Dennis Weglehner

      I agree. But I certainly think that the "bad debt" concept for speculative loans really is bad every time. As you pointed out the docos version of "good debt" can be bad, but does not have to be. I don't buy anything on credit, and subsequently have more money to spend on consumer items compared to if I lead a life of debt fueled spending. They did mention wasteful consumerism. But it would have been good if they touched on this more in the doco.

  6. Lenny Tizaul

    Is debt as "a great invention" sarcasm?

    So did this guy host and narrate the follow-up documentaries: "Radiation: Good for? Your Health!" and "Herpes and HIV - A Gift of Love!"?

  7. Snoop

    The narrator has taken what would probably be taught in a full semester of economics 101 and condensed it into a 45 minute video.
    After reading the comments, I realize that the concepts discussed are over the heads of many of the commentators. Please watch a second time before posting.

  8. Lastviewer

    Just as if the currencies were emited & under the scrutiny of governments... Not a word about that in that docu....
    For the least, both in the US & UK, the government borrows from corporates.And surprise, those corporates charge a huge fee to emit currency they never earned.
    Anybody who'd try to straiten that out would be shot before sitting in any parliement, or while exerting office.
    Sort of a maffia since human being live in society.
    If a man is of good will, you ain't gonna see him in any parliement.
    In any events, what this docu prove is that money is a big farce!

  9. Michael Brown

    Some thoughts.

    The guy says as soon as specialized labor was developed then these "debt credits" became very useful.

    pre-mathematic, pre-commoner written language horticulturalist
    societies were writing detailed tablets about debt? Did they have 3rd
    party trusted translators to relay the information on these tablets? Or
    perhaps they ran around the village continuously with these
    stone-written-contracts to hopefully encounter the person who finally
    ends up holding their debt?

    What a fantasy explanation that
    there's not much historical evidence for commodity-based money. Various
    cultures that used shells, gold, , grain, dried fish, gems, and more
    all used commodity-based currency.

    The guy says that without debt there can be no economic growth / development. Total BS.....

    Even in a closed system like the board game "Monopoly" money is backed by commodities. It's possible to grow an empire based by the exchange of money, and the money used to purchase assets.

    Just silly.

    1. Mathew Scannell

      actually the very first examples of written language are just that, loads and loads of tablets detailing exchange of comodities and also debt. no poetry or stories just bags of grain and donkeys!

    2. Peter Wilson

      I think you'll find such records are related to tax collection (yes everyone but the privileged are debtors in a taxation scheme)

    3. Snoop

      In Monopoly, all of the players are handed startup money .
      Where did it come from.

    4. LoggerheadShrike

      They had math and writing long before they had proper currency. Most debts were recorded on clay tablets, not stone, using a stylus and cuneiform writing. The tablets could be soaked in water and then reused.

  10. Peter Wilson

    "without a credit/debt money system, no growth, no innovation, no development of any kind could have been possible" "We would still be in the stone age" (not exact quotes). What a total crock. That's it for me on this brainwash.

    1. Mathew Scannell

      agreed that is an absurd thing to say with no real basis to it. evidence? none, total guess work

    2. dufas_duck

      Meanwhile, those that saved lost their tails and were not even in the loop.. The banks used people's savings as the banks asset...

    3. Snoop

      You've missed the point entirely.
      Enough said.

    4. Peter Wilson

      No, I think I got it---a debt-based fiat money system is glorious and goodly---and, yes it is, for the corrupt and greedy a-holes of the world.

    5. Aleksandar Daic

      I actually agree that current monetary system WAS very useful in the past and that it contributed to our development...I just think that the moment we are as a society able to produce more than we require, it become obsolete ...and that happened somewhere after the WW2

    6. Peter Wilson

      Ever notice that all the most wonderful developments were advanced by individuals who generally made their discoveries regardless of phoney financial "instruments" of fiat government-enforced currencies and debt?

    7. Aleksandar Daic

      Like Nikola Tesla ? Yes I noticed and I do agree with that but advancing as a society is more complex than single altruistic driven individuals might contribute. For example, ancient Grece technology did not change much from bronze age (1300 BC) almost to the renaissance some 2K years ...that is because there was no middle class who could afford the products ...if there was a middle class we would have industrial revolution 1000 yers before it actually happened.

  11. Adrian Miu

    "We need to deal with the mistakes of the past and regulate the banks" says the professor in clip 4. No word about letting them go bankrupt. He also says the banking system should be small; apparently not by letting them go bankrupt but by regulating them.

    Bottom line of this series: let us replace the banking masters with the new masters from the political bureaucracy. Here's a novel idea: "Just don't have masters!"

    1. Snoop

      Although he didn't use the word "bankrupt", In clip 3 the narrator does in fact mention the need to reduce the size and number of banks ,restructure existing loans, write off bad debt etc. I understood regulation to mean enticing the banks to make loans to enhance goods and services as opposed to speculative loans which tend to increase the debt burden and lower GDP.

    2. Peter Wilson

      I'm afraid your novel idea went way over Snoop's head, but Snoop replied anyway!

  12. Mathew Scannell

    dont feel like you guys are watching this with an open mind. i hate the financial system as much as the next guy but, come on, it is still just people doing what they think is good for them. the system isnt purely set up to keep you down although some parts of it do a damn good job. i personallly find it interesting to hear what the other side of the argument has to say and to understand the conditioning the economics students must go through so they dont realise something is seriously wrong here!
    be sceptical of the information not of its delivery!
    should stress i totally agree with the things people have said here but am not a fan of the idea that some guy or group of people has control over the rest, it just is not true in spite of the 99% etc

    1. I AM POP SLAG.

      i suggest you take a look around you...

      NLP is most everywhere -

      If successful memes are repeated over and over until they become "true" in themselves then subseqeuntly they need little further reinforcment.
      For instance "be sceptical of the information not it delivery" is total bulls*it- you know its bullshi but you still said it...why?

      If the guy is able to deceive the ignorant and obfuscate the issue away from what is the actual truth of the matter, then his delivery is most important, most important indeed.
      Coincidentally where did you hear that? im asking because it appears rather a lot in internet comments and its utter, utter tripe(or possibly drivel im not entirely sure).
      It is an obfuscating cover all statement and could, for instance, be used to redirect the discussion away from the motives of this little dutch shyster and onto the crap he was coming out with about;

      "what he doesnt know speshifically abouut economicsh" and

      "debt creates debt and it is money shee? it all worksh like that! hunkydorydoodledandeey you shee!"
      ---> cue simplified and FLAT WRONG representative cartoon that wilfully leaves out of the cast list, the men who, using this very same illogic surrounding what fractional reserve banking is, where it came from and what it actually does,...
      have amassed "ownership" of half of all the carrots and meat and maseratis in the whole world and have also in the past five years been putting a down payment on the rest of the world-
      every last bit of it -
      includiing you.
      That very statement you made proves my point.
      You dont think for yourself- if you did you would realise that you have been getting some stuff very wrong.

      If a conveyer of information is telling you black is blue and getting away with it then i am most very sceptical of him and the system that allows him to convey these fallacies- you cant just control the mass-psyche "just like that" you need reinforcment - repeated "anchoring" as it is described by the creepy hypnotists who do such things for entertainment.
      oh and smoke pot- you see straight through their bulls*it -i often pause videos to take in what i just heard when im stoned and a little more thoughtful-
      this dutch chap had me diouble checking everything because it was designed to confuse and his bulls*it quickly breezed over a difficult to spot omission for someone who hasnt not studied a little REAL economics- YOU DONT JUST BREEZE OVER THE FACT THAT BANKS ARE SUPPOSED TO WRITE OFF DEBT AND THE MONEY THAT DEBT CREATES AND FOR THE MOST PART, THEY DONT.

      A neurolinguistically programmed illogical fallacy.
      Someone put that in your head as no sane thinker would ever come up with such rubbish.
      Its basically a statement telling you to ignore whoever is feeding you a line- by living ones life by this illogical nonsense you will be had by many a scoundrel and led up a fair few garden paths- you are however in the majority- i hear an original thought about once a week now- maybe less...
      dumbed down ....much?

    2. Mathew Scannell

      ha! ok a much better written response i retract that earlier comment man apologies. yeah i am a little insulted at the assumption that you should tell me why im stupid since you know nothing about me but anyway.....

      i totally agree with you, when reading/watching about FR banking and the logical fallacies it presents i pause, have a toke, and think "what the f*** happened?" but i really think it is important not to just assume that if i cant understand it then it must be wrong. i admit it is very confusing and i am always torn between thinking about the system being rigged and thinking i probably just need to learnmore about it. much the same way i think about quantum mechanics. of course one is nature and the other is the creation of dum apes.

      its not a particularly original sounding sentence trust the information not the delivery or whatever it was doesnt come from anywhere, and it is not bull. what i am saying is ignore the person the background the credentials everything the information is really all that matters and if the "ignorant" would solely question the information, not the delivery. they would not be decieved. focusing on the delivery really just distracts from the message.

      also, nlp? doesnt matter.

      unless you want to control the vocabulary and body movements of everyone presenting any show ever! you just have to trust that there are more intelligent people out there than you think. which could lead you to an actual helpful conclusion like, say, education? if people were "conditioned" to think critically about everything none of this would be a problem.

      i hope you see where im coming from, please try to assume less about people.

    3. I AM POP SLAG.

      "also, nlp? doesnt matter.

      unless you want to control the vocabulary and body movements of everyone".
      Not everyone ...just a vast dumbed down, reactionary, moralistic, mind controlled mob of groupthinking stooges,
      billions of them,
      trained to a fixed dogmas and ideologically stagnated thought patterns, birthed in boxes, eating from boxes, learning in boxes, travelling in boxes,working in boxes counting boxes, dying in boxes and then getting buried... in a box.
      WHilst outside all the stuff to fill the boxes is becoming toxic and scarcer...
      And what do the people think of this?
      They dont
      You want what you dont need because you have been trained to iphone5 ford focus ritz cheese hydrogentaed palm oil vegetable toxin crackers.

    4. Mathew Scannell

      woah you really wanna control the masses dontcha! either that or you just plain cant stnad them! have realised why you think that now tho, you are from america it seems? yeah a hell of a lot of stupid people there and yeah all that stuff about federal reserve being unconstitutional (which by the way seems dogmatic of you, just saying) is true and scary and all those things but i still dont believe that the system was setup to keep you down. its still a faulty system but thats just what people do, make mistakes. there will always be people who say the mistake was the right thing to do, such as invading iraq and afghanistan, even when alll the evidence is screaming otherwise and its important to still listen to why they think it.
      stop telling me what i want! ;-)

    5. I AM POP SLAG.

      you make little sense>>> the masses are already controlled- we weither bite back now or we are ******.

      Im not an american.

      And the system WAS designed to keep you down. we have the blueprints as proof.

    6. I AM POP SLAG.

      Invading Iraq and Iran wasnt really a mistake as such- but its a nice way of describing empire expansion to people who might not think thats a good idea...

      "sorry" said hitler as he fell on the war map, knocking all the model tanks over the polish border -thus condemning his people to horrific war and millions to execution. "i just slipped..."

      That is the lie you are buying into if you believe such an act can be a "mistake"- understating apologist much?

    7. bringmeredwine

      I followed your rebuttals this far. Man do you have patience! I know what you're saying and I agree. Have a good summer!

    8. I AM POP SLAG.

      your full of it. the only thing we learn is the "other side of the argument"in this case is put forward by a man who speaks,looks and has the mannerisms of an unconvincing long-con grifter. which is what he is.
      the grift being an acceptance of the cartels that are modern banks and exchanges.
      only achievable by letting yourself confuse what thi sguy has to say with truth or a reasoned logical summary of the situation in any way.
      Or though it will very much appear that is what he is doing...until you actually listen to him and break down his "argument" which upon inspection appears to be veiled half truth and some delusion that double entry bookkepping hasnt evolved into straight up neofuedalism and theft by the few from the they can build maseratis you too can lust after and one day maybe achieve!
      and you are left just like me with the idea of the maserati cemented in your head as something he can afford and you cant.
      A subtle cue- a carrot on a stick if you will? now whee did all those carrots go? forgot didnt you ? thinking about the maserati
      It also forces me to confront with a slightly illogical argument as im arguing against nothing all mixed up with allegory, fallacy and an intellectual credential to make you think the best economic minds are having trouble figuring out that someone stole all the ownership of everything= seemingly overnight in 2008

      and i question your bullshit scannel- im sceptical of your easy tone around this subject matter and your lack of knowledge in it and the fact that all you have tried to do is lie.
      in fact that is the first thing you did.
      because nlp relates to everything that has anything whatsoever to do with human thought- from biologies relation to language to the economic myths and truisms we hold dear or castigate
      - and if you know what nlp is then you would never make the statement
      "thats got nothing to do with it" unless you were really s*upid.
      sorry my bad.
      go back to the crayons.
      sorry if im being a little harsh- there is objective documentation of subject matter(often sought but never found) then there is "public relations" formerly known as "propaganda" in a neuroliguistic hypnotic trick of the most dastardly nature -an act of propaganda to rebrand propaganda as public relations before even the propaganda makers ,who are now no longer propagandists but "marketing executives" or "brand managers" or "public relations consultants" even knew what rebranding was!
      this assault on conciousness - and this press release(for that is what it is) is always specifically designed to create a perception and initiate a contolled manageable response just like yours- "dont attack the messenger" "attack the message" and will neutralise criticism to some extent- i cant attack his credentials then it is hoped - which lends him authority -YOU are lending him authority in fact -its his easy nature appeals to something in you- perhaps? he is also weak and kinda looks like jhe needs defending - hear him out? why not?
      because hes a snake- thats why not.
      we can spot em -we clever round these parts.

    9. DigiWongaDude

      Round of Applause!

    10. Mathew Scannell

      dude you are paranoid! all i was saying is that the banking practices we all object to had to have orriginated some where and i am 100% sure that it was not to control the masses or produce the society we all live in. i find it interesting to hear from people involved in finance or economics to understand why the things which i find terrifying like the fractional reserve system where ever thought to be useful. i dont think this guy is trying to trick anyone i think he just believes what he is saying and is trying to explain to people what is going on.

      and seriously the nlp thing, chill out man. comparing that kindly dutch profesor to the fox news team is obsurd. they are a bunch of crazed right wing christians who never listen to anybody and he is jsut some guy talking to a camera. the youtube video was showing tactics used to distract people in interviews not how to brain wash someone with a monologue. and yeah f*** you man i dont know everything about money because no one does and for that matter and neither do you, in fact you can barely write a readable paragraph so crayons? reallly? mature man

      the guys credentials come from the training he has had and his own experience and are not there soley to trick or oppress you. i am sure he has been conditioned into thinking certain things but that doesnt mean you shouldnt listen to him! its that exact reason that makes me sit and listen to all the creationist bull so i know what they are saying and where the misunderstandings come from. we now know lots of things that people thought were correct are not and never were but it is still important to hear about it and try to be objective. but you are clearly very slanted in your opinion and thats fine be as you will, i probably even agree with 90% of your opinions but will still listen to any opposing opinion with an open mind.

      if you think that you know all there is to know about economics and the history of banking then why are you even watching this stuff! i do not claim to as it is a very difficult subject and even the best economists cant agree on the problems....guess they should ask you huh?

    11. I AM POP SLAG.

      slanted? what skewed through the crystal clear glass of what is actually the truth- ie we are being had over and the luckiest you are likely to get is screwing the wheel nuts on this wazzocks maserati?
      it so happens that the best economists do agree- that the abolishment of the glass stiegel act was a very bad idea and technically treasonous.
      That they also agree that the federal reserve act was written by the bankers, of the bankers and for the bankers and is coincidentally totally unconstitutional -but thats all just guff- im just a man in the street pointing out the mugeer who just had away with your future.
      I meant to write "mugger" but i like mugeer- im coining it
      instead of having handbags off old ladies these mugeers are nicking whole countries to fuel those maseratis.

    12. DigiWongaDude

      It's scam Mathew, watching with an 'open mind' suggests the facts are not all in yet. They very much are. Mutton dressed as lamb.

    13. Mathew Scannell

      you say the facts are all what? what is your thoughts on what should happen? and then theres the obvious problem, some people may know loads about this stuff and agree with you and others may know loads and disagree. we are not dealing with cold hard facts here its all conjecture, not science. also just because you may have decided based on the information available does not mean that i have decided or even seen all the evidence. dont just say "no" try to present me with some information if you care enough to reply

  13. DigiWongaDude

    @4:39 "As the debt tokens move out of that particular trading relationship, there will also be the need for some external authority to assert their value".

    Rubbiiiiiish. The external relationship will accept a mutually agreed payment of goods, services or similarly agreed debt tokens. No external 'authority' required. It then directly continues....

    "This also opens up the possibility of 'Central Clearing' which greatly simplifies things: If A owes B, B owes C and C owes A, then they could all physically pay each other the clay tablets [debt tokens]. But it's also possible to settle without any of these debt tokens changing hands. So the clay tablets can be left in a central storage. Only the ownership of the clay tablets would change hands."

    Rubbbiiiiish!!! The debt ownership would be cancelled and the tablets destroyed. But here the 'central storage' keeps them and begins using them as assets.

    Why would the central clearing authority take ownership? Because it's a plausible ponzy scheme of fraudulent lies without any merit, necessity or requirement. Right there, at that point, is a system of loans out of non existent wealth created, because the debts of A, B & C were all cancelled.

    1. Harry Nutzack

      technically, there is no mention of WHO title to individual tokens of A, B, and C is assigned, but the assumption is, by cancelling the debts, all 3 gain title to their OWN token pile, ideally ALL of their outstanding tokens. the retention of the tokens in the "clearing house" merely facilitates ongoing trade between A, B, and C. assuming all 3 entities provide a good or service desirable by all 3, that is used in comparable value over the same time frame, the token piles at any one time should even up to "got all of mine, none of yours". it's most comparable to a "credit union" in modern banking, except that ALL trade in the example is between members. that's when the "central authority" kicks in, to allow trade beyond "member to member" within the individual clearinghouse system. it's also (of course) where the potential for corruption rears it's ugly head. get the "authority" to buy into a scheme you hatch, and you can run roughshod on all, in the comfort of "bulletproof" status. you're jumping the gun on foaming at the mouth (lol), the real hoodwinking hasn't even transpired yet.

      what is interesting is the example shows DEBT as the driving force for banking in its earliest form, rather than the stocking of precious metals (as the hundreds of "gold bug" vids, docs, and other advertising media portray the "birth of banking"). that places it in an entirely different light in actual practice. there is a much less insidious "creep" in a "clearing house of debt tokens" to "merchant of agricultural debt" than in the portrayals of meier rothschild so often used to castigate the current banking system.

      it also casts the foundations of "currency" in a completely different light. it becomes a representation of actual goods, as opposed to "piles of useless pretty stuff". once again, a far less malignant "creep" in that move. it also shows that, as it is based on future yields of goods, it is based solely on abstraction, even in its infancy. it's pledges of next years harvest, not the one just brought in. it adds RISK, right from the very beginnings. that is a very significant difference.

    2. DigiWongaDude

      That's what I said! lol, ok obviously I didn't, but wish I had! I'm far too 'emotional' for economics. Really great post.

    3. Harry Nutzack

      lol, we all have our topics that inspire rabid salivation, the trick is overcoming the pavlovian response. i actually found much of this guys rap quite palatable, even if he starts at a point of "economist fanboy".

      technically, there is nothing inherently malignant in banking, or monetary "professionals". the "evil" shows in practice. his condemnation of credit based consumerism is actually spot on.

      it's the transition from "industrialism" to "vampirism" that makes the "money game" destructive. examine the economies of the planet, the "industrial driven" ones inevitably prosper, while those engaged in "auto-vampirism" crumble. the transition from the former to the latter was the undoing of the US economy. the spreading of such "chicago school" nonsense is why the entire planet paid the piper for our economic faux-pas just these few years ago.

      the lesson is there, plain to be seen, but the solution is one that shifts wealth back to the commoner, a scenario the moneyed would prefer to avoid.

      examine the shuttering of the american company "hostess foods" this past spring. the courts allowed a "solution" that cost 3 times as much as the unions sought, and the company closed its doors. this "solution" completely concentrated the assets in the hands of the moneyed. meanwhile, the previous 5 years had seen concession followed by concession by the workers, while "executive compensation" expanded exponentially.

      technically, when examined with "modern book-keeping" the "solution" is neutral to the economy (in that the product lines were bought up, and are back in the markets), yet a couple thousand jobs were lost, an industry with a two third century plus history went under, and a good portion of the manufacturing went "overseas". but the shareholders, creditors, and executives "got theirs". short term profit overshadowing fiscal sustainability is the problem. that is completely the legacy of the "maximizing dividends for the shareholder is the ultimate corporate responsibility" laws. those shareholders got FAT checks, but will NEVER see another one. penny wise, pound foolish, no?

    4. DigiWongaDude

      I realise I made this blunder "got all of mine, none of yours", since...ok... the debt tokens would rotate between members, not get destroyed. :-/ Why did I think they would? Because I thought of them as credit notes, to be torn up. This got me thinking about the 'origin' of those clay tablets. Somebody had to create them to begin with. Yep...thinking about that they would have been created out of credit (payment) for goods, not debt (promise to pay). The promise to pay, as you say, is constructed/born here. Or more sinisterly, the creation of something out of nothing.

    5. I AM POP SLAG.

      Yes - I seem to remember the little snake dropping an actual fact in there amongst all the feel good hand waving obfuscation.
      debt tokens? wtf? intrinsic value- intrinsic value intrinsic value.
      A Representative token of an intrinsically valuable physical commodity- that is what money is.
      In its right ofrm it is neither totally imaginary nor is it entirely tangible- it is based on trust and nothing more- NOT DEBT.

      Be it carrots, meat, bribes to dutch professors to smile whilst they close the curtains on the real cogs of the economy, gold or pieces of paper promising gold.

      If you cant run that con on the people who play along -in a way that used to self aware of this useful collective delusion.
      Its just some figured out that if you can stretch what is already a fantastical concept to breaking point by promising prosperity for all and frogetting the actual maths- there are only ever just so many carrots at any given time...
      There is only so much bulls*it people will take with their means of everyday exchange.
      To further press my point about the tricksey language of our dear, badly dressed professor put that sentence together with his "economic logic"
      "There is only so much bulls*it people will take with their means of everyday debt"-
      "It makes no sense...or maybe it does? and this is the world we live in? said alice as she looked back through the looking glass...."
      you have no hope for your "money" if it ceases to be money- its a wilful self delusion of all of ours that these fra gone lunatics with the zeros in their machines would do well to remind themselves that they are deconstructing an evolved cultural trait of humanity- not only that of honest and fair "money" but of trust itself.
      The guys they get to program the market bots and their money harvesting are for the most part autistic incidentally- not mentally ill by any means like the functional psychopaths who set the little "quant" maths genius to their tasks but our idea of what a "healthy" economy has become skewed from reality-
      yes its true trees "grow" and that is good but if they were always growingthey would run out of space- so how is exponential growth good?
      oh it allows a h"healthy" futures market at the expense of a raped planet.
      too emotional for economics digi?...hmmmm.
      maybe economics needs some emotions introduced to it "excuse me mate did i just catch you with your hands in my pension fund?"
      "are you threatening me and my entire country with a collateralised debt obligation?"

  14. John Defalque

    The problem is crapitalism itself, where some individuals are "worth" tens, hundreds, thousands, millions of times more than others because they are so "smart" and so "productive". I guess the only incentive that we the rabble have is to off ourselves en masse.

    1. I AM POP SLAG.

      ecomonic growth is a concept for building armies from when labour was i nshort supply and resources abundant-
      now resources are scarcer and the labour force has been put out of work by machines to f*ck all day and produce people society doesnt actually need anymore- fuelled by everyone and anyone who has got it good or hopes to get it good in the current system- "conservatism" in the greediest sense.

  15. I AM POP SLAG.

    There is a Lot of half truth here; in the first part at least- It smells like it was funded by a bank.

    First, he says "they dont just make money out of nothing"

    then proceeds to tell us yes they do and its not real in any case.

    And not once uses the word "construct"
    which is what money is-
    A psychological representation of goods and services- if we cease to believe this because of the total largesse of some -(we already have by the way and no amount of pontificating, patronising professors is going to convince us otherwise tbh.) then there will be moves made to make the banks "nice" again.

    Santander for instance with their adverts featuring people being literally stalked and startled by very creepy sports stars pronouncing interest rate deals and loan offers- the banks are telling you that they are scary, they are in your house, they are literally right behind you!
    but they have a product you WILL like...OK?

    This is the beginning of the propaganda campaign-

    Shut the pay day lenders who have been syphoning back any of the quantative easing that might have filtered down since the crash in an effort to show fairness and that there is some finacial regulation going on,

    show trial a few selected individuals for the crimes of an entire industry like libor and madeoff etc etc to show similar regulatory teeth'

    Start explaining economics in nice fluffy terms adding in every few minutes that your government isnt a power mad oligarchy.
    It is, and they are by the way.)
    this is first propaganda piece of a big assault on the perception of banks i reckon-
    It looks like this documentary was made for school viewing and to shape the perceptions of those young folk who have been visiting Vlatkos site! or listening to alternative sources to the blamestream.

    this promotional assault will soon be followed by zero interest rates magically disappearing with the free money supply to those with "good credit scores"(THE FANTASTICALLY WEALTHY in other words)
    ) the banks will be "forced" by the goverments to:

    "lend but more carefully this time-we are watching those pesky,risky banks we promise etc etc-"
    Its likeke theyve been trying for ages already in a vivid dramatic show to point out to you just who is exactly in charge

    govt:hey mr banker- here is 5 billion! lend it to small businesses will ya?

    bank:No. but we will take the money

    govt:ok have the money....cmon mr banker please?????

    bank:No you will have to beg and be austere for a few years to please us then we might start lending soon on a drip feed only basis utill we have made everyone suffer properly and let them know how things work on this planet, tell them you are in talks with us and we promise to release a few quid to some poorer folks but not too much eh?

    govt:yes mr banker- but can you tell them we made you do it?
    so we can still feel important? and people who really dont know better will admire us and respect us and let us sit in this nice warm government building for longer? grovel...i have client who wants to put a nuclear reactor in one of your countries beauty spots and an oil giant who wants some laxer regulations....

    Now that the feds teat has been suckled dry by the wealthy, interest rates will climb as they expand who is deemed "credit-worthy"- the media will do its bit giving it the uplifting ecomony is recovering bit -well done at acheiving thrifty poverty! etc etc making a big stink to prtend recovery when the only thing that changed was them and the way they ar eplaying you when everyone is still just getting by- but a bit better each day for a few good years, until you may even find yourself financially comfortable...and just when you thought it wont happen they will pull the rug out from underneatth you again and crash! crisis! panic! fear! all over again- because of maseratis.

    all the while you- you pleb, have been borrowing at a higher interest rate if you can borrow at all- if not its massive overdraft fees or overtime if you can get it -scrimping saving---whilst all the liquidity and capital flows into the ever increasing string of zeros in the accounts of the wealthiest scum on earth.

    Slowly they will take the squeeze off and start lending to joe public the way they used to- extortionate but still affordable nonetheless and everyone will start to feel better again!

    We will slowly crawl out of recession and think that we are struggling against the odds and we will once again overcome the economic demon only to have it all happen again in ten or twenty years when the banks collectively decide to put their foot on our necks again.

    He misses out very complex parts of what money is and tries to paper over some massive cracks in the evolution of money-ie the fact that one little shrew faced old b*stard called rothschild has had about 75% of all the money in the world since his daddy died and basically runs the whole show -

    A large round stone with a hole in the middle was both money and status symbol for instance to the indonesian seafarers(or was it polynesian)- no debt obligations there!
    if only it were the same today
    lord rothschild on his yacht with a half ton stone as a symbol of his wealth- now theres a nice thought.

    1. Chris Tidman

      Every dollar in circulation is owned by someone who expects to collect his interest. This means that there has to be more dollars in circulation every year. We either print the extra which causes inflation, go further into debt, which has the same effect on an economy as printing money or the bankruptcies increase to adjust the banker's books.

      Our money is now ones and zeros and nobody should be expected to pay interest for borrowing ones and zeros, no matter who makes them or who owns them.