Comments on: Binary economics: the solution to the global financial crisis?

By: Zippy

Zippy — Sun, 13 Apr 2008 00:29:30 +0000

However, I don’t think it needs to be any more “difficult” than our present system.

Providing zero-cost capital based on a bureaucratic process will eliminate usury and won’t be any more difficult than the present system? Color me sceptical.

By: Jeff Culbreath

Jeff Culbreath — Fri, 11 Apr 2008 16:42:23 +0000

“This proposal seems to assume that ‘productive capacity’ is a known thing into which money can be channeled, just by deciding to do so, and that avoiding channeling money into unproductive things is straightforward. That is far from clear. It is possible to buy all sorts of unproductive tractors, or factories, or farmland, or software packages, or whatever.”

That’s obviously the crux of the difficulty – that, and the problem of knowing whether the person taking the loan will be a competent and productive steward. However, I don’t think it needs to be any more “difficult” than our present system. Presumably, people will still need to apply for their loans and meet certain qualifications. A certain percentage of them will be turned down. There will also be a percentage of “bad” loans, and there will need to be some kind of mechanism to compensate for these.

It would not be a perfect system by any stretch, but it would eliminate usury – not an insignificant point – and should end up more justly (I did not say “efficiently”) allocating resources and stabilizing the currency.

By: Zippy

Zippy — Tue, 08 Apr 2008 14:44:10 +0000

At the core of the solution is the use of interest-free loans issued by the central bank for the purpose of productive capacity. Such loans cannot be inflationary, indeed, they are counter-inflationary ─ when the loans are repaid, they are cancelled leaving behind in the economy productive, income-generating capital assets. Thus productive assets always back the currency.

In can be very difficult to figure out what is and isn’t productive, though. This proposal seems to assume that ‘productive capacity’ is a known thing into which money can be channeled, just by deciding to do so, and that avoiding channeling money into unproductive things is straightforward. That is far from clear. It is possible to buy all sorts of unproductive tractors, or factories, or farmland, or software packages, or whatever.

Of course there are all sorts of things money should not be channeled into, on moral and cultural grounds. But if we set that aside and look at only morally acceptable options we are still stuck with the fact that what is and isn’t productive is a complex and radically context-dependent determination.

By: rishu

rishu — Tue, 01 Apr 2008 02:42:55 +0000

article is very good ,and suggestion is also good ,but i think the impact of global financial crisis or us recession would be worsen on the world’s development ,and udcs would be affected badly ,country like india brazil