Proof of a radical idea: We Don't Need Banks
We had to bail out the banks. We had no choice.
We had to give the banks hundreds of billions of dollars, that went straight into bonuses for the people who crashed the economy.
All of the politicians, economists, and media pundits without exception tell us this.
And yet the truth might be the exact opposite.
No, not just that we shouldn't have bailed out the banks.
I mean the truth truth - that we should have shut them all down and said "good riddance to bad rubbish".
On May 1, 1970, Ireland's bankers went on strike, and they didn't go back to work until mid-November.
So Ireland's economy collapsed, right?
I recall a six-and-a-half month strike that closed all banks in Ireland in 1970 which was meant to have similarly calamitous results as predicted for Greece today, but in fact had very little destructive impact. Contrary to expectations, Irish people rapidly found other ways of carrying out the functions previously performed by the banking industry. The economist Michael Fogarty, who wrote the official report on the bank dispute, was quoted by the Irish Independent as saying that “the services of the clearing banks proved by no means as indispensable as would have been expected before the dispute”. Others take the example of the Irish bank strike as evidence that much of what banks do is a “socially useless activity”.
In fact this wasn't the first time Ireland's bankers had walked out, and it wouldn't be the last.
Not only did calamity not strike, but the economy of Ireland slightly improved each time that there were no bankers doing what bankers do.
So who cashed the paychecks? It's Ireland.
Here's the Bank of England's Ben Norman and Peter Zimmerman:How did payees manage this risk for such a prolonged period? Notoriously, local publicans were well-placed to judge the creditworthiness of payers. (They had an informed view of whether the liquid resources of would-be payers were stout or ailing!)
For example, John Dempsey, a publican in Balbriggan, near Dublin, was "…holding cheques for thousands of pounds, but I'm not worried. The last bank strike went on for 12 weeks and I didn't have a single 'bouncer'. … I deal only with my regulars … I refuse strangers. I suppose I've been able to keep a few local factories going."
In much the same way that paper money arose from proxies for money, like gold certificates, paychecks became currencies themselves.
When the supply of cheques dried up, people wrote new ones on any available piece of paper, such as beer mats, on the backs of cigarette boxes and even on toilet paper.
Even more important and relevant, the fundamental concepts behind modern economics was shown to be hopelessly and hilariously flawed.
Orthodox economics would have predicted a collapse in the money supply, a credit crunch, a trade implosion, mass unemployment, an atomized GDP [gross domestic product, or a measure of the value of stuff a country makes in a specific period], and the gears of industry and commerce grinding to a crashing halt. I like to describe it as all the veins in your body suddenly shrinking and collapsing. That's how economists conceive of banking shutdowns.
...
Even though the money supply did contract sharply, neither trade, commerce, nor industry came to a grinding halt. People created their own currencies, to substitute for the collapsing money supply. They kept using checks to pay one another, but then, people's checks began trading within communities.A radically decentralized, peer-to-peer financial system spontaneously arose. Instead of letting the bankers' strike collapse their prosperity, people decided, simply, that they could get on with the day-to-day stuff of banking themselves.
Antoin Murphy, one of the few scholars to have studied these strikes closely, describes it as "a highly personalized credit system without any definite time horizon for the eventual clearance of debits." The Irish were able to trade notes with one another, in lieu of credit issued by banks. It's amazing really.
When you think about it, it isn't all that amazing.
Banks need people a lot more than people need banks.
Comments
I've said it before, I'll say it again:
Economics is, and always was, pseudoscience.
I've formally studied it. I liked my teachers, my teachers liked me. In the end, the impression took away from it was that it was all, at best, nothing more than a subtopic of history, a river you can never quite step in twice, and such ideas in it as are useful are just "common sense" sorts of things (opportunity cost, for example) that hardly need a devoted, specialized field.
The American preoccupation with economics reminds me of what I read about in The First Socialist Society: A History of the Soviet Union from Within, where the author talks about how in the USSR, after "The Great Patriotic War" (AKA World War II), Soviet academia became convinced that military strategy and tactics were a science, with "laws" and principles on par with those of physics (my father's an experimental physicist, and I've heard him joke on occasion about "physics envy" in other fields; he also urges his students to take liberal arts even though many of them would rather not; "In science and engineering, we can tell you HOW you're doing the things you're going to be doing, but we can't tell you WHY," he explains - which is all the more reason to be alarmed and upset by the scourge of crackpottery and personality disorders threatening to overrun the humanities). With time and refinement, proponents of this new "science" claimed, they would eventually reach a point where the outcome of a battle could be accurately predicted before a single shot had been fired (shades of that Original Star Trek episode "A Taste of Armageddon").
That vision finally crashed and burned in - where else? - Afghanistan.
People have free will, and that is KRYPTONITE to science. Culture, society, "the economy" - it's all just a game; the rules can be whatever we want them to be.
“Reality is that which, when you stop believing in it, doesn't go away.”
- Philip K. Dick
In the Land of the Blind, the One-Eyed Man is declared mentally ill for describing colors.
Yes Virginia, there is a Global Banking Conspiracy!
Amen
Economists are the high priests of the made up religion of capitalism. Any computations that require more than algebra are just made up bullshit. America runs on bullshit.
"America runs on bullshit."
isn't it
I never knew that the term "Never Again" only pertained to
those born Jewish
"Antisemite used to be someone who didn't like Jews
now it's someone who Jews don't like"
Heard from Margaret Kimberley
viral bull shit
I have a feeling that banks aren't the only thing we don't need. How many ways can capitalists insert someone or something in the middle to take a cut.
"Religion is what keeps the poor from murdering the rich."--Napoleon
Seems like all levels
of government in the US are set up on some level to promote or protect commerce. From diplomacy to taxation and everything in between commercial interests have a say in the policy (thru political party or donor) of each department. So, I'm thinking pretty much it's all ways capitalists insert someone or something in the middle to take a cut.
bullshit
Actually, there do exist places where calculus is required (Newton and Leibniz would never have invented it otherwise). But its use in economics (the subject at hand here) is indeed just made up bullshit, exactly as you said.
In honor of the legitimate uses of calculus, I present to you "The Theme Song Of The Calculus":
[video:https://youtu.be/pl9gZSIZqmQ]
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
I know, I know
I flunked it, but really wanted to get a working knowledge. There was a pre calc class I took taught by an engineer (substitute for prof on maternity leave). Seeing the practical uses knocked my sox off. Prof came back, went back to pure math with little practical examples. Actually resented being asked.
That said, for most of America big decisions are made with made up math. There are most likely economists that would endorse Ponzi schemes as a viable economic vehicle, and show you the math to prove it.
Percentages/averages
hedonics, especially hedonics cuz
then you can eat your Iphone w/out it having
caloric intact
I never knew that the term "Never Again" only pertained to
those born Jewish
"Antisemite used to be someone who didn't like Jews
now it's someone who Jews don't like"
Heard from Margaret Kimberley
Differential equations (based on Calculus) come in pretty handy
, in actual "Rocket Science."
"I’m a human being, first and foremost, and as such I’m for whoever and whatever benefits humanity as a whole.” —Malcolm X
rocket SCIENCE
As there's actual science in "Rocket Science", this makes perfect sense.
There's no
fuck in chocolatescience in economics....."US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
Economics as preached in the US is a ruling class racket
The "physics envy" trope is dead on. In his More Heat than Light: Economics as Social Physics, Physics as Nature's Economics, Philip Mirowski gave the history of how economics stole physics ideas of equilibrium systems. When physicists pointed out the fallacies in economics, these frauds dismissed the physicists as not understanding economics. When the classical "political economists" pointed out the fallacies in the new equilibrium economics, the "economists" dismissed them as being mathematically illiterate. Unfortunately, Mirowski is very difficult to read and comprehend. (That's probably why he hasn't been run out of Friedmantown on a rail. You need a Ph.D. in economics to understand his criticism.)
Then there was Vilfredo Pareto, major fascist ideologue and "economist", who invented the pernicious Pareto optimality (see The triumph of Pareto), which is used to justify not taxing the rich.
If there is any science to economics, it is not in equilibrium systems but in far from equilibrium systems. Other examples of FFE systems are living things. Hence, Herman Daly famously said that equilibrium economics is like a body with a circulatory system but no digestive system. That is, it completely ignores where its raw materials come from and where its waste goes.
Over the past thirty years, the cult of "economics" has been further captured by the cult of Dynamic Stochastic General Equilibrium (DSGE) theory, which postulates that the entire economy can be represented by one actor with complete information about all future transaction probabilities. DSGE is such complete crap that it has been torn to shreds by Bank of Sweden Laureates in "economic science", such as Paul Romer. (See The Trouble With Macroeconomics) Romer mocks these frauds by comparing their various theories to failed physics concepts such as phlogiston, caloric, and aether. While there is a lot of math in that paper, there is also a lot of prose that is devastating.
So, yes, what passes for economics is a mathematical and scientific fraud that increasingly lives in a made-up fantasy world. And even major economists are saying so.
Your comment and Moonbat's comment
are brilliant.
They put my essay to shame.
brilliant
All I can add is the immortal work of Mojo Nixon and Skid Roper on the subject:
[video:https://youtu.be/bMehSfTmnbY]
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
Poetic
Well
We wouldn't be talking about it if you didn't write it.
This...
...is solid platinum.
In the Land of the Blind, the One-Eyed Man is declared mentally ill for describing colors.
Yes Virginia, there is a Global Banking Conspiracy!
As a physicist myself, I despise the pretensions of "economics"
I tripped over economics in the late 80s, when the internet brought me some of the more outrageous claims of this racket. I spent five years teaching myself real economics from people like Mirowski so that I could hold my own with the "economists". What I learned from arguing with that crowd is that economics is a religion, not a science. The market is god - that is the core of neoliberalism, as it was the core of libertarianism before it.
So, basically, what I know is self-defense and the defense of genuine science.
I thank you immensely for the history of the bankers strike in Ireland. I never heard of it before. The story is a great contribution. It humanizes the issue, unlike all the abstract, mathy arguments that bore most people to death. I love the fact that the Irish (my people) turned to bookies in pubs! LOL!
it wasn't bookies
It was bar owners
My bad. But it did involve pubs :-) n/t
Exactly
It's Ireland.
Who knows how trustworthy someone is more than the guy who serves you drinks for 20 years?
Has the following ever occurred to you:
Bartenders.
Psychotherapists.
Prostitutes.
Clergy.
They do have their differences, but there is definitely a certain level on which they're all the same profession, isn't there?
In the Land of the Blind, the One-Eyed Man is declared mentally ill for describing colors.
Yes Virginia, there is a Global Banking Conspiracy!
The first fallacy is that suppliers and consumers are rational
The enormous advertising sector exists because consumers are not rational. The huge number of CEO's that have destroyed successful companies proves that suppliers are irrational too (choices are made by humans who are known to be mad as hatters.)
As for equilibrium - economies are as close to equilibrium as a boiling pot whose gas jet is controlled by a random number generator. Catastrophe theory is a better basis than equilibrium math.
I've seen lots of changes. What doesn't change is people. Same old hairless apes.
The second fallacy is that only goods and services
that are sold "count" towards the total economic output of a nation, and that all economic activity has a "+" sign in front of it.
Thus, anything that is "free" -- like, for example, breathable air, or the labor of a homemaker preparing a homecooked meal, doesn't count at all, but things that represent costs (e.g. treatment of asthma attacks caused by air pollution) are counted as "positives" on the national balance sheet.
The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.
Shuffling money around
is about as useless as it gets. Even more useless than my music degree.
BAD JOKE ALERT: I should've gotten a career in finance--that's where all the money is. Ba-dum tss.
This shit is bananas.
That's not a bad joke--it's the truth
Willie
sutton, famed bank robber of yore was asked why he robbed banks, said "that's where the money is." This is a cornerstone of eCONomics.
Interesting history lesson
And it would have worked a lot better had the Irish government stepped in and issued bills of credit and bought up all the paper. And then you would have had a permanent solution, at least until the banks bought off the government again.