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9 Nov 2005 @ 15:24, by oasiian. Economics, Financing, Banking
Supply Economy existed once in the Feudal Ages of Europe and for an even longer time in the Asian cultures.
We Switched to a Demand Economy, but was that such a good thing? More in the article following... More >
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21 Oct 2005 @ 23:16, by ming. Economics, Financing, Banking
Hey, I'm one of the top 50,000,000 richest people in the world. Then why do I feel so poor? Check it out. Puts things in some kind of perspective, I guess. More >
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 21 Jun 2005 @ 15:19, by rishi. Economics, Financing, Banking
What will YOU do, when the dollar is regarded as worthless, or next to worthless? What will that new suit or new dress, that new car or big house/appartment matter then?
More importantly, what good will it do to continue to "play the game" of a society whose very existence is irrational, and whose norms are not only world-destructive but SELF DESTRUCTIVE as well?
***********
US deficit hits a new record
By Nick Beams
21 June 2005
The US balance of payments deficit hit an all-time high for the first quarter of the year, rising to $195.1 billion, up 3.6 percent from the previous record of $188.4 billion for the final three months of 2004 and well above market predictions of $190 billion. The latest figure means that the US payments deficit is running at an annual rate of $780 billion, requiring $2 billion a day from the rest of the world—mainly provided by Japan, China and other Asian nations—to finance it.
The current account deficit for 2004 was a record $668.1 billion, up 28.6 percent from the previous record of $519.7 billion in 2003. But if present trends continue, this year’s deficit will be even larger.
The record payments gap is certain to fuel demands for the Bush administration to take action against US trade rivals. The Congress has already passed a resolution calling for the revaluation of the Chinese currency within six months and protectionist sentiment is growing.
Democrat Senator Byron Dorgan said the latest figures showed the current account deficit had reached “dangerously high levels” and that the administration had to change course on trade.
The trade figures appeared to bring to an end the recent rally enjoyed by the dollar in international currency markets—following the No vote on the proposed European constitution in France and the Netherlands and the row over the European Union budget. After sliding by 6.7 percent since early May, the euro rose by 1.1 percent last week, with much of the gain coming after the announcement of the US deficit.
The relative movements of the euro and the dollar—reflecting the growing economic weaknesses of both the United States and the eurozone economies—point to underlying problems at the heart of the world financial system.
On the one hand, the general rise of the euro over the past three years has been caused in the main by the growing debts of the US—both the ever-widening balance of payments gap and the federal budget deficit. With US imports now around 50 percent higher than exports, no serious observer believes that there is a “quick fix”—such as a revaluation of the Chinese yuan or the introduction of protectionist measures—that can reduce the US payments deficit. Even with a decline in the value of the dollar of more than 25 percent against the euro since the start of 2002, the current account deficit has continued to rise, growing by 1.6 percentage points of gross domestic product since the start of 2003.
On the other hand, the recent fall in the euro and the rebound of the dollar has been caused by the rejection of the European constitution and the doubts this has raised about the future of the euro and even the European Union. In other words, the strength or weakness of each of the world’s two major currencies is determined by the relative position of the other.
Last April, the Financial Times noted in an editorial comment that the euro did not have a great deal going for it except that it was not the US dollar. “In truth, there are good reasons for selling all three of the world’s main currencies (the dollar, the euro and the yen). But could they all fall? Yes, against either gold or the Chinese renminbi (yuan),” it stated.
This conclusion points to deep problems in the global monetary system. For the past 34 years, since the decision by US president Nixon to remove its gold backing, the US dollar has functioned as a global fiat currency. Its position in international markets has depended on the relative strength of the US economy vis-à-vis the other major capitalist powers.
That position has steadily eroded over the past decade and a half. Up until the end of the 1980s, the position of the dollar was sustained by the fact that, even though its trade and balance of payments situation was worsening, the US was still a net international creditor—a status it first attained in the aftermath of World War I. From the mid-1990s, even as US international debts steadily grew, the “strong dollar” was sustained by an inflow of capital into the US, attracted by the higher returns on investment and in the stock market.
But since the collapse of the share market bubble in 2000, the US has come to increasingly depend on an inflow of capital from the central banks of Asia to cover its debts—so much so that more than 75 percent of all the balance of payments surpluses of the rest of the world are used to finance the US deficit. The danger to the stability of the global financial system lies in the fact that, at a certain point, this inflow may cease, sparking a rapid fall in the dollar’s value, a rise in interest rates and the onset of a US and global recession.
Were such an economic scenario to develop, it would by no means necessarily follow that the euro would come to replace the dollar as the chief international currency. The present crisis of the European Union, and the doubt it casts on the long-term future of the euro, means that a major dollar crisis could bring a crisis of confidence in all major currencies, and a turn to gold as the only secure store of value. The steady rise of the price of gold over the past four weeks amid the political turmoil surrounding the European Union could well be a sign of things to come.
See Also:
Global interest rate "conundrum" recalls the 1930s
[14 June 2005]
US indebtedness a growing threat to global stability
[23 May 2005] More >
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 6 Jun 2005 @ 21:54, by ming. Economics, Financing, Banking
Article in New York Times about an economist who does economic experiments with monkeys. And he finds that they behave like people in many ways.Two monkeys faced each other in adjoining cages, each equipped with a lever that would release a marshmallow into the other monkey's cage. The only way for one monkey to get a marshmallow was for the other monkey to pull its lever. So pulling the lever was to some degree an act of altruism, or at least of strategic cooperation.
The tamarins were fairly cooperative but still showed a healthy amount of self-interest: over repeated encounters with fellow monkeys, the typical tamarin pulled the lever about 40 percent of the time. Then Hauser and Chen heightened the drama. They conditioned one tamarin to always pull the lever (thus creating an altruistic stooge) and another to never pull the lever (thus creating a selfish jerk). The stooge and the jerk were then sent to play the game with the other tamarins. The stooge blithely pulled her lever over and over, never failing to dump a marshmallow into the other monkey's cage. Initially, the other monkeys responded in kind, pulling their own levers 50 percent of the time. But once they figured out that their partner was a pushover (like a parent who buys her kid a toy on every outing whether the kid is a saint or a devil), their rate of reciprocation dropped to 30 percent -- lower than the original average rate. The selfish jerk, meanwhile, was punished even worse. Once her reputation was established, whenever she was led into the experimenting chamber, the other tamarins "would just go nuts," Chen recalls. "They'd throw their feces at the wall, walk into the corner and sit on their hands, kind of sulk."
He also learned that the monkeys might cheat or steal to get what they want. And they might think of new kinds of exchanges, like paying for sex, or trying to pass on counterfeit coins. And they would make the same kind of irrational choices as humans tend to, like making certain choices, when presented with a gamble, which seem emotionally satisfying, but which might not be rational.When taught to use money, a group of capuchin monkeys responded quite rationally to simple incentives; responded irrationally to risky gambles; failed to save; stole when they could; used money for food and, on occasion, sex. In other words, they behaved a good bit like the creature that most of Chen's more traditional colleagues study: Homo sapiens.
Now, this is all a somewhat touchy subject with economists, because economic theory traditionally assumes that it is only humans who can act economically, based on our ability to think rationally. Which is probably a bunch of crap, as humans don't think very rationally half the time, and most economic choices aren't rational. Might very well have a lot more to do with being conditioned. You want this tasty banana (car, tv, house), push this button (go downtown and push papers around all day). More >
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22 May 2005 @ 19:28, by vaxen. Economics, Financing, Banking
CONSPIRACY, FRAUD, UNLAWFUL CONVERSION, AND TREASON
On May 23, 1933, Congressman Louis T. McFadden brought formal charges against the Board of Governors of the Federal Reserve Bank system, The Comptroller of the Currency and the Secretary of United States Treasury for numerous criminal acts, including but not limited to, CONSPIRACY, FRAUD, UNLAWFUL CONVERSION, AND TREASON.
The petition for Articles of Impeachment was thereafter referred to the Judiciary Committee and has YET TO BE ACTED ON. More >
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12 May 2005 @ 19:06, by raypows. Economics, Financing, Banking
Be careful when selling things to private parties. even cashiers checks that look completely real can be fraudulent. Get the money first and wait until it clears, or better yet, sell local get cash or use PayPal.
I recently sold my Alienware Are 51-M laptop via an ad I put in the Los Angeles Recycler magazine. I sent the package COD FedEx Ground to the (not so) gentleman in Reno, Nevada. He told me his name was Ollie Westbrook at 345 Westbrook Lane, Reno, NV. FedEx picked up the cashiers check, no signature was required, I deposited the cachiers check, bought a new laptop and a week later when I went to my bank they told me there was a stop payment on the cashiers check. The check was from Great Basin Federal Credit Union. It had an incorrect routing number on it. Turns out the bank has a detective investigating this already due to several other fraudulent cashiers check being issued.
I had spoken to the guy 2-3 times on the phone and as many emails. When I called and emailed him after the stop payment, guess what, both were no out of order.
There weren't really any telltale signs this was going to be a rip off except for his hurry to get it and not wanting to pay through paypal, which was okay with me since I didn't want to losee the % paypal takes. But I lost alot more.
The main signalss I got not to ship it was I had to go to three different places to get it shipped. The 1st the man who knew COD wasn't there, the 2nd didn't do COD's anymore, the 3rd their computers were down, so I went back to the 1st later in the day and I shipped it off. Life does give us information to go by if we stop to listen. Tricky balance between will and guidance. I was willful and pushed on through this time.
And though I am back pedaling a bit now financially, the upside is I am really enjoying my new Mac Powerbook which I bought with non-existeant funds.
May we live long, love and prosper. More >
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 17 Mar 2005 @ 14:42, by jerryvest. Economics, Financing, Banking
Christiane, my daughter, wrote this poem many years ago. I don't have the date, perhaps a fifth grader, but she was obviously aware of what was happening in our world then. As a professional social worker, Christy works with teens, at risk, in Colorado's "I have a Dream" program. Obviously, I am very proud of her work and devotion in helping our next generations preserve their dreams and help them bring their aspirations to realization. I have a dream foundation
Our Tomorrow by Christy Vest
As I look out this window
I can imagine our World tomorrow.
A chill runs up my spine
And my heart fills with sorrow.
Whatever happened to love?
Where is all of the cheer?
I think about this,
As I wipe away a tear.
Tomorrow is upon us
Fear is in my heart.
As the war we have, love and hate,
Quickly begins to start.
Bring love to our World
Even if for just one day.
Fight for our World of Tomorrow
Fight for love today.
Thank you Christy for keeping your dreams alive and for working with others to help them improve the quality of their lives, health and relationships. I love you. Dad
More >
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 6 Feb 2005 @ 03:41, by ming. Economics, Financing, Banking
The Economist has a little article on The economics of sharing. It has some good stuff. It is also somewhat amusing to hear about economists pulling their hair out trying to understand why people share, when they're supposed to just be self-serving consumers and capitalists.Economists have not always found it easy to explain why self-interested people would freely share scarce, privately owned resources. Their understanding, though, is much clearer than it was 20 or 30 years ago: co-operation, especially when repeated, can breed reciprocity and trust, to the benefit of all. In the context of open source, much has been written about why people would share technical talent, giving away something that they also sell by holding a job in the information-technology industry. The reason often seems to be that writing open-source software increases the authors' prestige among their peers or gains them experience that might help them in the job market, not to mention that they also find it fun.
Seems like one can't get around the subject any longer, when talking about economics. And the interesting part remains how and how quickly and widely sharing will spread to more tangible goods. The question is, can sharing be used to supply more than just information? One of the most articulate proponents of the open-source approach, Yochai Benkler of Yale Law School, argues in a recent paper that sharing is emerging for certain physical, rivalrous goods and will probably increase due to advances in technology. Where open source was about sharing information by way of the internet, what is happening now, Mr Benkler notes, is the sharing of the tangible tools of technology themselves, like computing power and bandwidth. This is because they are widely distributed among individuals, and sold in such a way that there is inherent (and abundant) unused capacity.
He's talking about social sharing as a "third mode of organising economic production, alongside markets and the state". Well, maybe we can call it that. But the networks for sharing are also a market. Just a market that measures value somewhat differently.
It is an interesting, even if obvious, key point that sharing is most likely to emerge when something is available that has inherent and abundant unused capacity. Probably isn't important that it is sold. It is important that there's an abundance of something, and some kind of informational system exists that allows some of that abundance to be directed to where else it might be needed and appreciated.
For that matter, that little phenomenon could be the basis of a whole new kind of civilization. The networking of excess capacity. That's what a traditional market does too, but from a very different angle. A guy who owns a factory figures out how to finance the cheap production of millions of widgets, and he gets them into the hands of people who want them, and gets paid for it. Wheras the sharing phenomenon tends to start off with stuff that's somehow already paid for, or that is perceived to be. I've already gathered my MP3 collection, and I'm paying for my DSL line anyway, so if somebody can use some of it, even if I get nothing directly out of it, that's fine.
Better information and better networking will make more things sharable. If somebody came up with something that would scan the titles of my old books and found takers for them automatically, I might not throw them away. If somebody comes up with a sufficiently efficient way of sharing cars, and always being able to find one close by, I wouldn't need to own one. Several companies are already doing that pretty well in certain limited areas.
Seems like it is not just that there are economic markets and there is open source sharing. Most likely more hybrids will pop up.
There are some very different basic aims involved, which wouldn't really have to be that different. There's the traditional capitalist motivation where you mass produce something as cheaply as possible and you "share" it in a direct one-to-one exchange with people who want it. Your aim was profitable exchange, but not really the sharing as such. And then there's the more open source kind of thinking, where you try to come up with something that is as easily sharable as possible. And then you secondarily might derive income from the increased advantages that come from that.
The focus is switching towards drawing economic advantage from the flow of stuff from where it is abundant to where it isn't, as opposed to from taking payment for the stuff itself. Like, information is becoming very free and freely available, but there's a business in making a search engine that finds it for you, even if it is just by serving you some ads along with it.
Really it isn't as new as it seems. When Exxon sells you some oil, it is really only because they found it lying around somewhere, and they took it and brought it to you, and it would have been difficult for you to do that yourself. But they didn't make it, they just took it and pretended they owned it. Most economic engines start off with something like that, even if it is made to look a lot more complicated. Generally somebody grabbed something that was lying around and processed it somehow and transported it to you, and they pretend they made it and they own it, and therefore you have to pay. Where really it is more the processing and transportation they did. The farmer didn't invent pigs. He just fed them for a while, loaded them in a truck, took them to the butcher, etc. The newspaper is printed on paper made from trees pulled out of the ground and transported. Not by anybody who truly owned those trees in the universal scheme of things, just by somebody who pretended they did.
So we could say that the sharing mentality rather starts with the idea that things are inherently free. Or we can see it the other way. Nothing is really ours, it is all stuff that comes from somewhere else, that we temporarily have use of. My music files, my ideas, my computer bandwidth. It is all coming from somewhere else that I don't quite control.
Good will, gratitude, reputation, prestige, cooperation - those are qualities that emerge when we take ownership and control out of the equation. Are they more natural? I don't know, I'd like to think so. But even if that wasn't a given, and even if they aren't inherently stronger forces than greed and control, things can very well be arranged so that they will dominate the playing field.
One can produce things so that they inherently aren't owned. Some free software licenses will specify that the software has to remain free, and you have to pass on the same license if you improve on them. Thus there's no power in direct ownership any longer, and you're instead forced to traffic in the economy of good will and recognition of good work.
More tangible products could be made in a similar fashion. Again, we're seeing it first with information products. You can make a song and give it a license that specifies that it has to remain free, but that you always want to be credited for it. So the only way people have of generating value is not by owning it, but by sharing it, talking about it, improving it, categorizing it, etc. They might be paid for that, but they can't ever be paid for owning it.
Sharing and things being free aren't the same thing of course. I'd like everything to be free, but that's a more long-term project than sharing is. Sharing doesn't mean things don't cost anything. Just that the value of something can be leveraged by sharing it.
Can bicycles be free? It is possible. But it is more likely that somebody makes a scheme that lets me pay a little bit every month and that bicycles then become abundant, so I don't have to worry much about holding on to one.
The new thing is the potential to base economics on the sharing of abundance, rather than the metered access to scarcity. With some luck the economists will make some more calculations and realize that there's much more profit to be made by creating and sharing abundance than there is in reluctantly selling scarce items. Because, well, there's a scarcity of scarcities, but there's unlimited potential in abundance and new ways of sharing. More >
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 27 Jan 2005 @ 23:06, by ming. Economics, Financing, Banking
The world's central banks have begun, slowly and carefully, to switch away from the dollar, to more stable currencies. See Financial Times. That is no small matter. It is a long story, but, in brief, most countries keep large amounts of dollars in reserve. Dollars that nothing gets bought for, but that are kept, well, as reserves, and because some important commodies, like oil, are sold almost exclusively in dollars. And, ok, it is not that those dollars aren't used, but there's continuously a very large amount of them that are not. Which is what allows the U.S economy to run with a huge deficit, in a way that no other economy can. Normally a country has to have an approximate balance in what it exports and imports. But the fact that lots of countries keep US dollars that they've paid for, but which they aren't getting goods for, allows the US to import way way more than it exports, and to a large degree to get it simply by the act of printing money, or, rather, moving some numbers around in computers. If the dollar wasn't used in such a manner, the US economy would be unsustainable, and might have to crash. Anyway, the global system is so tied together that none of those other central banks would really want that. But they also want their reserves to be stable, so they slowly change things. And mostly they speak very diplomatically about it. Maybe a little less so the Chinese guy in Davos this week:"The U.S. dollar is no longer -- in our opinion is no longer -- (seen) as a stable currency, and is devaluating all the time, and that's putting troubles all the time... So the real issue is how to change the regime from a U.S. dollar pegging ... to a more manageable ... reference ... say Euros, yen, dollars -- those kind of more diversified systems ... If you do this, in the beginning you have some kind of initial shock. You have to deal with some devaluation pressures."
Now, even though I'd find a certain enjoyment in looking forward to being able to blame a crashing US economy on the suicidal fiscal policies of Bush's regime, I also get paid most of the time in dollars. Which are worth crap right now. So it is not entirely a good thing that it will get worse. Actually it is worse for anybody who uses dollars outside the U.S. than inside, where, I'm sure, things seem pretty normal. More >
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 12 Nov 2004 @ 23:45, by ming. Economics, Financing, Banking
I've never exactly liked multi-level marketing (MLM). Well, half of the time I hate it. It too often looks like being conned into shelling out a few hundred dollars for some supply of diet pills or something, and then you need to convince all your friends to sign up under you and get really excited about it.
But then again, I like the idea of having thousands of people in my network who'll provide me with a continuous residual income. So, if I could do that without having to force my friends to buy some overpriced vitamins they don't want, I might change my mind.
At times it had seemed very attractive. I've known or met people who've done extremely well with MLM, and obviously, to see those folks who've done best can inspire a lot of other people. Like, I remember this event at the house of one of the top Herbalife people. Larry something. He had made 65 million dollars at the time. So it was a recruitment event in the basement disco of his Beverly Hills mansion. There were at least 500 people. It has ostrich feathers on the wall. His couple of Ferraris and Lamborghinis were strategically parked out front. Well, he seemed like a nice guy too. And they put on quite a show. Seemed like those vitamins cured cancer and just about anything else. And lots of previously normal little folks had great success stories to tell about how well they'd done on marketing it.
However inspiring it was, I didn't sign up more than maybe one or two people, who didn't do anything with it. My family ate the vitamins for a year or so, which was perfectly fine, albeit a little expensive.
And, statistically speaking, that's how it goes for most people who sign up in an MLM. They think it sounds great at first. They imagine themselves making 10s of thousands in residual income every month. They find the money for the starter package somewhere. And that's usually how far they get. Because they don't know how to be as inspiring as the people who hooked them on to it. And because their friends aren't really interested, and they don't know how to reach anybody else who is.
Even at those times when I temporarily thought it was a great idea, I've had moral qualms about the pyramid nature of it. I mean, obviously the scheme is in the shape of a pyramid. People sign up under somebody else, becoming part of their down-line. And the money they spend to join or to buy products is what goes to fund the people higher up. But you can pretty easily see it as a pyramid where a few people at the top are doing really well, some of them becoming millionaires, being able to tell great success stories. And the further we go down in the pyramid, the more dull it looks. At the bottom are people who paid money for nothing, or there are people who work at actually selling the product it all was about. Seems like there will have to be a great many loosers to fund a few winners.
But then it just struck me. This is really very similar to how a capitalist economy works. Most people haven't thought of it that way, but it is really structured as a pyramid scheme too. Except for that it is so complicated and cleverly done that it pretty much can keep going indefinitely, without anybody really noticing.
A capitalist economy works in part on the expectation that one can make investments that produce returns. I.e. you give something out and you get more back. Like, an investor invests in a company, or a bank gives a loan, and they want it back with interest. So the company does a bunch of things that does the same thing. They put the money into things that give more money back. I.e. they pass the buck to somebody else, in order to get a return for themselves and the people behind them. And so forth, through numerous steps. It is really inherently the same idea as a pyramid scheme. And at the bottom of the pyramid you find the people who do the actual work, or who buy the products. And they generally get less back than they put out. I.e. they work hard and get paid less than what it is worth, in order to finance that the people higher up in the scheme get their returns. Which produces our typical societal arrangement where a small percentage of people are doing really well, and the majority of people are just getting by, stuck in a daily routine.
You see it even more clearly in the way money is actually created in the first place. No, it doesn't inherenly come from hard work. It might fund some hard work later, but at its origin it has nothing whatsoever to do with it. A bank creates the money out of thin air, in order to lend it out. The bank has certain limits on how much money it can create, which is in ratio to how much money they currently have as actual deposits. Like, they can create 10 times as much money as what is deposited there. That money doesn't go anywhere. The money that is "lent" out is created as entries in a computer. The bank then puts that money at the disposal of somebody that they expect will be able to pay it back with interest. I.e. to somebody who will turn a profit from some activity, or who'll earn the extra money somewhere else, in order to pay it back.
Now, mind you, money can ONLY be created by a bank. Most governments retain the right to create money as well, but currently none of them do. Even most of the money the government borrows is created out of nothing by a bank, and the government needs to pay it back with interest.
Now, it shouldn't be very hard to notice that the math is in principle impossible. Certain amounts of money are being created, and more than that needs to come back. Lots more, as interest compounds quickly. In the big picture, that isn't possible. There is no other source of it, so you can't pay more back than what exists. And the truth of the matter is that if all loans in the world were called back this moment, not only would all existing money be used up for that purpose, but there wouldn't be enough.
See, in case you missed it, a magical thing that happens when you pay back a loan to a bank is that the money then disappears. It is not that they had been missing it, and now we paid it "back". It didn't exist before they lent it out, and it stops existing after you pay it back. But the interest, which is the bank's profit, will keep existing.
The whole thing is based on that the profit, the returns, the extra interest, will come from the next guy in line. You pass the buck, or rather the debt. You start off by owing something, and you make somebody else pay not only that, but enough so that you can keep something, in addition to paying back your source.
And if you freeze the whole picture right now, it isn't possible for everybody to be paid. Because there would invevitably be a relatively small number of people that have a lot, or that a lot is owed to, and a whole lot of people that owe it, and can't pay it. The losers at the bottom of the pyramid.
But the amazing thing is that it still mostly works. The wheels keep churning. People are busy running businesses and making a living and buying and selling things. And most don't give that whole thing a single though. Those who do best are keenly aware of the magic of compound interest, and spend their efforts on putting their resources where they give the biggest return. But hardly anybody worries about the inherent impossibility in it all. And, actually, it isn't as impossible as I make it out to be, because it is a complex dynamic system, always in motion, which gives it a certain stability that isn't obvious when we take a snapshot.
And maybe I'm being a little too harsh about it. I would tend to use that kind of logic to attack the system, to complain about how insane it is, and how it is only designed to make the people at the top very rich, and keep the people at the bottom enslaved in an impossible situation.
But we can also look at it different ways, because essentially, seemingly against logic, the system works, and might well keep working for quite a while.
It might keep working in part because it is very complex and opaque, so nobody sees through it, and one can maintain one's confidence in the money system. It keeps working also because there are many ways to pass the buck to others. I.e. anybody has the opportunity for investing their capital wisely and getting a return back. And there's actually nothing that stops most everybody from being a business which gains a profit. There's no law that says you have to be the suffering lower rungs of the pyramid. People are there in part because they don't succeed in playing the capitalist game very well, so they just get taken advantage of. But they could play if they learned how.
The economy is actually arranged so the money can keep moving indefinitely. The same dollar can be used any number of times. So even though you're providing a profit for somebody higher up in some pyramid, you're free to set up the same type of scheme for yourself, and do something that produces more return than what you put into it. There's no scarcity of pyramid schemes. Or, more kindly, systems that can leverage your investment into much more.
And, in-between, money can be passed around any number of times. If the money velocity increases, more people can be paid off of the same money. It isn't all about borrowing and paying back loans, of course. I could earn and spend loads of money without being involved with any loans at all, and without thinking about where the money originally came from. I could just have a well-paying job with a pension plan and feel happy and secure, without directly having to worry about business or where money comes from.
But it all still is built on a mechanism of getting returns. Getting more back than you put out. Getting as many people as possible to give you more back than you give them. At least that's the game for those who're playing the game.
So, now, a multi-level marketing scheme is not all that different. It is simply more transparent. It is easier to see the pyramid forming within a particular scheme, so easier to have qualms about it, and start thinking it is impossible. It is also easier for it to obviously not work as well, if everybody's in the same pyramid, and there's only a very limited number of products and things to do in it. But there's nothing really that stops such an arrangement from being complex enough that everybody can make profits and keep going indefinitely. Because there can be many different types of businesses, and because money can circulate endlessly, at any kind of speed.
My objections about the morality of MLM aren't very different from my qualms about a general capitalist economy. Is it fair that some people get extra money back without directly doing any work for it? Well, if it would only be theoretically possible for a few people to do it, I might not think it is fair. But if it is possible for everybody, then it might be a good thing. It indeed might be possible to keep the balls in the air, and have everybody profit from it, as long as they think as businesses, rather than as consumers and workers.
Thinking as an investor or as a business is obviously very different from thinking as a consumer or a worker. The inherent laws of how it works are different. You won't be a good investor if you only think about what work you can do and what stuff you can buy. Somebody who's good at business or at investing is looking for ways they can get their capital and resources to do the most possible work, to give the biggest return. Very different.
So, now, I still have a lot of qualms about our money economy and the society it tends to create. But several thoughts:
There's apparently no fundamental reason that most participants couldn't do very well even in an economy based on pyramids, or on returns on investment. But they have to all be willing to become business people, rather than workers and consumers
There's no big reason why one can't build networks as a sub-set of the bigger economy where the participants do that same thing with each other, and maybe create returns faster than the general economy, and where most people could do well. But, again, they would know how to act as business people.
 There might well be some possible scheme that works better than pyramid and interest systems, and that inherently would make it more possible for everybody to play. I.e. there's gotta be some kind of constellation of people that can both out-compete the greed-based capitalist system AND provide the leverage to do more with less AND make it actually work for most people.
A profit/interest/pyramid based money system can easily out-compete a local money system with a flat structure that only uses currency for exchange for goods and services. But it has a lot of negative characteristics. Lots of effort is wasted. People are forced or tricked into paying for lots of things that aren't useful, and the system leaves most people lost in struggle. That could potentially be different, if everybody just played the system well, and made sure they had good information. But there might be other systems that are more easily playable, ensuring that more people actually will play in them, and thus be more likely to be successful at them.
So, I'm looking for a different geometry, I guess. More complex, in a synergetic way.
And, in the meantime, I'll try to refrain from feeling bad about concentrating on investing my time and effort for the maximum return. More >
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