I watched all 22 parts.  I found it clarifying and cogent.  I'm skeptical of parts of it.  I'm not sure how a debt-free economy would work, but I have come to believe the Fed is evil and it's got to go. 

This documentary appears to have been made in the mid-nineties, and everything it predicted 15 years ago is happening.

I would be curious to hear what others think of it.

Part 1: Link to other installments on Youtube
http://www.youtube.com/watch?v=lXb-LrVkuwM

I'm not sure how a debt-free economy would work


It'd be enormously deflationary.  That's fantastic if you have lots of cash, but horrible for everybody who's actually trying to run a business.  Or a household.

Like it or lump it, households and businesses run on debt.  Without debt, you can't afford your $50K in student loans to get the degree that qualifies you as something other than a burger-flipper.  Without debt, you can't afford that $500K fixer-upper, even if it costs $50K, because you're no longer making $100K, you're making $10K.  (OK, so I'm a moron for living in an area in which $500K won't buy a fixer-upper, but at least I wasn't dumb enough to buy one at $750K five years ago!)

Sure, you've got $1.00/gallon gas from $20/bbl oil.  But that just means that everybody currently pumping that oil went bankrupt.  Except for the oil companies that happen to have cash on their balance sheets from the days of $100/bbl oil.  ("Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicking and he's not. That's why. He's picking up some bargains.")  Congrats.  The cost of filling your car went down by 75%, but your salary went down by 90%.  And since nobody will give you a loan at any price, you still can't afford that home that costs five times your salary.

The most interesting development of the past week was that Swiss bond yields went negative.

This indicates that people who actually have cash are willing to lend it to the Swiss at a small, but guaranteed loss, rather than invest it in the bonds of the US or European governments.  Barring QE3 (another round of controlled currency devaluation in an attempt to inflate commodities/equities and drive investment capital into those markets rather than to Switzerland), stocks are right out.

May we live in interesting times.

Apropos of nothing, Pilkington and Graeber on What are Profits and What is Debt, and for the trifecta, Profits and Disequilibrium.

(Annoying.  For all three articles, clicking them directly from here results in threads without comments.  You have to click on the header of the article as hosted at NC to read the comments, even though the URLs are identical and I can replicate this annoyance whether I send the correct Referrer-ID or not.  Anyways.  If you get a version of the articles without any comments, click on the title of the article to get the comments, because the ciscussion in the comments to all three articles is almost as illuminating as the articles themselves.)

It'd be enormously deflationary.  That's fantastic if you have lots of cash, but horrible for everybody who's actually trying to run a business.  Or a household.

It's a bit like the Irishman giving directions*: "Well, I wouldn't be starting from here"

"Enormously deflationary" is still a teensy wee bit of an understatement.. To change from our current debt-financed model to one without would be pretty much catastrophic for people like me (not to mention almost impossible to sort out what counts as "fair" in the who-owes-what-to-whom stakes).  I'm not sure how it would be possible to untangle it all to move to a debt-free economy.


* Personal note: this has happened every time I have asked for directions in Ireland.. well, the first time.  And I haven't asked a second time, just to keep the perfect score.

It sure would be nice to live without debt, and we do all we can to do so (ie no credit card balance), but who can afford to buy a car outright, unless its a junker, which will ultimately cost you more than a new one, not to mention buying a house.  The trick is to manage debt responsibly

And no fractional reserve banking would require an end to the FDIC.  Might as well keep your money in the mattress.

I liked the documentary, though it strays into tinfoil hat territory, and the editing is terrible. 

You can buy all the education you want but it doesn't mean you'll be able to get a job as anything more than a burger flipper.  On top of that, you'll be enslaved to debts you can never repay.  That's what I resent about our debt culture.
::)

You can buy all the education you want but it doesn't mean you'll be able to get a job as anything more than a burger flipper.  On top of that, you'll be enslaved to debts you can never repay.  That's what I resent about our debt culture.
::)


What I resent is that college administrators in the executive levels are generally spendthrifts and so the increasing cost of a college education has consistently outstripped the cost of living for decades.  College professors spend an ever-decreasing amount of their time actually teaching... that's left to Master and PhD candidates to do while the profs sit at coffeehouses celebrating their tenure and concocting their next grant application so that they can study the mating habits of coffin flies.

The college system is even more featherbedded than the public primary & secondary school systems.

Pennsylvania cut the public college appropriations by ~20% this year, and I expect in the next go-round to see an added 7-10% cut. That will still leave plenty of room to get rid of ridiculous programs and staff positions.  The colleges could easily INCREASE the number of teaching staff members if they would get rid of the excessive admin positions.

Until then, I get to see the new $2MM fitness center under construction at the local Penn State campus.  ::)

What I resent is that college administrators in the executive levels are generally spendthrifts and so the increasing cost of a college education has consistently outstripped the cost of living for decades.  College professors spend an ever-decreasing amount of their time actually teaching... that's left to Master and PhD candidates to do while the profs sit at coffeehouses celebrating their tenure and concocting their next grant application so that they can study the mating habits of coffin flies.

The college system is even more featherbedded than the public primary & secondary school systems.

Pennsylvania cut the public college appropriations by ~20% this year, and I expect in the next go-round to see an added 7-10% cut. That will still leave plenty of room to get rid of ridiculous programs and staff positions.  The colleges could easily INCREASE the number of teaching staff members if they would get rid of the excessive admin positions.

Until then, I get to see the new $2MM fitness center under construction at the local Penn State campus.  ::)


Publish or perish, my friend.  I don't hold it against the professors.  You don't make tenure by, you know, teaching.  You have to get your name in the journals and kiss ass at the right cocktail parties!
::)

Years ago, I'd say almost 20 years ago, we watched a video (VHS) with a similar message. Live without debt, purchase residential units/housing, vehicles. In other words, don't owe anything to anyone. It's a nice life principle to suggest, put forward and try to live by.

Having said that, today's housing prices make it difficult to achieve that.
When I was born (let's say 50 years ago), you could buy a house for 20 grand, a new car for a little over 1 grand. My parents lived without debt (as far as I know). The only house young people can afford to buy, paying cash,  are those little red houses in a monopoly game.  :-\\


Thanks for posting the video, Max. I really should spend some time to watch it.

I was never able to repay my student loans because my psychiatric issues kept me from building a career.  I have a BA in journalism I wish I had never gotten. 
Try living without credit.  You become a virtual criminal.
::)

The only house young people can afford to buy, paying cash,  are those little red houses in a monopoly game.  :-\\

Made me think that when you have a property mortgaged in Monopoly, you can't collect any income from it (or build any houses/hotels)

This is just wrong!  When you mortgage a property, you should pay interest (given the nature of the game, I'd suggest 10% of all mortgaged property value every time you pass go), but still be able to collect when people land.. hmm.. methinks I'm getting a bit carried away, here.

What I resent is that college administrators in the executive levels are generally spendthrifts and so the increasing cost of a college education has consistently outstripped the cost of living for decades.  College professors spend an ever-decreasing amount of their time actually teaching... that's left to Master and PhD candidates to do while the profs sit at coffeehouses celebrating their tenure and concocting their next grant application so that they can study the mating habits of coffin flies.

The college system is even more featherbedded than the public primary & secondary school systems.

Pennsylvania cut the public college appropriations by ~20% this year, and I expect in the next go-round to see an added 7-10% cut. That will still leave plenty of room to get rid of ridiculous programs and staff positions.  The colleges could easily INCREASE the number of teaching staff members if they would get rid of the excessive admin positions.

Until then, I get to see the new $2MM fitness center under construction at the local Penn State campus.  ::)


As Max said, Publish or parish, at least at the university level, where the typical teaching load for professors is three sections and two preps, but you had better get that book, or those articles published.  And the typical intro course that one teaches might have 150 students.  The TA's teach the "recitation" sections. At the typical 4 year college (where most professors actually work) the teaching load is three preps and four sections plus some form of "scholarly activity" and college/community service.  So the myth of the lazy tenured prof just doesn't hold water.  Sure, there are a few cases of the distinguished prof (the real big guns in their fields) who might teach 1 seminar, but we're talking about the likes of a Steven Hawking or Steven Gould (des.)  And at those 4 year schools where most of us teach, teaching is the prime consideration for tenure.  From my own experience teaching  at two state colleges, the work week was something like 45-50 hours.  For me it just didn't seem like work.

As to tuition, state support for state colleges has been declining for a long time, at my last school the state now provides only 9% of the budget, so the only source of funding has become tuitions and the occasional grant.  Need tuition $$$, attract students.  And what do students want?  Fancy dorms resident halls, state of the art fitness centers and **** cafater dining facilities with gourmet food.  Ya gotta please your "customers".

I might agree that administrative staffs are bloated though

As Max said, Publish or parish, at least at the university level, where the typical teaching load for professors is three sections and two preps, but you had better get that book, or those articles published.  And the typical intro course that one teaches might have 150 students.  The TA's teach the "recitation" sections. At the typical 4 year college (where most professors actually work) the teaching load is three preps and four sections plus some form of "scholarly activity" and college/community service.  So the myth of the lazy tenured prof just doesn't hold water.  Sure, there are a few cases of the distinguished prof (the real big guns in their fields) who might teach 1 seminar, but we're talking about the likes of a Steven Hawking or Steven Gould (des.)  And at those 4 year schools where most of us teach, teaching is the prime consideration for tenure.  From my own experience teaching  at two state colleges, the work week was something like 45-50 hours.  For me it just didn't seem like work.

As to tuition, state support for state colleges has been declining for a long time, at my last school the state now provides only 9% of the budget, so the only source of funding has become tuitions and the occasional grant.  Need tuition $$$, attract students.  And what do students want?  Fancy dorms resident halls, state of the art fitness centers and **** cafater dining facilities with gourmet food.  Ya gotta please your "customers".

I might agree that administrative staffs are bloated though


That's what happened to UMass under the "run it like a business" mantra in the eighties.  The bureaucracy mushroomed, tuition and fees exploded, and state support sank like a stone.  Pencil pushers in the admin building make quintuple the salary of an adjunct professor.  It's obscene.


Made me think that when you have a property mortgaged in Monopoly, you can't collect any income from it (or build any houses/hotels)

This is just wrong!  When you mortgage a property, you should pay interest (given the nature of the game, I'd suggest 10% of all mortgaged property value every time you pass go), but still be able to collect when people land.. hmm.. methinks I'm getting a bit carried away, here.


Which leads to one of the biggest conflicts between the Muslim world and the West.  It is forbidden under Sharia law to lend money with interest. 

For me, the video calls to question the sanctity of the debtor to pay his debts.  Money is and always has been a contrived instrument for managing debt and the creditors in any society will always be in charge and will always declare the debtors to owe them morally even more than fiscally.

Can't remember who said it first, but revolutions share a common platform: Cancel the debts and redistribute the land.

We saw the public scolds in 2008 blame the housing bubble burst not on those who devise bogus fiduciary schemes, but on poor folks.  The poor must be chastened for they have fallen from God.
http://www.inthe00s.com/smile/13/jerk.gif

We saw the public scolds in 2008 blame the housing bubble burst not on those who devise bogus fiduciary schemes, but on poor folks.  The poor must be chastened for they have fallen from God.
http://www.inthe00s.com/smile/13/jerk.gif





Only according to conservative, or as I like to call them "free market freaks".  Anyone with an understanding of the exploitation involved blamed the "jolly bankers"

It sure would be nice to live without debt, and we do all we can to do so (ie no credit card balance), but who can afford to buy a car outright, unless its a junker, which will ultimately cost you more than a new one, not to mention buying a house.  The trick is to manage debt responsibly


Individuals can live without debt.  Corporations - really - can't.  I'll gloss over the paradox of thrift (which I really shouldn't, because it's at the core of this debate). 

But for the purposes of this post, I'll allow that an individual might scrape through college (or get giftrants from his/her parents instead of loans), might live in a small apartment, might drive a used car for a few years, but very few organizations can afford to hire a hundred engineers and a dozen salesweasels (or depending on the industry, the other way around! :) without debt.  And nobody builds an office tower (on the 23rd floor of which said engineers and salesweasels work) without taking a loan from a bank for X% interest, so they can use the bank's cash to pay for the land/construction labor, in the hope that a steady stream of future businesses (such as our hypothetical bunch of nerds and weasels) will be willing to pay X+Y% in rent over the next 30 years.

The extent to which nation states can/can't live without debt is a matter up for debate.  Not in the sense of "my ideology says yes/no" or "I'm right because" during a debate between economists, but in the sense of the world is going to find out, for real, pretty soon.  One of the big factors at the national level will be whether or not a nation-state issues its own currency.  The United States can pay any debt it owes in dollars, because its central bank can print as many dollars as it likes, quite literally at the touch of a keyboard.  The nations that make up the EU, not so much.

That doesn't mean the USD is "worth" more than the Euro, but it also doesn't mean the USD is worth less than a Euro.  And that's where it gets interesting.  Unfortunately, by "interesting", I mean I haven't a clue how it actually plays out, nor how to profit by it.

But I'm in good company.

http://blogs.reuters.com/felix-salmon/files/2011/09/9yrold2.jpg

Even JP Morgan's analysts have been reduced to explaining it with Lego (PDF).

Even JP Morgan's analysts have been reduced to explaining it with Lego (PDF).


So I found a better explanation.

http://3.bp.blogspot.com/-M3s5B3Ov_64/TnBT_gwOJMI/AAAAAAAAAbw/FLqtggnT280/s1600/euroview.jpg

Incidentally, I remember reading articles like this in 2008.  I hope not to make the same mistake twice. 

I was never able to repay my student loans because my psychiatric issues kept me from building a career.  I have a BA in journalism I wish I had never gotten. 
Try living without credit.  You become a virtual criminal.
::)


I get very anxious over anything debt-related. The only credit I have had was a couple of store-cards lasting less than a month just to get a discount from a clothes store (which I wasn't happy doing so haven't since. I would rather pay the full amount of money for clothes now while I have it than wait 30 days at a point where I may not have the money) and an instalment plan with my dentist over a span of 2 years. I paid the store credit bill when it was due and cut the cards up immediately and, after aggressively saving my money over the last 8 or 9 months I will completely pay off my whole instalment plan when I see my orthodontist this next month. I have never owned or made plans to mortgage any property.

One thing I was told about not having credit is the estate agent won't give me a mortgage if I don't have a credit rating because, even though that should be proof enough that I am good with my money, they view it as lack of experience with credit-borrowing.

I get very anxious over anything debt-related. The only credit I have had was a couple of store-cards lasting less than a month just to get a discount from a clothes store (which I wasn't happy doing so haven't since. I would rather pay the full amount of money for clothes now while I have it than wait 30 days at a point where I may not have the money) and an instalment plan with my dentist over a span of 2 years. I paid the store credit bill when it was due and cut the cards up immediately and, after aggressively saving my money over the last 8 or 9 months I will completely pay off my whole instalment plan when I see my orthodontist this next month. I have never owned or made plans to mortgage any property.

One thing I was told about not having credit is the estate agent won't give me a mortgage if I don't have a credit rating because, even though that should be proof enough that I am good with my money, they view it as lack of experience with credit-borrowing.


A classical "catch 22"