Showing posts with label guardian. Show all posts
Showing posts with label guardian. Show all posts

Friday, 20 November 2015

Quantum computers a step closer to reality after silicon coding breakthrough

 

All this could have profound importance for the development of Transfinancial_Economics. Blogger Ref  http://www.p2pfoundation.net/Transfinancial_Economics

In the race to build the first functional quantum computer, Australian researchers at the University of NSW find coding possible in silicon

 
Australian researchers have written quantum code on a silicon microchip with the highest score ever recorded in an experiment. Video: UNSWTV
Australian researchers have demonstrated that a quantum version of computer code can be written on a silicon microchip with the highest level of accuracy ever recorded.
A quantum computer uses atoms rather than transistors as its processing unit, allowing it to conduct multiple complex calculations at once and at high speed. In the race to build the first functional quantum computer scientists around the world have been trying to write quantum code in a range of materials such as caesium, aluminium, niobium titanium nitride and diamond.
But researchers at the University of NSW have long been basing their research around silicon, because silicon is the building block of all modern electronic devices, which would make quantum code in a silicon microchip easier, more cost-effective and highly scalable.
For the first time they managed to entangle a pair of quantum bits – units of quantum information also known as qubits – in silicon. Qubits allow computers to access code vastly richer than the digital codes used in normal computers which gives quantum computers their superior power.
By “entangling” the two qubits, in this case an electron and the nucleus of a single phosphorus atom, the researchers showed that the particles remained connected even when separated so that actions performed on one still affected the other.
“Qubits are physical objects that have two typical states, so imagine a spin that can point north or south, or a circuit where current can flow clockwise and counterclockwise, all binary possibilities,” Professor Andrea Morello, who led the research, said.
“But if you entangle the two of them together, you get a superposition of the different combinations of binary choice, so a spin can now point both north and south, and the current can flow clockwise and counter clockwise. Two binary things are occurring at the same time.”
This entanglement meant a quantum computing language or code vastly richer than standard digital codes used in normal computers could be accessed, with these special codes giving quantum computers their superior power, he said.
“You can think of it as having an additional vocabulary,” Morello, program manager at the Centre for Quantum Computation and Communication Technology, said.
“When you speak, you have 26 letters and a few hundred thousand words available to you. In a classical computer, the vocabulary is a combination of zeros and ones that constitute its code.
“In a quantum computer, imagine that you have the same zeros and ones, but because entanglement of quantum bits allow you to combine them in a way impossible on normal computers, it would be the equivalent of suddenly have a billion new words available to you using those same 26 letters.
“This is why quantum computing is so powerful.”
To mathematically prove the entanglement of the two particles had occurred, the finding had to past the Bells Test, a stringent and unforgiving test that detects even the most minor imperfection.
The research passed the test with the highest score ever recorded in an experiment. The findings were published in the international journal, Nature Nanotechnology, on Tuesday.


Professor Andrew Dzurak, a silicon nanofabrication expert, said it demonstrated that silicon was a “fantastic” platform for quantum computing.
“We suspected that for some time, but this really clearly demonstrates it, and it also shows that these single-atom quantum bits can be very, very promising,” he said.
“In the area of silicon-based quantum computing, Australia is clearly in the lead, and is now a good two years ahead of our nearest competition in the field.”
Morello said currently there was a fairly limited understanding of what a functional quantum computer could do, since there was no prototype.
“It’s hard to invent a new algorithm without a computer to try it on,” he said.
But quantum computing’s greatest potential was perhaps in the field of medicine, he said.
“Wouldn’t you want a computer where you could tell it you had cancer and ask it what molecule to inject to kill it?” Morello said.
“The reason you can’t do that now is because even if you had full understanding of cancer cell killing you, there is no calculation that can answer that question, as it is a quantum problem. This is where quantum computing might have the biggest impact.”

Tuesday, 8 September 2015

Jeremy Corbyn's opposition to austerity is actually mainstream economics

Labour leadership contender Jeremy Corbyn.
Jeremy Corbyn wins correspondents’ support for voting against the £12bn in cuts in the welfare bill. Photograph: Jeff Overs/BBC/PA
The accusation is widely made that Jeremy Corbyn and his supporters have moved to the extreme left on economic policy. But this is not supported by the candidate’s statements or policies


His opposition to austerity is actually mainstream economics, even backed by the conservative IMF. He aims to boost growth and prosperity. He voted against the shameful £12bn in cuts in the welfare bill.
Despite the barrage of media coverage to the contrary, it is the current government’s policy and its objectives which are extreme. The attempt to produce a balanced public sector budget primarily through cuts to spending failed in the previous parliament. Increasing child poverty and cutting support for the most vulnerable is unjustifiable. Cutting government investment in the name of prudence is wrong because it prevents growth, innovation and productivity increases, which are all much needed by our economy, and so over time increases the debt due to lower tax receipts.
We the undersigned are not all supporters of Jeremy Corbyn. But we hope to clarify just where the “extremism” lies in the current economic debate.
Yours,
David BlanchflowerBruce V Rauner professor of economics, Dartmouth and Stirling, ex-member of the MPC
Mariana MazzucatoProfessor, Sussex
Grazia Ietto-GilliesEmeritus professor, London South Bank University
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Malcolm WalkerEmeritus professor, Leeds
Robert WadeProfessor, LSE
Michael BurkeEconomist
Steve KeenProfessor, Kingston University London
Victoria ChickEmeritus professor, UCL
Anna CooteNEF personal capacity
Ozlem OnaranProfessor, Greenwich
Andrew CumbersProfessor, Glasgow
Tina RobertsEconomist
Dr Suzanne J KonzelmannBirkbeck
Tanweer AliLecturer, New York
John WeeksProfessor, SOAS
Marco Veronese PassarellaLecturer, University of Leeds

Dr Judith HeyerEmeritus Fellow, Somerville College, Oxford
Dr Jerome De-HenauSenior lecturer, Open University
Stefano LucarelliProfessor, University of Bergamo
Paul HudsonFormerly Universität Wissemburg-Halle
Mario SeccarecciaProfessor, Ottawa
Dr Pritam SinghProfessor, Oxford Brookes
Arturo HermannSenior research fellow at Istat, Rome
Dr John RobertsBrunel
Cyrus BinaProfessor, Minnesota
Alan FreemanRetired former economist
George IrvinProfessor, SOAS
Susan PashkoffEconomist
Radhika DesaiProfessor, University of Manitoba
Diego Sánchez-AncocheaAssociate professor, University of Oxford
Guglielmo Forges DavanzatiAssociate professor, University of Salento
Jeanette FindlaySenior lecturer, Glasgow
Raphael KaplinskyEmeritus professor, Open University
John RossSocialist Economic Bulletin
Steven HailAdjunct lecturer, University of Adelaide
Louis-Philippe RochonAssociate professor, Laurentian
Hilary WainwrightEditor, Red Pepper
Arturo HermannSenior researcher, ISAE, Rome
Joshua Ryan-CollinsNEF personal capacity
James MedwayLecturer, City University
Alberto PaloniProfessor, Glasgow
Dr Mary RobertonLeeds

Friday, 19 September 2014

Climate change report: prevent damage by overhauling global economy


Reducing emissions can generate better growth than old high-carbon model, says co-author of report, Lord Stern   Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics

Co2 Pollution and climate change : General view of a coking plant in the city of Bytom Silesia
The report about the climate and economy comes ahead of a UN-convened summit of world leaders on global warming. Photograph: Peter Andrews/Reuters
The world can still act in time to stave off the worst effects of climate change, and enjoy the fruits of continued economic growth as long as the global economy can be transformed within the next 15 years, a group of the world's leading economists and political leaders will argue on Tuesday.
Tackling climate change can be a boon to prosperity, rather than a brake, according to the study involving a roll-call of the globe's biggest institutions, including the UN, the OECD group of rich countries, the International Monetary Fund and the World Bank, and co-authored by Lord Stern, one of the world's most influential voices on climate economics.
The report comes ahead of a UN-convened summit of world leaders on global warming next week at which David Cameron has pledged to lead calls for strong action.
"Reducing emissions is not only compatible with economic growth and development – if done well it can actually generate better growth than the old high-carbon model," said Stern.
It is his most significant intervention in climate politics since the landmark 2006 Stern review of the economics of climate change, which made the case that tackling climate change as a matter of urgency will be cheaper than attempting to deal with the effects of the problem decades in the future. That report marked a revolution in thinking on global warming, and was a major factor in the agreements forged in Copenhagen in 2009 by which developed and major developing countries for the first time set out joint measures to reduce greenhouse gas emissions.
The economic transformation proposed in the new report will improve the lives of billions, the authors argue, from people suffering from air pollution in crowded cities to farmers struggling with poor soils in developing countries, the authors found. But achieving this change will require strong political action to set limits on carbon dioxide emissions, while promoting alternatives such as renewable energy, sustainable cities, teaching modern farming techniques and better-designed transport.
The world is expected to add billions of people to the global population in the next two decades, and trillions of dollars in economic growth – but if the massive expected growth of developing world cities is poorly managed, and global investment is poured into existing high-carbon infrastructure, then a unique opportunity to change the pattern of prosperity will have been lost, and billions of people will be left the poorer as a result, the report warns.
Stern gave the example of cities, which if designed on public transport can have more efficient economies – because people aren't spending hours commuting and polluting, with its attendant effects on health – as well as better quality of life and lower carbon emissions.
The energy and climate change secretary, Ed Davey, told the Guardian that the UK has already seen benefits from focusing on clean development, and was committed to helping developing countries do the same. He said: "It has required UK business and international investors to recognise the costs of failure and the benefits of change and it has been sustained by a strong, vocal and committed network of NGOs, pressure groups and activists who have been instrumental in sustaining political will and public acceptance."
Cutting Co2 pollution : solar panel on the rooftop of a house in India Promoting renewable energy sources is a key feature in achieving economic transformation, the report says. Photograph: Rafiq Maqbool/AP At next week's climate summit, the UN secretary general, Ban Ki-moon, will convene heads of state and government from around the world to discuss climate change for the first time since the 2009 Copenhagen conference, which produced the first commitments from major developing countries such as China and India to curb emissions, and marked the first time the US agreed to binding emissions targets, but was widely derided for the scenes of chaos that accompanied it.
Convening world leaders again is a risky strategy, but is seen by the UN as essential to lay the ground for a crunch meeting in Paris next year, at which world governments will attempt to forge a new agreement that will cut global greenhouse gas emissions after 2020, when current pledges run out. The EU has vowed to cut emissions by 40% by 2030, compared with 1990 levels, but is the only major developed country bloc to have laid out clear plans.
Today's report, the New Climate Economy, from the Global Commission on the Economy and Climate, says that although technological "fixes" to climate change – such as renewable energy, low-carbon fuels, better urban design and better use of agricultural land – are growing fast, they are currently nowhere near enough to produce the transformation needed. As new power stations, cities and transport networks are built today, they are still being engineered on a high-carbon basis – coal-fired power plants, roads rather than public transport, slums without facilities rather than planned developments – and once these are built they lock in high carbon emissions for decades to come. Breaking that cycle requires a coordinated effort, from rich and poor countries, that prioritises sustainability and penalises high-carbon growth, for instance through a price on carbon.
Such efforts will come at a price, but this is far outweighed by the benefits in economic growth and improvements in health, the report suggests. For instance, reducing the world's dependence on coal and other dirty fuels will cut air pollution and remove a key source of strain on healthcare systems.
The Global Commission on the Economy and Climate, launched a year ago by the UK along with six other countries, has involved the World Bank, the International Monetary Fund, the OECD, the International Energy Agency and the UN, as well as several research institutes, and former world premiers. It has been chaired by the Mexican president, Felipe Calderón, and advised by leading economists including Lord Stern and Nobel prize winners Daniel Kahneman and Michael Spence.
Ottmar Edenhofer, chief economist at the Potsdam Institute for Climate Impact Research, and an adviser to the report, said: "Economic growth and emissions reductions can be achieved together, the report clearly confirms … Pricing CO2 is key. The heaven above us today is a waste dump for gases that harm our climate system. Wealthy states are disposing of them, free of charge, at the expense of all of us. If emitting CO2 came at a reasonable price, this would stabilise investors' expectations so they can push forward the innovation of climate friendly technologies."

Saturday, 7 June 2014

Intellectual property is putting circular economy in jeopardy

Manufacturers like BMW, Apple and Nikon could accomplish far more if they worked with independent businesses, instead of against them
Car Production At The BMW Mini Factory
Why isn't BMW recycling more of its own cars in Europe? Even if they wanted to, they probably couldn't. Photograph: Bloomberg/Bloomberg via Getty Images
I watch as workers at BMW's Recycling and Dismantling Centre fish around for an alternator under the hood of what must have been a mid-sized saloon- except this car doesn't have a bonnet anymore. In fact, this car doesn't have much of anything anymore. Its skeletal remains picked clean of most detachable components, this car is one of about 6,000 BMWs recycled at the centre every year.
The international car manufacturer has been disassembling cars in Landshut, Germany since 1994. For a brand of luxury cars, the disassembly centre is surprisingly low-tech. No scientists with clipboards swirling reclaimed motor oil around in beakers. No lab-coated boffins testing car components. Instead, the centre is a familiar industrial mix of overalls, forklifts, and stripped-down cars, just like every other scrap facility I've been to in my life.
But this recycling centre is pretty unique for BMW. After all, BMW makes cars; they don't usually unmake them. Still, in order to meet European environmental standards, BMW has to prove that their cars are 85% recyclable and reusable. So, BMW runs a European recycling plant, where they recycle concept cars, prototypes, and crash-test specimens - cars with components that, for intellectual property reasons, can't be reused.
The 6,000 cars recycled here are just a drop in the bucket compared to what BMW ships worldwide: nearly 1.8m cars in 2012 alone. So, why isn't BMW recycling more of its own cars in Europe, where programmes—like the circular economy—have driven home the profound importance of recycling and reuse at the manufacturer level?
The short answer: even if they wanted to, they probably couldn't.
Like all mass-produced products, BMWs are everywhere: in Manchester, in Stuttgart, in Metz. When those cars come to the end of their useful lives, they don't drive themselves back to the recycling centre in Landshut. The cars stay in Manchester, in Stuttgart, and in Metz. BMW would never be able get all their products back to a single collection centre.
And BMW isn't the only one.
I've spoken with a lot of companies that are interested in circular economy principles and they're all saying the same thing. They want to recycle their own goods. Even more than that, they'd like to repair and refurbish their products for resale (reusing old products is more profitable and more green than making new ones, even from recycled material). But manufacturers just haven't been able to get enough of their own products back from consumers. The products are just too dispersed.
IKEA can't put a collection bin in every community where someone bought a sensibly-priced bed. Philips can't send a company representative door-to-door to collect the nation's broken kettles. And BMW can't run a scrap-yard in every city where someone's purchased a car.
Luckily, they don't have to.
There's a legion of recyclers, refurbishers, and repairers that could do it for them - millions of small businesses already on the ground in Manchester, in Stuttgart, in Metz, and in every other city around the globe. And those small-scale, independent businesses are much more efficient at reuse than their manufacturing counterparts.
So while BMW will never be able to recycle all its own cars, the open market can do that and more. In California, there's a small business that specialises in BMW recycling. They repair, refurbish, and resell car parts directly back to the public, and there are thousands more small, independent scrap-yards like them.
That's the circular economy at work, and it works so well in the automobile market. Thanks to a vast ecosystem of independent refurbishers and recyclers, very little goes to waste. Instead, every valuable bit of the car is repaired and resold. Only when something is beyond salvage does it get melted down for recycling, where the material finds a new life again. This thriving open market is the reason why it will always be easier (and sometimes cheaper) to find another muffler for your Ford Fiesta than it will be to find a replacement circuit board for your iPad.
The trouble is, most manufacturers don't embrace the open markets, especially when it comes to reuse. Reusing and repurposing devices may require technicians to reverse engineer them, to hack them, and to digitally unlock them. Repairing modern machinery requires access to diagnostic codes, circuit schematics, and replacement parts that manufacturers zealously protect. And refurbishing can require access to proprietary tools that manufacturers have been historically reticent to share.
At the BMW recycling centre, technicians showed us a tool they had developed to drain oil from the shock absorber, so the oil could be reused. A useful innovation. But when a member of my tour group asked if BMW sold it to other refurbishers, the man holding the tool looked confused, as though the suggestion was patently absurd. That tool was their intellectual property; it was developed by BMW for BMW. And the patent they filed for the tool ensures that no-one else can invent something similar. Never mind that BMW only recycles only a tiny fraction of their own cars.
And that's how something like intellectual property can strangle the circular economy. Information and innovation are the currency of circularity, but sharing either with independent businesses is not something that manufacturers have been willing to do.
Technology companies are some of the worst offendersApple, for example, doesn't release their internal service manuals or sell replacement parts to the public, to independent repair technicians, or to unaffiliated recyclers and refurbishers, even though that information would certainly help to close the loop. Likewise, in 2012, Nikon USA stopped selling replacement parts to camera repair shops that weren't inside their circle of "authorised" repairers. Their decision to do so hasimpacted countless small business owners, stifled competition, and given Nikon a monopoly over the aftermarket of their products.
Those policies might seem good for manufacturers in the short run, but building walls around products —around intellectual property— is self-defeating. Apple could make hundreds of millions if it sold replacement parts to the public, just as BMW could certainly find a wider market for their proprietary tools. And, as the price of raw materials continues to skyrocket, working hand in hand with the small businesses that already process their products just might mean manufacturers would be able to reclaim the materials they need for remanufacturing.
Imagine how much more manufacturers could accomplish if they worked with the open market, instead of against it. The market opportunity is immense in providing tools and services to the thousands of small businesses that specialise in reuse, refurbishment, repair, and recycling. An inclusive ecosystem is the best shot we have at closing the loop. Without them, we won't reach the economies of scale that the circular economy needs.
Kyle Wiens is CEO of iFixit and Dozuki
The circular economy hub is funded by Philips. All content is editorially independent except for pieces labelled advertisement feature. Find out more here.
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Friday, 9 May 2014

The second machine age is upon us: time to reconsider the Luddites?


Computers are making many jobs redundant – yet our society has no mechanisms for converting redundancy into leisure

The sub-heading of this article above makes the claim that ".....our society has no mechanisms for converting redundancy into leisure." However, a careful study of Transfinancial Economics in its Advanced Stage (or Phase II)  reveals that "unemployment," or better still more meaningful employment, notably working as paid employees for example in certain NGOs would be possible, and be paid for by newly created money. In other words, "unemployment" would be virtually impossible though new employment could at time appear to be more "leisure-like." With the gradual injection of newly created money, serious  inflation would not occur, but would be controlled by direct super-flexible controls which would largely maintain the Free Market Price. Moreover, the amount of new funds created would be accurately assessed as TFE in its Advanced Stage would have a " near complete" understanding of the Economy in Real-Time. Also, the controls just mentioned would be able to help tackle instability, and uncertainty in the Economy itself. The above also has implications for pensions because these could be funded in full, or in part by newly created money without serious inflation. See http://www.p2pfoundation.net/Transfinancial_Economics

Industrial revolution
Performers depict the industrial revolution during the opening ceremony of the 2012 Olympics. Photograph: Ryan Pierse/Getty Images
At the start of the Industrial Revolution, textile workers in the Midlands and the north of England, mainly weavers, staged a spontaneous revolt, smashing machinery and burning factories. Their complaint was that the newfangled machines were robbing them of their wages and jobs.
The rebels took their name, and inspiration, from the apocryphal Ned Ludd, supposedly an apprentice weaver who smashed two knitting frames in 1779 in a "fit of passion". Robert Calvert wrote a ballad about him in 1985: "They said Ned Ludd was an idiot boy/ That all he could do was wreck and destroy," the song begins. And then: "He turned to his workmates and said: 'Death to Machines'/They tread on our future and stamp on our dreams."
The Luddites' rampage was at its height in 1811-12. An alarmed government sent in more troops to garrison the disturbed areas than were then available to Wellington in the Peninsular War against Napoleon. More than a hundred Luddites were hanged or transported to Australia. These measures restored peace. The machines won: the Luddites are a footnote in the history of the Industrial Revolution.
Historians tell us that the Luddites were victims of a temporary conjuncture of rising prices and falling wages that threatened them with starvation in a society with minimal welfare provision. The Luddites, however, blamed their misfortune on the machines themselves.
The new knitting frames and power looms could weave yarn into cloth much faster than the most skilled artisan weaver working in his own cottage. Caught between fixed costs (the hire and upkeep of their domestic appliances) and falling prices for their products, tens of thousands of families were doomed to become paupers.
Their plight evoked some sympathy (Lord Byron made a brilliant speech in their defence in the House of Lords); their arguments, however, did not. There could be no rejecting progress: the future lay with machine production, not with old-fashioned handicrafts. Trying to regulate trade, Adam Smith taught, was like trying to "regulate the wind".
Thomas Paine spoke for middle-class radicalism when he said: "We know that every machine for the abridgment of labour is a blessing to the great family of which we are part." There would, of course, be some temporary unemployment in the technologically advancing sectors; but, in the long run, machine-assisted production, by increasing the real wealth of the community, would enable full employment at higher wages.
That was the initial view of David Ricardo, the most influential economist of the 19th century. But in the third edition of his Principles of Political Economy (1817), he inserted a chapter on machinery that changed tack. He was now "convinced that the substitution of machines for human labour is often very injurious to the class of labourers," that the "same cause which may increase the net revenue of the country, may at the same time render the population redundant." As a result, "the opinion entertained by the labouring class, that the employment of machinery is frequently detrimental to their interests, is not founded on prejudice and error, but is conformable to the correct principles of political economy."
Just consider: machinery "may render the population redundant"! A bleaker prospect is not to be found in economics. Ricardo's orthodox followers took no notice of it, assuming it to be a rare lapse by the Master. But was it?
The pessimistic argument is as follows: If machines costing $5 an hour can produce the same amount as workers costing $10 an hour, employers have an incentive to substitute machines for labour up to the point that the costs are equal – that is, when the wages of the workers have fallen to $5 an hour. As machines become ever more productive, so wages tend to fall even more, toward zero, and the population becomes redundant.
Now, it did not work out like that. Labour's share of GDP remained constant throughout the Industrial Age. The pessimistic argument ignored the fact that by lowering the cost of goods, machines increased workers' real wages – enabling them to buy more – and that the rise in labour productivity enabled employers (often under pressure from trade unions) to pay more per worker. It also assumed that machines and workers were close substitutes, whereas more often than not workers could still do things that machines could not.
However, over the last 30 years, the share of wages in national income has been falling, owing to what MIT professors Erik Brynjolfsson and Andrew McAfee call the "second machine age". Computerised technology has penetrated deeply into the service sector, taking over jobs for which the human factor and "cognitive functions" were hitherto deemed indispensable.
In retail, for example, Walmart and Amazon are prime examples of new technology driving down workers' wages. Because computer programs and humans are close substitutes for such jobs, and given the predictable improvement in computing power, there seems to be no technical obstacle to the redundancy of workers across much of the service economy.
Yes, there will still be activities that require human skills, and these skills can be improved. But it is broadly true that the more computers can do, the less humans need to do. The prospect of the "abridgment of labour" should fill us with hope rather than foreboding. But, in our kind of society, there are no mechanisms for converting redundancy into leisure.
That brings me back to the Luddites. They claimed that because machines were cheaper than labour, their introduction would depress wages. They argued the case for skill against cheapness. The most thoughtful of them understood that consumption depends on real income, and that depressing real income destroys businesses. Above all, they understood that the solution to the problems created by machines would not be found in laissez-faire nostrums.
The Luddites were wrong on many points; but perhaps they deserve more than a footnote.
Copyright: Project Syndicate, 2014.

Wednesday, 23 April 2014

The truth is out: money is just an IOU, and the banks are rolling in it


The Bank of England's dose of honesty throws the theoretical basis for austerity out the window

Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics
   
British banknotes – money
'The central bank can print as much money as it wishes.' Photograph: Alamy
Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, "there'd be a revolution before tomorrow morning".
Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.
To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.
The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes.
It's this understanding that allows us to continue to talk about money as if it were a limited resource like bauxite or petroleum, to say "there's just not enough money" to fund social programmes, to speak of the immorality of government debt or of public spending "crowding out" the private sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" … "In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money 'multiplied up' into more loans and deposits."
In other words, everything we know is not just wrong – it's backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There's really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again. So for the banking system as a whole, every loan just becomes another deposit. What's more, insofar as banks do need to acquire funds from the central bank, they can borrow as much as they like; all the latter really does is set the rate of interest, the cost of money, not its quantity. Since the beginning of the recession, the US and British central banks have reduced that cost to almost nothing. In fact, with "quantitative easing" they've been effectively pumping as much money as they can into the banks, without producing any inflationary effects.
What this means is that the real limit on the amount of money in circulation is not how much the central bank is willing to lend, but how much government, firms, and ordinary citizens, are willing to borrow. Government spending is the main driver in all this (and the paper does admit, if you read it carefully, that the central bank does fund the government after all). So there's no question of public spending "crowding out" private investment. It's exactly the opposite.
Why did the Bank of England suddenly admit all this? Well, one reason is because it's obviously true. The Bank's job is to actually run the system, and of late, the system has not been running especially well. It's possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.
But politically, this is taking an enormous risk. Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.
Historically, the Bank of England has tended to be a bellwether, staking out seeming radical positions that ultimately become new orthodoxies. If that's what's happening here, we might soon be in a position to learn if Henry Ford was right.

Friday, 4 April 2014

Manchester University move to scrap banking crash module angers students


Manchester University students

Course leaders cancelled the Bubbles, Panics and Crashes module developed as counterpoint to free-market teaching


Joe Earle, front and centre, says students are upset by what they believe are the university’s attempts to obstruct teaching of alternative economic perspectives. Photograph: John Super

Manchester University bosses came under fire from angry economics students after they scrapped a groundbreaking course that examined the effects of the 2008 banking crash.
In an escalation of the crisis gripping university economics departments, the course leaders cancelled the Bubbles, Panics and Crashes module developed to answer protests at the dominance of orthodox free-market teaching.

Students said the U-turn undermined the credibility of senior staff who promised reforms and meant the department was actively obstructing debate over the causes of the financial crash and why economists failed to see it coming.
Next week, they will hold a day of debates to run alongside the Royal Economic Society’s annual conference, which is held over three days at Manchester University. A manifesto for reform – The Revolution in Economics – will also be published with a foreword by Andy Haldane, the Bank of England’s director of financial stability.
The row broke out last year when students claimed that mainstream economic teaching failed to address the underlying causes of the banking crash, and was in part responsible for politicians and financial watchdogs relying on free-market theories and light-touch regulation.
Undergraduates in Manchester formed the Post-Crash Economics Society and joined groups at the London School of Economics, Cambridge University and University College London to rebel against what they saw as the dominance of discredited theories that rely on mathematical formulas and not real-world examples.
In response, several university departments agreed to implement a new curriculum that would incorporate a wider range of viewpoints, including Keynesian economic thinking. Sponsored by the Institute for New Economic thinking, based in New York, the Curriculum in Open-source Resources in Economics project was set up to develop “a new approach to economics teaching for undergraduates”.
Manchester University’s economics department, which faced the brunt of student criticism, went further when it agreed to run the Bubbles, Panics and Crashes course. The decision to close it down after only one year has dismayed students.
A Manchester University spokesman said: “Our students have been leading a national debate on the way economics is taught in higher education, and the ensuing debate has been positive, useful and informative in terms of our extensive consultation with key stakeholders, including students.
“We have decided not to run the Bubbles, Panics and Crashes module next academic year, but will launch other new economics-run modules to address broader areas of the economics curriculum. These include a new module on economics for public policy led by the renowned and newly appointed professor Diane Coyle and a module on behavioural economics. Students will also now be able to take a second-year module on the financial crisis offered by Manchester Business School and two third-year modules on global capitalism by the politics department.
“Looking further ahead, economics is exploring the possibility of running a module on alternative economic theories from 2015 to 2016.”
Coyle, who runs a consultancy and is the author of The Economics of Enough: How to Run the Economy as if the Future Matters, is writing some of the Core curriculum, which she is expected to teach when she joins the university.
Joe Earle, a spokesman for the Post-Crash Economics Society and a final-year undergraduate, said the new courses and Coyle’s appointment showed that the university was responding to student and employer concerns about the lack of “real-world application” in economics education.
“However, its decision to reject Bubbles, Panics and Crashes shows that it is actively obstructing attempts to provide optional modules that teach students about alternative economic perspectives such as institutional, post-Keynesian and Austrian economics.
“This does nothing to reverse the elevation of one school of thought to be the sole object of study in economics and means that the assumptions, methodology and values of what we are taught are not in question. We are simply taught the ‘scientific’ way to do economics.”

Friday, 20 December 2013

Icelanders Overthrow Government and Rewrite Constitution After Banking Fraud-No Word From US Media

 

Icelanders Overthrow Government and Rewrite Constitution After Banking Fraud-No Word From US Media
- By Rebecca Savastio - Guardian Writer - December 2, 2013
Blogger Reference Link http://www.p2pfoundation.net/Transfinancial_Economics



Can you imagine participating in a protest outside the White House and forcing the entire U.S. government to resign? Can you imagine a group of randomly chosen private citizens rewriting the U.S. constitution to include measures banning corporate fraud? It seems incomprehensible in the U.S., but Icelanders did just that.  Icelanders forced their entire government to resign after a banking fraud scandal, overthrowing the ruling party and creating a citizen’s group tasked with writing a new constitution that offered a solution to prevent corporate greed from destroying the country. The constitution of Iceland was scrapped and is being rewritten by private citizens; using a crowd-sourcing technique via social media channels such as Facebook and Twitter. These events have been going on since 2008, yet there’s been no word from the U.S. mainstream media about any of them. In fact, all of the events that unfolded were recorded by international journalists, overseas news bureaus, citizen journalists and bloggers. This has created current accusations of an intentional cover up of the story by mainstream U.S. news sources.
An “iReport” on CNN, written by a private citizen in May 2012, has questioned the reasons why this revolution has not been widely covered in the U.S., suggesting that perhaps the mainstream media is controlled by large corporate interests and thus has been unwilling to report on Iceland’s activities. That report is currently making its way around social media. CNN today placed a statement on its website saying: “We’ve noticed this iReport is being shared widely on Facebook and Twitter. Please note that this article was posted in May 2012. CNN has not yet verified the claims and we’re working to track down the original writer.” It is interesting to note that CNN’s European version, CNN Europe, already covered the story of the protests and the government’s resignation, leading many to question why CNN would now need to “look into” the claims.
Besides CNN Europe’s own coverage of the scandal, the events in Iceland were widely covered by international media and are easily verified by a simple search on Google which leads to a variety of reputable international news sources that ran numerous stories on the Icelandic revolution. A whole documentary has been made on the governmental overthrow called Pots, Pans and Other Solutions, and now, the conversation is focused on whether or not the citizens’ actions actually worked to make Iceland a more equitable nation.
To understand the enormity of what happened in Iceland, it’s best to draw parallels between the initial banking fraud that caused Iceland’s economy to collapse and the banking fraud in the U.S. that caused the mortgage crisis six years ago. In Iceland, unscrupulous bankers had inflated the value of Iceland’s banks internationally which in turn caused the “bubble” to eventually burst in 2008 and saw most of Iceland’s banks going bankrupt.
A similar situation happened in the U.S. just one year before the collapse in Iceland, with the mortgage crisis of 2007. Mortgage lenders in the U.S. knowingly lent money to prospective homeowners who could not afford to purchase a home. This, in turn, led to falsely inflated home values and a vicious cycle of too much lending. Just as in Iceland, the bubble burst and many U.S. banks were about to declare bankruptcy. In Iceland, the citizens took to the streets by the thousands, banging pots and pans in what is known as the “pots and pans revolution,” leading to the arrest and prosecution of many unscrupulous bankers responsible for the economic collapse. Icelandic citizens also refused to pay for the sins of the bankers and rejected any measures of taxation to bail them out. In the U.S., the government bailed out the banks and arrested no one.
The pots and pans revolution in Iceland was not covered by mainstream U.S. media. In fact, any information about this revolution is found only on international newspapers, blogs and online documentaries, not on mainstream front-page articles as would be expected from news organizations covering a story of this magnitude. The New York Times published a small handful of piecemeal stories, blogs and opinion pieces, but mostly glossed over the main narrative by saying the 2008 financial collapse in Iceland caused “mayhem far beyond the country’s borders” rather than pointing out that Icelanders took to the streets with pots and pans and forced their entire government to resign.
As the saying goes, “there are two sides to every story,” but a more accurate articulation of this phrase would be “in any story, there are multiple sides, viewpoints, opinions and perspectives.” The story in Iceland is no exception. Socialist and Marxist blogs here in the U.S. say that there’s been a massive U.S. news conspiracy and cover up about the revolution in Iceland because the U.S. media is controlled by corporations, including banks, and the “powers that be” don’t want U.S. citizens getting any ideas to stage a revolution of their own. Some conservative Icelandic bloggers claim that while there was, indeed, a revolution, it did not lead to a successful or widely accepted new constitution. They say the situation in Iceland is worse than ever, and that international news reports of an effective democratic uprising leading to a better government are simply myths. Social media commenters are scratching their heads over why they were robbed of the story of Iceland’s pots and pans revolution.
As with most narratives, the truth may lie somewhere in the middle of all of these varying perspectives. One thing is clear, though: it’s nearly impossible to find one mainstream U.S. news report of the pots and pans revolution in Iceland, the resignation of Iceland’s entire government, and the jailing of the bankers responsible for the economic collapse there. Whether or not the revolution led to a more fair government or a workable and effective constitution is irrelevant to the fact that the U.S. media has essentially skipped over this story for the past five years.
Is it possible that mainstream media sources purposely covered up the Iceland story to appease their corporate sponsors? It doesn’t seem likely, and yet, what explanation could be given as to why this news never made it to the front pages of our most trusted media organizations here in the U.S.?
As Iceland struggles to regain its footing with a new government, U.S. citizens may or may not be able to look to Iceland as an example of perfect democracy in action. The real question, though, is why weren’t U.S. citizens given the information about the ousting of the Icelandic government and the jailing of the unscrupulous bankers? Are journalists in control of the mainstream media or is there some truth to accusations that big business may, in fact, be strong-arming reporters to keep quiet about world events that could inspire similar actions here in the U.S.?

Pots, Pans and Other Solutions - full movie




Saturday, 11 May 2013

Climate milestone is a moment of symbolic significance on road of idiocy

The only way forward is back: to retrace our steps and seek to return atmospheric concentrations 



George Monbiot 



 
 
Friday 10 May 2013 15.50 BST


Planet Earth in Outer Space
 
 
 
Reaching 400ppm is a moment of symbolic significance, a station on the Via Dolorosa of environmental destruction. Photograph: Corbis
 
 
 
The data go back 800,000 years: that's the age of the oldest fossil air bubbles extracted from Dome C, an ice-bound summit in the high Antarctic. And throughout that time there has been nothing like this. At no point in the preindustrial record have concentrations of carbon dioxide in the air risen above 300 parts per million (ppm). 400ppm is a figure that belongs to a different era.

The difference between 399ppm and 400ppm is small, in terms of its impacts on the world's living systems. But this is a moment of symbolic significance, a station on the Via Dolorosa of environmental destruction. It is symbolic of our failure to put the long-term prospects of the natural world and the people it supports above immediate self-interest.

The only way forward now is back: to retrace our steps and seek to return atmospheric concentrations to around 350ppm, as the 350.org campaign demands. That requires, above all, that we leave the majority of the fossil fuels which have already been identified in the ground. There is not a government or an energy company which has yet agreed to do so.

Recently, Shell announced that it will go ahead with its plans to drill deeper than any offshore oil operation has gone before: almost 3km below the Gulf of Mexico. At the same time, Oxford University opened a new laboratory in its department of earth sciences. The lab is funded by Shell. Oxford says that the partnership "is designed to support more effective development of natural resources to meet fast-growing global demand for energy." Which translates as finding and extracting even more fossil fuel.

The European Emissions Trading Scheme, which was supposed to have capped our consumption, is now, for practical purposes, dead. International climate talks have stalled; governments such as ours now seem quietly to be unpicking their domestic commitments. Practical measures to prevent the growth of global emissions are, by comparison to the scale of the challenge, almost nonexistent.

The problem is simply stated: the power of the fossil fuel companies is too great. Among those who seek and obtain high office are people characterised by a complete absence of empathy or scruples, who will take money or instructions from any corporation or billionaire who offers them, and then defend those interests against the current and future prospects of humanity.

This new climate milestone reflects a profound failure of politics, in which democracy has quietly been supplanted by plutocracy. Without a widespread reform of campaign finance, lobbying and influence-peddling and the systematic corruption they promote, our chances of preventing climate breakdown are close to zero.

So here stands our political class at a waystation along the road of idiocy, apparently determined only to complete the journey.