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106 Comments
- soks86, on 10/31/2009, -9/+32This is not a history lesson, this is cherry picking some facts and backing them up with pure unadulterated *****.
As drewcoll pointed out above, colonial times were not as simple as this article suggests. In fact, banks used to print their own money back in colonial times and this worked quite well, until of course the government would suspend the redemption of notes for gold when the banks were in trouble. This happened about a billion times (seriously though maybe 5 or 6 times which is A LOT especially since these period would last up to (and even over) 10 years.
See REAL money, that is gold/silver coins or other precious metal, is called specie. When you have a dollar you have a note to redeem specie, at least that's what money used to be. Instead the government realised the power of non-specie fiat paper money and decided that it needs control of this power. This isn't some paranoid garbage, go read Human Action by Ludwig Von Mises and you will learn that the political machine is a business and people are out for money.
Anyway, to cut this short the government can pretty much issue as much money as it wants (not quite but the ability to create money against ANY asset pretty much means they could declare a land value for all of America and issue money against that, this is a bit of an exaggeration but not too much of an exaggeration) and put the money wherever it wants. This means that rather true open market forces deciding which businesses and which commodities have demand, the government tries to predict this demand or simply puts the money wherever its friends are. By the way, the government LOVES the banks (Alexander Hamilton is referenced in the article, read up on him, he's a lover of banks, credit, and other bad-market things). - UberNick, on 10/31/2009, -13/+33"Philosopher" Ayn Rand? Buried.
- kuett, on 10/31/2009, -3/+20actually the origins of the word dollar (spanish dollar) comes from
thaler http://en.wikipedia.org/wiki/Taler
-> tolar http://en.wikipedia.org/wiki/Tolar
and eventally dollar - UberNick, on 10/31/2009, -1/+13I don't consider your favorite fiction writer to be a serious academic; therefore, I am a communist. Your philosophical prowess and powers of deductive reasoning are impeccable.
- Suricou, on 10/31/2009, -7/+18And now witness the rush of people who know nothing about economics try to pretend they do.
Idiots, please, have the decency to admit your own ignorance. Either pass an actual course, or stop trying to spread your conspiricy theories and ridiculous miracle-cures for the economy. - digitalArtform, on 10/31/2009, -6/+14"Philosopher" Ayn Rand once pointed out that it was Americans who coined the phrase to make money. Rather than seeing wealth as something looted or distributed
...or inherited by a tiny group, which was how it mainly came into people's hands under feudalism, which is why everyone else started mulling over the need for looting and distribution. - digitalArtform, on 10/31/2009, -2/+10"you are here only by the good grace of capitalism"
Isn't that what I just said? Capitalism was a great step up from Feudalism; yes.
---------
and since you bring up Socialism - I assume you are carefully cheryy picking your examples. How much misery is Socialism causing in Sweden? And how much misery is Capitalism causing in, say, Somalia? - tgc1, on 10/31/2009, -1/+9That's all well and good. But as we've seen it doesn't appear that ANYONE knows anything about economics. Truly. Because if they did, we wouldn't be IN THIS ***** MESS. Seems like anyones guess is as good as the other. Seeing as since the manner in which economic decisions are made these days are all but a coin toss.
- magamiako, on 10/31/2009, -7/+15I find it interesting that this article tries to make a difference between what we accept as valuable "gold" versus the "dollar".
Gold isn't exactly valuable either, it's nothing more than a mineral.
Do you know why gold has any sort of value? Because we say it does. Nothing more, nothing less. It was shiny, pretty, everyone wanted it. And what do you do when you want something that someone else has? You exchange for it.
The only difference between gold and the paper dollar is the fact that one is much easier to print than the other.
What do people who hoard gold do with it right now?
They trade it for dollars (or Euros, or any other non-gold backed monetary system)
Why? Because dollars, Euros, Pesos, Yen, and whichever else are more universally accepted as a currency system than gold is. If someone walks into the store with a box of gold and says that "I want to buy this place", I'm probably not going to sell it to him unless I can find its value in dollars first. - Suricou, on 10/31/2009, -1/+8I know almost nothing at all about economics.
This is why I refrain from discussing any of it in-depth. I have no idea what keynesian or austrian economics means, and leave such matters up to people who have studied them. People like you, if your claimed credentials are accurate. - gr00vy, on 10/31/2009, -0/+6Wow, you definition of inflation is even wrong.
Inflation happens when people are willing to pay more for a good, and people charge more.
Is a McDouble for a buck inflationary?
How about compared to a $9.75 steakhouse burger?
Do McDoubles ever actually run out? If they never run out, are they constrained by supply?
See the problem with your simplistic understandings on how money works, leads to all sorts of mis conclusions in the end. Almost all of the thought problems that people spout are very small scale. They involve local money, and supplies that actually run out, and demands that exceed local supply. But they do not model large markets well at all. Markets where supplies don't run out, markets of plenty, markets of wealth, and global markets. We live in a world of those bigger markets. And applying small market thinking and principles on large markets, is dangerous, and often wrong, and if right are accidental. Ignorance of the marketplace is the blind squirrel, and he occasionally finds a nut.
The raise of the price of housing was because the percentage of average income to purchase a home went down dramatically because of low interest rates charged by the fed. The speed of the correction to the usual percentage was caused by the flood of competing customers, often dropping the supply dramatically below demand.
Extra points for what this is called. And at the same time, this whatever you call it, did not mean that McDoubles all of the sudden cost a buck. Or that the prices at wal-mart keep coming down. What do I care what something costs? I do not even negotiate what I am willing to pay, I pay what they charge. What is that called? If I save money at the end of the day, and I purchase everything I want and need, what is that called? Should I pay more, because I have more? No, that is silly.
Would it have been different if there was a gold standard?
Ok, where did the money come from, and why would sane people do this.
A lot of connecting the dots, and you will find that most of the money came from money market accounts. *Most* of the money in money market accounts is not owned by individuals, it is uninsured money that is kept there because of corporate bylaws. You know like Starbucks, and Microsoft, and New Balance, and Universal Studios.
You know there are two ways to have a bank run. One is when people try and take out more than the bank physically has. Like It's a wonderful life.
Another is when assets are marked to market and a balance sheet is forced, and it is shown that the bank is insolvent.
When the bank is insolvent, it means there is no money for the depositors.
Except for insurance, that probably covers you.
But doesn't cover, Mcdonalds, Tasty Freeze, or 7-11.
What happens when this happens to all of the banks at the same time.
Besides a date like January 1st, it also means the end of economy as we understand it. All the companies go broke at the same time
In smaller economies one nationalizes the banks, removes the debts, sells them off for the benefit of the people, and reopen the banks, sometimes with new money.
When that happens in the US, it turns out that is too big to contemplate, so we try and stabilize the banks by providing capital, We change balance sheet laws, not to show truth, but to hide it, and we pray that nobody will notice until the turd has passed through the system. But trust me, this is far better than any other action or disaction.
We are paying dramatically, for what was massive theft of money market accounts. By essentially creating lies, and insuring with no reserve those lies, and people saying ok, because of fees.
This is not a failure of the fed, other than keeping interest rates for too low for too long, it was a failure in regulation, in that very basic economic principles were ignored and allowed what turned into massive end of the world level of theft.
A gold standard wouldn't have helped. Gold standards fail too for a variety of reasons, including runs on the bank.
The fed makes sense, so long as sensible principles are applied.
Alan Greenspan summed up the problem. "I was wrong".
And most of the people here don't even come close to understanding what he was talking about. - Mujokan, on 10/31/2009, -0/+5That ranks up there with John Galt's radio address.
- L0cKe, on 10/31/2009, -2/+7Well you're all kinda wrong and kinda right. It is true that the Fed has doubled the money supply. However, it hasn't doubled the amount of printed money, the money only exists digitally or 'on the books.' This money exists almost completely on the books of the big banks to balance out their losses on the mortgage crisis (part of the bailouts).
Eventually, this money will filter down to the broader economy with help from a practice called fractional reserve banking. This is when the increase in prices will come and the U.S. turns into post-WWI Germany. - CapnSlam, on 11/01/2009, -0/+4cool-
less of you to worry about - ewertz, on 11/01/2009, -0/+4I don't know the origin of the dollar, but I sure know where it's headed.
- soks86, on 10/31/2009, -5/+9Wow, nice try magamiako but I believe gold does have a value. It's simply that if I have some, you won't and that none of us can (yet) create gold. You can only find gold and there is always a finite amount. Also gold (along with silver, platinum, and a few others) does not decompose like other metals and materials, so it can hold value over time.
You should learn about why we value things and what value means. True gold does have value because we give it value, but if we DO give it value the value will be stable, always rising, and the gold you hold in your pocket will never be worthless.
Fiat money on the other hand can always be produced, usually loses value (I have yet to see a non-inflationary fiat money system), and the paper money in your pocket becomes worthless the second the government collapses (or nearly does). - transapien, on 10/31/2009, -1/+5Someone please explain to the rest of the U.S. that there is more to politics than being a democrat or republican. Oh wait there's not according to everything you ever hear in the news and elsewhere my bad for mentioning it.
- gr00vy, on 10/31/2009, -5/+8Well since most of the new money has yet to be distributed.... See Recovery.org, um no.
Since much of the money is used to replace money that was stolen, money market accounts, um no.
The Inflationary event already happened. It was the real estate bubble, particularly in Manhattan, the Hamptons and California.. We are still suffering through that, and yes we are still trying to keep THAT market moderately inflated. Hard to do, costs lots of money, may not work in the end.
All the other idiotic and dramatic long term stuff usually equated to in statements like yours, come from very simple, and ultimately ignorant understandings of the US financial marketplace. - soks86, on 10/31/2009, -0/+3Umm... I'm not sure what you're saying.
Treasury notes are ways for the government to "buy" debt and pay for it using interest over time.
This doesn't have anything to due with the money in the transaction being inflated or not, you could buy/sell bonds with money that is backed by gold, or that isn't. This does not change the function of bonds.
All TIPS means is that the bond is based off of inflation indexes, so when inflation happens your bond gains value equal to the inflation. - thecoolestguy, on 11/01/2009, -0/+3Gold will ALWAYS have value in the market place because human nature values what is scarce, and gold is scarce.
- brad3378, on 10/31/2009, -2/+5Even the libertarian favorite, Peter Schiff lost money during the crash!
He bet that the dollar would collapse (a short position) when he should have bet that it would gain in value (A long position). Thankfully he had plenty of book sales (myself included) to offset his market losses. - gehlm, on 10/31/2009, -2/+5The difference is that gold (silver, or nickel) can be used as a standard (like defining an inch or pound). Gold neither gains nor looses value over time. Fiat currencies on the other hand, have a different history and predictable future.
http://dailyreckoning.com/fiat-currency/ - z0rk, on 10/31/2009, -3/+6The reason that it has become instantly apparent is because the rest of the world in lock step with the US has also massively inflated their currencies to keep the value of the dollar high. They use the dollar as their reserve so if it loses too much value their currency will also lose value.
- soks86, on 10/31/2009, -1/+4Hi L0cKe, thanks for calling that one. I am ignorant in saying "printing money."
I'll clarify to say when I mean "printing money" I should have been talking about inflation, fractional reserve banking, as well as central bank reserve deposit pyramiding (sorry I don't know the proper term for this).
I agree with you L0cKe, you are quite correct and thank you for clearing that up. - kingnova, on 10/31/2009, -2/+5Who gives a ***** whether you can create gold or not? WHAT are you going to use it for? If you want to play the "it has value" game, then talk about copper.
Gold is nothing more than an investment, like a stock. It has very little real world value beyond making jewelry. The price of gold can be easily manipulated, and has been many times in the past when Gold was the standard currency.
The blind devotion some people have to gold is really, really funny. - Mujokan, on 10/31/2009, -0/+3The Online Etymology Dictionary says "To make money "earn pay" is first attested 1457." http://www.etymonline.com/index.php?term=money
In French you don't say "loot" but "gain". I guess you can say the two terms are similar, but it's a bit of a leading interpretation. In Japanese there are a couple of characters 儲 which is related to storing and saving, and 稼 which is related to cultivating grain.
Folk etymology can be interesting as a way of kicking around ideas, but it's not a good idea to take too much significance from it, because it's often vague and ambiguous so you can just bend it around to fit whatever theory you have. - soks86, on 10/31/2009, -3/+6Actually, Ron Paul seems to have sold out as well. See he likes to push bills that say that false advertising needs to be disproved in the case of a trial and not proved.
So I can say "these pills make you fly" and unless you take them and jump off of a building to prove that you can't, I can sell them. Of course this is the opposite of science... so... no thanks Ron Paul. If I am misunderstanding the purpose of this bill please feel free to correct me.
http://www.opencongress.org/bill/111-h3394/text
Basically I can sell "cancel cure pills" until YOU prove they don't. This is insanity, NO Ron Paul 2012 from what I see here. - soks86, on 10/31/2009, -1/+4Ah, more importantly isn't that we don't understand. It's that most people choose to believe Keyne's ideas when they've been proven wrong many times. The issue being that banks and large industries have shaped this system into what it is and change will simply mean lost money for them.
Also changing the system will lead to more lost money... but you gotta suffer sooner or later when you use an inflationary monetary system. - untreadatom, on 11/01/2009, -0/+3Rand wasn't a philosopher.
- soks86, on 10/31/2009, -0/+2Are you referring to Historical Revisionism or Economic Model Revisionist (I may have just made that up)?
- Canadian007, on 10/31/2009, -1/+3I find it amazing how many conservatives have begun to follow her teachings AGAIN as if she's some sort of God yet conveniently ignore the fact that she was an atheist. I can't stand any of her philosophical teachings because Anything that involves any kind of aid whatsoever is considered unnecessary altruism to Ayn Rand, selfish *****!
- drewcoll, on 10/31/2009, -3/+5"until 1857 – during colonial times"
1776 < 1857 - soks86, on 10/31/2009, -1/+3Umm... sure we can use copper, but we use copper for more important things so it would only tie up a precious metal... but that's not the only thing to consider so I will say you have a point but it definitely needs to be researched further.
Gold actually has value to scientific endeavours as well (maybe some others?), for example wires in space are wrapped in gold shielding. Right now I would say this is not an important thing to argue about, once we back money in gold properly then we can talk about gold being the best for the purpose or not. - inactive, on 10/31/2009, -4/+6"is actually created from the labor and belongings of the masses"
That's false. Only far left Marxists/Socialists/Communists and Fascists think that. - inactive, on 11/01/2009, -2/+4Goodness is overrated, you give a homeless guy a dollar and he goes and spends it on booze. But you see the poor can never be called greedy only the successful.
- gr00vy, on 10/31/2009, -0/+2Yes indeed Badenglishihave. Yes, indeed.
- jpete71chevmal, on 10/31/2009, -2/+4You can't create gold! What are you an alchemist! LOL! You've got this so wrong I can't even begin to straighten you out here. Peruse www.mises.org for a while.
- AvangionQ, on 11/01/2009, -0/+2Since the United States has switched to the fiat based dollar, inflation has reduced the buying power of the dollar to a mere 3% in under a hundred years ... what's worse is that the debt upon interest that's owed now exceeds the GDP of the entire nation - see debt clock - and the credit derivatives, if honored, exceed the GDP of the entire world, several dozen times over ...
- thecoolestguy, on 11/01/2009, -0/+2So in the name of 'social justice', you're going to condemn all rich people and assume they inhereted their wealth from those who illegally expopriated?
That's not how a just society works. People are supposed to be assumed innocent unless proven guilty, not stereotyped based on what class they're born into and punished for the supposed crimes committed by that class 300 years ago.
Wealth redistribution and 'social justice' are just parasitism, behind a cover of ***** historical rationalizations and crass and malicious stereotypes. - Suricou, on 11/01/2009, -1/+3You ever driven on a public road? Or eaten food delivered by those roads?
Pay up. You use the infrastructure, you pay for it. - thecoolestguy, on 11/01/2009, -0/+1ALL HAIL OUR GOD FDR!
- gdo01, on 10/31/2009, -1/+2I fail to see how you managed to gather that drewcoli was implying the omission of specific historical facts from a comment that appears to be solely an incorrect attempt at correcting what appeared to be an obvious mistake in the article. I believe that you are just trying to create an implication so that you can soapbox using drewcoli's small statement as a starting point.
- soks86, on 10/31/2009, -1/+2Lol.
If you deposit $100 in the bank.
Your bank will go out and loan someone $50.
They "created" $50 IF they have enough deposits so that they have a high enough average deposit amount that most people can go in and withdraw their money without there being a shortage.
More interesting is something called deposit pyramiding. See when the Fed has $100 they will deposit $60 into local fed branches while loading out $75 as credit. So now we have $175 with $60 deposited in other banks. These other banks will also issue loans against the $60 of say $30 while depositing $36 into non-Fed bank branches. These branches will do the same *****. Now you see how the Fed creates money, plus how much more gets created thanks to fractional reserve banking, and then there is the actual "creation" of money backed by purchases of debt or securitization of our countries assets. - brad3378, on 10/31/2009, -3/+4The fiat money system DOES offer non-inflationary wealth protection:
Treasury Inflation-Protected Securities (TIPS)
http://en.wikipedia.org/wiki/United_States_Treasur ...
The libertarians don't want you to know this because they would rather sell you their gold. - digitalArtform, on 11/01/2009, -1/+2Don't be so effing stupid; I'm talking about Medieval Feudalism, which can best be described as Feudalism. In the Medieval Era. Did I mention it was Medieval Feudalism? Money and land were handed down. And serfs didn't just pick up and open a business.
And America was the first country to call Capitalism 'making money?' What do you think the Dutch stock markets of the 1600's were doing? Or the East India Company? - thecoolestguy, on 11/01/2009, -1/+2brad, no one claimed an libertarianism outlook will allow you to make money EVERY single year, but it will give you a long term advantage.
The market is inherently unpredictable and cannot be timed with any consistency, but long term trends can be predicted to some degree if you understand human nature (forcibly taking money from one group to give to another leads to social/economic problems). - gr00vy, on 10/31/2009, -2/+3Why because he said post world war I germany?
You know the money that will come out of the bank, is not NEW money, it is the same money that got put in there by the depositors. The ones who didn't know they got stole from. I suppose the end of economy is the preferred out come? Soks86, puhleeze.
The "new" money was the money that got out for the loans on the marketplace.
He cleared up nothing, he continued the ignorant argument. - untreadatom, on 11/01/2009, -0/+1Everyone should have contempt for Rand but you are sounding like a douche.
- soks86, on 10/31/2009, -2/+3@gr00vy
"Do McDoubles ever actually run out? If they never run out, are they constrained by supply?"
I ASSURE you there is no unlimited supply. The "complicated" economics you speak of is simply the working of free markets, that aren't really free. Any businessman knows how to properly run his business and handle the micro parts.
Macro economics is an invention. It's an excuse to create central banks that control money supply in a feeble attempt to change inflation/deflation and the markets choice of money distribution.
I won't bother reading the second half of your ramblings. The money used on houses is ALL CREDIT. People were constantly doing 0% down, this means they had no money and they purchased the house on imaginary money (credit). Everyone did this and prices went up. The rest... who cares. ALL INFLATIONARY SYSTEMS DEFLATE.
Tell me, who taught you your economic theories? - soks86, on 11/03/2009, -0/+1Kaosu,
Could you please be constructive and explain my comprehension issue?
Because personally I was shocked to have seen the bill and bill's do not come with an explained intent. That is, I'm not sure which aspect of freedom is expressed through this bill that is so important. I simply see it as a way to deceive people easier, I mean I understand perhaps what it's trying to say with regards to keeping business open ended (I tie this closely to the argument that licensing should be abolished).
That is, in the case of licensing, if licensing were to be abolished then more people would be allowed to open businesses and attempt to sell services which were previous regulated. This would have the affect of lowering prices and increasing competition while those people who are in fact incompetent and would never have been licensed should fail due to consumer intelligence weeding them out as an option. The issue is consumer intelligence cannot be very good at all times, people have to specialize and they simply cannot comprehend everything.
To me this bill is saying "let people decide what helps you and what doesn't" but it's missing an important point, people will usually believe the statements made by these companies instead of assuming that they're lies. Also, this introduces the ability for the companies who are doing the advertising to set up false sources of bogus information which even the clever consumer could potentially find believable. This would lead to many people being lied to and in case you're not aware we have enough people who think homeopathic medicine does something. I understand the arguments for freedom but we have to realize that we don't live in a perfect world and some things do need to be regulated to protect the masses.
Could you perhaps explain yourself or maybe comment on my arguments?
Thanks. -
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