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Vatican City State491 Posts
There are so many things which I do not understand in our world. I mean, there are so many things that are so, so BAD for us, but for some reason we agree with them.
Something that I completely do not understand is flat money. Why the hell do we agree with it? Why are we so stupid? Dont we learn anything?
In 1933 the US government ROBBED people out of their gold. The government paid each person dollars and some time after, devaluated the dollar. This might sound a bit complicated. The goverment made the people sell their gold at $20.67 per troy ounce. Next, the government said that in order to buy back the gold, people would have to pay $35 an ounce.
In 1970 your presidend stopped the gold standard at all. Why did anyone allow that? This is insane. The money is worthless in general.
Due to the fact that there is no gold standard, the UK government will "print" 75billion pounds of money. This is like 4% of the WHOLE DOMESTIC PRODUCT OF THE UK!!!
The politicians tell us "not to worry". And we do not worry. We do not do anything about it.
And what does this small operation mean for the average UK person?
Let's assume that the total domestic product of the UK = 100. This is the value of all the real goods/services created in the economy.
People pay taxes on this goods. Let's assume that these are like 50% of their income (in a lot of countries this is true).
So I earn 50, government gets 50. I got 50%, gov 50% of money.
Government increases the monetary supply by 5%. We have 105 money. I have 50, gov 55. So I have 50/105 = 47,6%. They fucking robbed me out of 2,4% of my money!!!
Why is deflation discouraged? Why are prices always rising? Inflation is just another hidden tax... Why do we agree on that?
Maybe this will solve the problem of falling prices on the housing market... e.g. in Zimbabwe, the prices have increased by few million %...
What is the "base" of euro? What is backing up Euro? The dollar? = nothing?
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Government bonds - the "safest instrument there is".
I dont know much about the USA, but in Poland they said that the "Czar's bonds were the safetest security" before 1914. After the war they were cheap toiler paper.
Between 1918-1939, government bonds and bonds of governemts of other countries were the "safest". After the war they were cheap toiler paper.
During the communism, we had "PKO" (Polska Kasa Oszczednosci), something like a version of a "safe deposit plan". After 1989 - cheap toilet paper.
Now, we are told to invest into "us bonds"...
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The question is - can we do something about it? I expect many views and no replies - as most people are stupid lemmings. But perhaps we could gather few people and create some sort of an informational leaflet about this - and then post it on other forums. Then we could try making an organization, that would post this in press.. and then maybe we could "change" things.
 
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Spenguin
Australia3316 Posts
You and me can bond together!
Us Bonds!!
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On April 05 2009 19:12 Spenguin wrote:
You and me can bond together!
Us Bonds!!
Bonds in the sense of bondage, ie, slavery.
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Lets all come together. Take some land. Kidnap some women and start a new nation without all the Folly. We will cal it TL's nation of Lemmings.
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You make some pretty ignorant statements. You watch zietgeist?
You can't use random facts from history to really make your arguments and it's not like people have actually printed out seventy-five-billion pounds of paper money, it's all just numbers on computers. Also everything in Poland got turned into toilet paper after the War, the entire world was pretty much broke.
Unless your country is hit by hyper-inflation, bonds are a decent investment. In USA and Canada where the dollars are relatively stable, there's not much risk of it becoming worthless in the few years they take to mature.
Obama being a "communist/[socialist]" (not facist rofl, socialist, much much different) is a good thing. America just has a stupid stigma against them because of stupid propaganda and shitty television.
The market will restabalize itself and greener, cheaper energy will be in the future. Right now shit sucks cause food is going up world wide essentially because of high energy problems. New technology should make things cheaper and everyone being broke as fuck and not buying houses will make the house-market swing more into place.
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I don't really have a problem with socialism. However, consolidating the banking system in favor of large private banks, putting troops in the streets, commandeering the internet, creating a civilian national security force just as powerful as the military is not socialist, its fascist and I do have a problem with it.
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You're right that it is just printed money, but money isn't valued because of what it is made of. Same with gold. Really, gold has very little industrial application compared to a lot of other materials, but it is absurdly expensive. Most modern day non-cash assets, wether they be stocks, commodities, homes, etc have reached the point where they are practically as fluid and as easy to "print" as money. This is the by product of an increased overall market size (each individual home, each individual ounce of gold occupies a tiny part of the total market size), increased technology (allowing more perfect information, and lowering transaction costs), and increased legal/political flexibiliy on what can be done with these assets.
As for your specific points, in the 1930s, there was very little understood about economic theory and monetary policy. Many governments printed money as a short term solution to their problems without really understanding the long term implications. Most central banks now have a pretty good idea of what they're doing now as do many investors.
What happened in 1970 is a perfect example of increased understanding compared to 1930. You're right in that the USD was de-pegged from the gold standard, but you have to understand that the rest of the world wasn't really on the gold standard. The USD was kind of the defacto currency for which all other currencies were pegged to after WW2. Pegging the USD to gold was really just to boost the confidence of everybody else. In 1970, after decades of strong Western Europe growth and Japanese growth, excessive us spending, inflated unionized labor wages, the USD was put under tremendous pressure externally and internally. If the US has kept with antiquated monetary policy and forced the gold standard and/or printed tons of money, the effect would have been disasterous.
In your example of Poland, for both situations in 1919 and 1989, there was no bond measuring standard for Polish bonds. There is an established system to rate the riskiness of bonds now (that is, the likelihood of default) and the information is relatively easy to access. You won't really see the large scale failures in heavily traded markets (like the UK, USA, etc) because with so many transactions, all assets are pretty much valued at real time. It usually takes many years and decades of build up for somethign as monumental as a country's bonds to collapse.
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Vatican City State491 Posts
On April 05 2009 20:02 MiniRoman wrote:
You can't use random facts from history to really make your arguments and it's not like people have actually printed out seventy-five-billion pounds of paper money, it's all just numbers on computers.
Can you explain me the difference then, please?
Obama being a "communist/[socialist]" (not facist rofl, socialist, much much different) is a good thing. America just has a stupid stigma against them because of stupid propaganda and shitty television.
It's quite funny that we completely change the subject, but did socialism ever succeed anywhere? Perhaps in Sweden, but Im not really sure if this can even be called socialism (+ they have a lot of resources).
In all other countries it failed miserably.
The market will restabalize itself and greener, cheaper energy will be in the future.
Im not sure if you are trolling or not, first you write about socialism and then about market restabilizing itself? It's quite contraditory.
If the US government ever wanted to solve the problem of bonds, they should have bought the houses, not the "investment vehicles". This way:
a) houses would be owned by government
b) people would be repaying money to the government (via banks)
c) people would still live in their houses ("welfare")
d) banks would get money that they lost at securities and could stop whining about "crisis on real estate market"
Right now shit sucks cause food is going up world wide essentially because of high energy problems.
In Zimbabwe, the food prices went up too... by few million %. Maybe it's the same in US, but just by few %?
The other explanation that comes to my mind is the fact that USA and EU decided to go green energy and instead of using fields for crops, we use fields for plants that are later turned into fuel.
New technology should make things cheaper and everyone being broke as fuck and not buying houses will make the house-market swing more into place.
wow, just wow :O
It's quite funny that new technology makes things cheaper, but for the last 10 years or so, you had to pay $1000 for a good computer. Of course, zilog z80 processor costs probably less than a dollar today, yet, I dont see you browsing the internet using a zx spectrum.
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You also seem to misunderstand the concepts of inflation and deflation. Real inflation should just be a reflection of real economic growth. One of the objectives of most central banks is inflation targetting--that is printing money to match the level of growth. The idea behind this is that you keep the same level of fluidity. For example, if you have a basis of 100 units of production and 100 USD, you have a 1:1 ratio. If your economy grows 3% for 30 years, you'll have 2.43 units of production for every 1 USD. Each USD comes to represent a lot more units of production, which makes things a lot harder to trade. Every time you want to trade units, you're forced to trade in units of 2.43. Now imagine this on a very large scale of trillions of dollars and you have the basic idea behind what the point of printing money is. Fluidity makes for lower transaction costs and more accurate, consistent valuation of assets.
On the same note, deflation is discouraged because it shows that your economy is contracting. Also, if your currency is deflating, people will keep all their savings underneath their mattress. From a government's perspective, this is bad news beacuse you want to encourage people to spend. Spending creates growth, it creates jobs. Cash underneath the mattress creates nothing.
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On April 05 2009 20:54 closed wrote:
If the US government ever wanted to solve the problem of bonds, they should have bought the houses, not the "investment vehicles". This way:
a) houses would be owned by government
b) people would be repaying money to the government (via banks)
c) people would still live in their houses ("welfare")
d) banks would get money that they lost at securities and could stop whining about "crisis on real estate market"
Um, no. The free market is a lot better at managing homes than the government is. Have you ever seen what happens to government housing? There's a a reason why "the projects" in any major city are notoriously known as the most crime infested, drug dealing areas.
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And also, the government bought the investment vehicles because nobody really knows the actual value of these investment vehicles. The government wasn't looking to be manager for every aspect of the market. They are simply holding these assets until they can figure out how much they are actually worth.
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United States22883 Posts
On April 05 2009 20:12 fight_or_flight wrote:
I don't really have a problem with socialism. However, consolidating the banking system in favor of large private banks, putting troops in the streets, commandeering the internet, creating a civilian national security force just as powerful as the military is not socialist, its fascist and I do have a problem with it.
There is no civilian national security force, and it's not new for the military to run exercises in the US or serve in particular security settings, and so far the US has been far more liberal with its internet than most other Western countries.
The only decent point you made was about consolidating the banks, but you followed it up by posting an editorial by a Fox News host.
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I share much of the same sentiments as OP. Inflation is a phenomenon that bothers me greatly but people have accepted it as an unavoidable event. It is such an easily preventable action - just stop increasing the printed money supply at such a high rate. Sure deflation has some drawbacks, but inflation has its own share of disadvantages. I would rather live in a silght deflationary economy than an inflationary one. Just the concept of my money withering away its value in my pocket is conceptually disturbing to me, as it is to many others.
The problem is that governments as they are currently structured are too immobile and bulky to quickly adopt new economic policies. Nor am I saying they should necessarily - it would be very risky to those under their control. I am waiting for the day of radical reform when someone can really fix things up.
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On April 05 2009 19:20 fight_or_flight wrote:Show nested quote +On April 05 2009 19:12 Spenguin wrote:
You and me can bond together!
Us Bonds!! Bonds in the sense of bondage, ie, slavery.
I was going to make the same joke 
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Inflation:
Where:
a) the ratio of the supply of goods to printed money decreases,
or
b) demand for all goods increase substantially in contrast to constant or decreasing supply.
Deflation:
Where:
a) the ratio of supply of goods to printed money increases,
or
b) demand for all goods decreases substantially in contrast to constant or increasing supply.
All of these are pretty bad. But the difference between growth of an economy and just printing money is the difference between a and b. The economy doesn't grow if you print shitloads of money: it's just lying with numbers-printing 90 zillion dollars and causing your nation's GDP to increase to 90 zillion doesn't grow the economy.
And for people who are about to bring up the "Socialism has never been instituted properly" argument, I suggest that one reads The Road to Serfdom by F. A. Hayek. He won the nobel prize, so he must have been doing something right.
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On April 05 2009 20:54 closed wrote:
It's quite funny that we completely change the subject, but did socialism ever succeed anywhere? Perhaps in Sweden, but Im not really sure if this can even be called socialism (+ they have a lot of resources).
In all other countries it failed miserably.
uhm i think you mean communism
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why do we care about gold? what value does gold have on its own? it's worth just as much to me as a piece of paper. i don't really think it makes sense to back up currency with metals. maybe someone can explain that to me.
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United States22883 Posts
On April 06 2009 01:07 Caller wrote:
And for people who are about to bring up the "Socialism has never been instituted properly" argument, I suggest that one reads The Road to Serfdom by F. A. Hayek. He won the nobel prize, so he must have been doing something right.
This is pretty irrelevant. Hayek clarifies that what he means by socialism is government led markets (Britain) and not massive social programs (Sweden), although he believes the latter is eventually harmful. The purpose of Road to Serfdom is not to propose an economic solution, it's a political critique to avoid collectivism and eventually authoritarianism. His critique is good, but his solution (statutory policy) in Constitution of Liberty is flawed.
Socialism will never be instituted properly (for good reason) but that doesn't mean social-democracy can't be successful. It certainly has short comings but it's basically as Churchill said - it's the worst form of government except all others.
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On April 05 2009 23:09 Jibba wrote:Show nested quote +On April 05 2009 20:12 fight_or_flight wrote:
I don't really have a problem with socialism. However, consolidating the banking system in favor of large private banks, putting troops in the streets, commandeering the internet, creating a civilian national security force just as powerful as the military is not socialist, its fascist and I do have a problem with it. There is no civilian national security force, and it's not new for the military to run exercises in the US or serve in particular security settings
since when?
and regarding the civillian security force, I believe he means Xe/Blackwater, which is very scary IMO.
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EPT
