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On March 23 2014 06:14 GreenHorizons wrote:Show nested quote +On March 23 2014 04:11 Sub40APM wrote:On March 23 2014 03:53 GreenHorizons wrote:On March 23 2014 03:24 Sub40APM wrote:On March 23 2014 03:16 GreenHorizons wrote:On March 23 2014 02:36 itsjustatank wrote:On March 22 2014 08:11 Sub40APM wrote:On March 22 2014 08:03 JonnyBNoHo wrote:On March 22 2014 07:52 Nyxisto wrote:On March 22 2014 07:44 JonnyBNoHo wrote:
[quote]
Apple doesn't have money in a safe though... they have ~whatever billion in cash and marketable securities. So money available to be invested / borrowed.
It's not all in the US either. Apple is a "US" company but that doesn't mean that all it's assets are in the US or all it's income falls under US tax jurisdiction. They literally own about 150 billion bucks in cash. (http://bgr.com/2013/10/02/apple-cash-reserves-147-billion-dollars/) And most of it(~100 billion) sits around in tax heavens and actually does nothing. You can not seriously argue that a system that makes stuff like this possible puts its capital to the best use. If you'd pump that money into Greece right now you'd probably start the next industrial revolution over there. They literally have about 150 billion in the financial system available to be borrowed / invested. They literally do not have 150 billion sitting in a scrooge mc duck vault. in their last 10-k they say they have 14 billion in cash, and another 26 billion or so in short term securities. 'cash' as in deposit accounts, which go on to make more money because of lending. i would suggest anyone who wants to continue commenting on this issue while having zero knowledge about money supply read this first: http://en.wikipedia.org/wiki/Money_supply#United_States So I've taken some econ classes and read the article and another on the money multiplier. Perhaps someone could help me understand how these ideas are not just globally approved Ponzi schemes (besides that schemers essentially promise to keep the lions share of the profits instead of baiting with unrealistic returns for the investor generated by loaning out the Ponzi money?) I mean as a result of these schemes the vast majority of the worlds wealth actually only exists on paper or 1's and 0's, or in IOU's. One promise to pay paid for by another paid for by another promise, and another and so on... I guess the only significant difference I'm picking up on right now is that when these Ponzi's run out of money they can just print more? Someone's debt is someone else's savings. So the increase in debt should be viewed not just as a one directional resource but instead as an interaction between two people and the interest rate is the price that two strangers agree on what the price of the borrowing/savings is. So if the borrower can't or refuses to pay they destroy their wealth and the wealth of the saver correct? part of it would be destroyed, another part of it would not since the creditor would take the debtor to court and sue either for some asset that is equivalent of value or slap a court order on the debtor to garnish some of his income/wage. But I suppose if he is a total bankrupt than yes, his wealth would be destroyed
Also does a Ponzi scheme not have the same mechanic. Where one persons investment is another's return? The 'difference' being that there is allegedly more of an intention on the part of banks to 'pay up' if people come for their money.
If you want to ignore all the things that differentiate it from a Ponzi scheme: market sets the interset rate, the debtor usually provides extensive financials to the creditor so they can guestimate the relative riskiness of the investment, a court system that is ready to act to enforce the creditors rights then sure.
But just like a Ponzi scheme it only works if only a few people want their profits at a time. If lets say anything like 30%+ (possibly less) of savers want their money simultaneously (or in short order) the entire system collapses because the money simply isn't there.
Nope. If the bank is being run well then what they do is go to other banks or the central bank and borrow money from them and hand the money over to the people who demanded for it. Since people generally dont just keep their money in the mattress, the money returns to the monetary system somewhere else. If the bank has been run badly, then the FDIC is the person who makes whole the savers up to 250k and then takes over the assets of the bank to try and get back some of the money it lost (the rest of the money for the FDIC comes from a tax on all banks)
It also only continues to work as long as people keep throwing money into the Ponzi pit. If people lose faith in (fundamentally untrustworthy) lending institutions who have a fraction of money much smaller than the 'reserve requirements' the whole thing collapses.
I guess if at some point in the future people lose complete trust in the system that might be possible, there have been bank runs in history, but in general the actual concept of banking makes a relatively quick come back because -- again -- people dont like to handle all that cash.
The reserves are actually much smaller than the roughly 10% requirement would lead one to believe. The reserve 'money' doesn't have to be money at all. The 'money' can be and often is a promise to pay. So the bank in case of a run or whatever doesn't even have 10% of the money they claim to have. A significant portion of that 'money' is actually just a pile of IOU's.
What good is an IOU from Tom to Mary going to do for a starving Jason? Not a thing. This doesn't stop at the personal banking level. The same system pervades all the way up to national governments and institutes like the Fed. For instance the requirement for the FDIC which 'insures' against bank runs is below even the 10% set for banks. So if there ever was a run on a significant amount of banks 15-20%+ the insurer wouldn't have the resources to cover it (think AIG but the rescuers are the ones on fire.)
Our entire global economic system is dependent on trusting people who are wholly untrustworthy and preventing panic en mass of a perpetually panicked population.
Essentially if average people actually understood how the monetary system works than it would likely collapse. The rational fear of such a system would lead to runs and collapse almost instantly.
You are just wrong here. Runs rarely happen and only after great economic distress. Even when they do happen, whoever actually manages to pry their savings out of the system they dont turn around and bury them in their yard but put them in some other form of bank. In a well managed systems runs dont happen at all. Well your analysis all lead right to my final parts which you didn't really address. The idea that most of the money isn't there, and most of the 'money' they say is there is actually IOU's, that fact is what I think should shake any rational persons confidence and encourage a run(however counterproductive as it may be). I was suggesting a major reason runs don't happen is because the masses of sheeple don't understand it. A basic understanding that almost 90% of "money" are actually IOU's or even more so that even the notes themselves represent IOU's would lead to such events. + Show Spoiler +Presumably if the IOU's were all within close knit communities that might not be a problem. But when what were talking about is more like a situation of Lenny loans Jimmy $100 then Jimmy loans $90 to his Cousin John then John loans $81 to some guy he passed in the subway and so on it's a whole other ball of wax.
Lenny needs his $100 back to pay a bill problem is Jimmy only has $10 Jimmy says "no worries I'll just call in my loan to John" but John only has $9. So he calls in his loan to the guy on the subway. Of course he lent out his money too and only has $7 and some change. But he says "no worries, Ill call in my loans". Surprise surprise but they don't have the money either only this time turns out they didn't even keep anything in reserves so the trail stops here.
So Lenny's $100 is now about $26 and judgments/IOU's Well Lenny can't pay his rent with IOU's and judgments but let's say for fun he could. Well what we have is a trickle up of IOU wealth.
So what you end up with is a few people with a shit ton of IOU's and a lot of people who owe. So long as the extraction is measured things roll on.
The problem is when those IOU's start to pile up more rapidly. And the rate at which they are honored falls below what the ethereal reserves 'cover'
This is precisely where we are approaching now. The US (and many 1st world countries) hasn't actually mad a sincere effort to pay off it's debt since the 1700's.
If you were to be a creditor and your borrower had an ever increasing balance and an increasing mathematical certainty to the impossibility to ever have a reasonable plan to pay it off, how long would you keep taking their IOU's that they got from someone else as payment on their debt?
Well the truth as I've seen it is, that you can't stop.
The stability of 1st world countries is rooted in the idea that their debt and the debt of others they have accumulated is essentially certain to be paid. The problem is that we have empirical evidence that they wont be (payments are at best kept current). In the most favorable conditions we get even for a year or few with debt to GDP but the debt itself practically never goes away.
So since our growth is dependent on borrowing more money year over year from the federal level on down, and the viability of the increase in lending is dependent on the reliability of the growth we end up in a game of musical chairs. Sooner or later people are going to realize the perpetual global growth isn't sustainable (and perpetuating the myth creates ever worsening conditions) and the music stops and people are left without a chair.
So to go back to my Ponzi analogy, essentially getting in on a Ponzi scheme isn't necessarily a bad thing. If you are one of the first people in and first people out it's all good for you(provided they cant 'prove' you 'knew' you were roping people into a Ponzi scheme[or you have enough money/power to put off the investigators]).
Essentially you have the same thing here on a longer time scale. Like an inter-generational Ponzi scheme. As long as you kick the bucket/can before the music stops it was all a happy ride for you. Unfortunately we are rapidly approaching the event horizon of this scheme. Just like a Ponzi scheme you can do all sorts of accounting tricks, and loan consolidating, payment deferring, and fast talking to keep it going a little bit longer but eventually the house of cards collapses.
You can claim it's 'insured' or 'protected by the courts' but the when the curtain is pulled back the money just simply isn't there.
Got a bit long so I thought I'd spoiler it
In a Ponzi scheme there's no unlerlying economic activity, it's just people building a chain on transfers that's inherently unsustainable.
In the modern monetary system there's a lot of real underlying activity - you can pay off the loan with the income from the job you have.
The reason that the monetary system works the way it does - fractional reserve lending creating new money by lending - is that such a system has been found to have more advantages than disadvantages. As economic activity increases, so does lending, and through that, the money supply grows too. That's an important advantage. If the money supply didn't grow fast enough (can't mine gold fast enough) a lack of money actually prohibits economic activity. Of course on the downside you have more freedom to make reckless lending. Pick your poison.
It's important to not put the cart before the horse here. Money creation and economic activity go in tandem. And we also have the Fed to regulate both to maintain stability. It's not perfect, but no one's created monetary perfection yet, so get used to it 
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On March 23 2014 08:01 nunez wrote:followup on tech-octopus article i posted earlier: Show nested quote +Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.
...
Beneath that list, a rather cryptic warning suggesting that all across industries, illegal non-solicitation agreements were common everywhere:
“Please be cautious when recruiting teams from any company to keep our candidates and potential employees safe from legal action. Most companies have non-solicit agreements which would limit or prohibit a candidate from asking a coworker to interview with us as well.” srcgotta admire those free market ceo's, really earning their wages.
There's a "Cold War" in the tech industry that deals with large contracts and patents. Instead of running proxy wars using employee compensation that could ultimately lead to "actual" wars that would end these companies, they decided to collude. On one hand, I'm sure this has huge repercussions both in pay and consumer prices. On the other hand, I'm not sure an all-out war would have been better for the industry as a whole...
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On March 24 2014 00:41 aksfjh wrote:Show nested quote +On March 23 2014 08:01 nunez wrote:followup on tech-octopus article i posted earlier: Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.
...
Beneath that list, a rather cryptic warning suggesting that all across industries, illegal non-solicitation agreements were common everywhere:
“Please be cautious when recruiting teams from any company to keep our candidates and potential employees safe from legal action. Most companies have non-solicit agreements which would limit or prohibit a candidate from asking a coworker to interview with us as well.” srcgotta admire those free market ceo's, really earning their wages. There's a "Cold War" in the tech industry that deals with large contracts and patents. Instead of running proxy wars using employee compensation that could ultimately lead to "actual" wars that would end these companies, they decided to collude. On one hand, I'm sure this has huge repercussions both in pay and consumer prices. On the other hand, I'm not sure an all-out war would have been better for the industry as a whole...
what in god's holy name are you blathering about?
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On March 23 2014 08:01 nunez wrote:followup on tech-octopus article i posted earlier: Show nested quote +Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.
...
Beneath that list, a rather cryptic warning suggesting that all across industries, illegal non-solicitation agreements were common everywhere:
“Please be cautious when recruiting teams from any company to keep our candidates and potential employees safe from legal action. Most companies have non-solicit agreements which would limit or prohibit a candidate from asking a coworker to interview with us as well.” srcgotta admire those free market ceo's, really earning their wages.
No irony there, tech companies support Democrats 
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On March 24 2014 00:25 JonnyBNoHo wrote:Show nested quote +On March 23 2014 06:14 GreenHorizons wrote:On March 23 2014 04:11 Sub40APM wrote:On March 23 2014 03:53 GreenHorizons wrote:On March 23 2014 03:24 Sub40APM wrote:On March 23 2014 03:16 GreenHorizons wrote:On March 23 2014 02:36 itsjustatank wrote:On March 22 2014 08:11 Sub40APM wrote:On March 22 2014 08:03 JonnyBNoHo wrote:On March 22 2014 07:52 Nyxisto wrote:
[quote]
They literally own about 150 billion bucks in cash. (http://bgr.com/2013/10/02/apple-cash-reserves-147-billion-dollars/) And most of it(~100 billion) sits around in tax heavens and actually does nothing. You can not seriously argue that a system that makes stuff like this possible puts its capital to the best use. If you'd pump that money into Greece right now you'd probably start the next industrial revolution over there. They literally have about 150 billion in the financial system available to be borrowed / invested. They literally do not have 150 billion sitting in a scrooge mc duck vault. in their last 10-k they say they have 14 billion in cash, and another 26 billion or so in short term securities. 'cash' as in deposit accounts, which go on to make more money because of lending. i would suggest anyone who wants to continue commenting on this issue while having zero knowledge about money supply read this first: http://en.wikipedia.org/wiki/Money_supply#United_States So I've taken some econ classes and read the article and another on the money multiplier. Perhaps someone could help me understand how these ideas are not just globally approved Ponzi schemes (besides that schemers essentially promise to keep the lions share of the profits instead of baiting with unrealistic returns for the investor generated by loaning out the Ponzi money?) I mean as a result of these schemes the vast majority of the worlds wealth actually only exists on paper or 1's and 0's, or in IOU's. One promise to pay paid for by another paid for by another promise, and another and so on... I guess the only significant difference I'm picking up on right now is that when these Ponzi's run out of money they can just print more? Someone's debt is someone else's savings. So the increase in debt should be viewed not just as a one directional resource but instead as an interaction between two people and the interest rate is the price that two strangers agree on what the price of the borrowing/savings is. So if the borrower can't or refuses to pay they destroy their wealth and the wealth of the saver correct? part of it would be destroyed, another part of it would not since the creditor would take the debtor to court and sue either for some asset that is equivalent of value or slap a court order on the debtor to garnish some of his income/wage. But I suppose if he is a total bankrupt than yes, his wealth would be destroyed
Also does a Ponzi scheme not have the same mechanic. Where one persons investment is another's return? The 'difference' being that there is allegedly more of an intention on the part of banks to 'pay up' if people come for their money.
If you want to ignore all the things that differentiate it from a Ponzi scheme: market sets the interset rate, the debtor usually provides extensive financials to the creditor so they can guestimate the relative riskiness of the investment, a court system that is ready to act to enforce the creditors rights then sure.
But just like a Ponzi scheme it only works if only a few people want their profits at a time. If lets say anything like 30%+ (possibly less) of savers want their money simultaneously (or in short order) the entire system collapses because the money simply isn't there.
Nope. If the bank is being run well then what they do is go to other banks or the central bank and borrow money from them and hand the money over to the people who demanded for it. Since people generally dont just keep their money in the mattress, the money returns to the monetary system somewhere else. If the bank has been run badly, then the FDIC is the person who makes whole the savers up to 250k and then takes over the assets of the bank to try and get back some of the money it lost (the rest of the money for the FDIC comes from a tax on all banks)
It also only continues to work as long as people keep throwing money into the Ponzi pit. If people lose faith in (fundamentally untrustworthy) lending institutions who have a fraction of money much smaller than the 'reserve requirements' the whole thing collapses.
I guess if at some point in the future people lose complete trust in the system that might be possible, there have been bank runs in history, but in general the actual concept of banking makes a relatively quick come back because -- again -- people dont like to handle all that cash.
The reserves are actually much smaller than the roughly 10% requirement would lead one to believe. The reserve 'money' doesn't have to be money at all. The 'money' can be and often is a promise to pay. So the bank in case of a run or whatever doesn't even have 10% of the money they claim to have. A significant portion of that 'money' is actually just a pile of IOU's.
What good is an IOU from Tom to Mary going to do for a starving Jason? Not a thing. This doesn't stop at the personal banking level. The same system pervades all the way up to national governments and institutes like the Fed. For instance the requirement for the FDIC which 'insures' against bank runs is below even the 10% set for banks. So if there ever was a run on a significant amount of banks 15-20%+ the insurer wouldn't have the resources to cover it (think AIG but the rescuers are the ones on fire.)
Our entire global economic system is dependent on trusting people who are wholly untrustworthy and preventing panic en mass of a perpetually panicked population.
Essentially if average people actually understood how the monetary system works than it would likely collapse. The rational fear of such a system would lead to runs and collapse almost instantly.
You are just wrong here. Runs rarely happen and only after great economic distress. Even when they do happen, whoever actually manages to pry their savings out of the system they dont turn around and bury them in their yard but put them in some other form of bank. In a well managed systems runs dont happen at all. Well your analysis all lead right to my final parts which you didn't really address. The idea that most of the money isn't there, and most of the 'money' they say is there is actually IOU's, that fact is what I think should shake any rational persons confidence and encourage a run(however counterproductive as it may be). I was suggesting a major reason runs don't happen is because the masses of sheeple don't understand it. A basic understanding that almost 90% of "money" are actually IOU's or even more so that even the notes themselves represent IOU's would lead to such events. + Show Spoiler +Presumably if the IOU's were all within close knit communities that might not be a problem. But when what were talking about is more like a situation of Lenny loans Jimmy $100 then Jimmy loans $90 to his Cousin John then John loans $81 to some guy he passed in the subway and so on it's a whole other ball of wax.
Lenny needs his $100 back to pay a bill problem is Jimmy only has $10 Jimmy says "no worries I'll just call in my loan to John" but John only has $9. So he calls in his loan to the guy on the subway. Of course he lent out his money too and only has $7 and some change. But he says "no worries, Ill call in my loans". Surprise surprise but they don't have the money either only this time turns out they didn't even keep anything in reserves so the trail stops here.
So Lenny's $100 is now about $26 and judgments/IOU's Well Lenny can't pay his rent with IOU's and judgments but let's say for fun he could. Well what we have is a trickle up of IOU wealth.
So what you end up with is a few people with a shit ton of IOU's and a lot of people who owe. So long as the extraction is measured things roll on.
The problem is when those IOU's start to pile up more rapidly. And the rate at which they are honored falls below what the ethereal reserves 'cover'
This is precisely where we are approaching now. The US (and many 1st world countries) hasn't actually mad a sincere effort to pay off it's debt since the 1700's.
If you were to be a creditor and your borrower had an ever increasing balance and an increasing mathematical certainty to the impossibility to ever have a reasonable plan to pay it off, how long would you keep taking their IOU's that they got from someone else as payment on their debt?
Well the truth as I've seen it is, that you can't stop.
The stability of 1st world countries is rooted in the idea that their debt and the debt of others they have accumulated is essentially certain to be paid. The problem is that we have empirical evidence that they wont be (payments are at best kept current). In the most favorable conditions we get even for a year or few with debt to GDP but the debt itself practically never goes away.
So since our growth is dependent on borrowing more money year over year from the federal level on down, and the viability of the increase in lending is dependent on the reliability of the growth we end up in a game of musical chairs. Sooner or later people are going to realize the perpetual global growth isn't sustainable (and perpetuating the myth creates ever worsening conditions) and the music stops and people are left without a chair.
So to go back to my Ponzi analogy, essentially getting in on a Ponzi scheme isn't necessarily a bad thing. If you are one of the first people in and first people out it's all good for you(provided they cant 'prove' you 'knew' you were roping people into a Ponzi scheme[or you have enough money/power to put off the investigators]).
Essentially you have the same thing here on a longer time scale. Like an inter-generational Ponzi scheme. As long as you kick the bucket/can before the music stops it was all a happy ride for you. Unfortunately we are rapidly approaching the event horizon of this scheme. Just like a Ponzi scheme you can do all sorts of accounting tricks, and loan consolidating, payment deferring, and fast talking to keep it going a little bit longer but eventually the house of cards collapses.
You can claim it's 'insured' or 'protected by the courts' but the when the curtain is pulled back the money just simply isn't there.
Got a bit long so I thought I'd spoiler it In a Ponzi scheme there's no unlerlying economic activity, it's just people building a chain on transfers that's inherently unsustainable. In the modern monetary system there's a lot of real underlying activity - you can pay off the loan with the income from the job you have. The reason that the monetary system works the way it does - fractional reserve lending creating new money by lending - is that such a system has been found to have more advantages than disadvantages. As economic activity increases, so does lending, and through that, the money supply grows too. That's an important advantage. If the money supply didn't grow fast enough (can't mine gold fast enough) a lack of money actually prohibits economic activity. Of course on the downside you have more freedom to make reckless lending. Pick your poison. It's important to not put the cart before the horse here. Money creation and economic activity go in tandem. And we also have the Fed to regulate both to maintain stability. It's not perfect, but no one's created monetary perfection yet, so get used to it
Well there is economic activity in a Ponzi scheme, maybe not as much as the monetary system but it's there. Some people do make money off of them and they do spend it. Some people spend other money they had with the expectation their Ponzi money is actually there.
As for the Fed holy shit. You mean the same Fed that said we essentially didn't need fraud and other consumer protections because the free market would clear up the bad actors? And more so that financial industry CEO's wouldn't risk their companies on high risk dumb bets? (precisely the opposite happened)
You mean that Fed is going to protect the monetary system....?
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On March 24 2014 03:49 GreenHorizons wrote:Show nested quote +On March 24 2014 00:25 JonnyBNoHo wrote:On March 23 2014 06:14 GreenHorizons wrote:On March 23 2014 04:11 Sub40APM wrote:On March 23 2014 03:53 GreenHorizons wrote:On March 23 2014 03:24 Sub40APM wrote:On March 23 2014 03:16 GreenHorizons wrote:On March 23 2014 02:36 itsjustatank wrote:On March 22 2014 08:11 Sub40APM wrote:On March 22 2014 08:03 JonnyBNoHo wrote:
[quote]
They literally have about 150 billion in the financial system available to be borrowed / invested. They literally do not have 150 billion sitting in a scrooge mc duck vault. in their last 10-k they say they have 14 billion in cash, and another 26 billion or so in short term securities. 'cash' as in deposit accounts, which go on to make more money because of lending. i would suggest anyone who wants to continue commenting on this issue while having zero knowledge about money supply read this first: http://en.wikipedia.org/wiki/Money_supply#United_States So I've taken some econ classes and read the article and another on the money multiplier. Perhaps someone could help me understand how these ideas are not just globally approved Ponzi schemes (besides that schemers essentially promise to keep the lions share of the profits instead of baiting with unrealistic returns for the investor generated by loaning out the Ponzi money?) I mean as a result of these schemes the vast majority of the worlds wealth actually only exists on paper or 1's and 0's, or in IOU's. One promise to pay paid for by another paid for by another promise, and another and so on... I guess the only significant difference I'm picking up on right now is that when these Ponzi's run out of money they can just print more? Someone's debt is someone else's savings. So the increase in debt should be viewed not just as a one directional resource but instead as an interaction between two people and the interest rate is the price that two strangers agree on what the price of the borrowing/savings is. So if the borrower can't or refuses to pay they destroy their wealth and the wealth of the saver correct? part of it would be destroyed, another part of it would not since the creditor would take the debtor to court and sue either for some asset that is equivalent of value or slap a court order on the debtor to garnish some of his income/wage. But I suppose if he is a total bankrupt than yes, his wealth would be destroyed
Also does a Ponzi scheme not have the same mechanic. Where one persons investment is another's return? The 'difference' being that there is allegedly more of an intention on the part of banks to 'pay up' if people come for their money.
If you want to ignore all the things that differentiate it from a Ponzi scheme: market sets the interset rate, the debtor usually provides extensive financials to the creditor so they can guestimate the relative riskiness of the investment, a court system that is ready to act to enforce the creditors rights then sure.
But just like a Ponzi scheme it only works if only a few people want their profits at a time. If lets say anything like 30%+ (possibly less) of savers want their money simultaneously (or in short order) the entire system collapses because the money simply isn't there.
Nope. If the bank is being run well then what they do is go to other banks or the central bank and borrow money from them and hand the money over to the people who demanded for it. Since people generally dont just keep their money in the mattress, the money returns to the monetary system somewhere else. If the bank has been run badly, then the FDIC is the person who makes whole the savers up to 250k and then takes over the assets of the bank to try and get back some of the money it lost (the rest of the money for the FDIC comes from a tax on all banks)
It also only continues to work as long as people keep throwing money into the Ponzi pit. If people lose faith in (fundamentally untrustworthy) lending institutions who have a fraction of money much smaller than the 'reserve requirements' the whole thing collapses.
I guess if at some point in the future people lose complete trust in the system that might be possible, there have been bank runs in history, but in general the actual concept of banking makes a relatively quick come back because -- again -- people dont like to handle all that cash.
The reserves are actually much smaller than the roughly 10% requirement would lead one to believe. The reserve 'money' doesn't have to be money at all. The 'money' can be and often is a promise to pay. So the bank in case of a run or whatever doesn't even have 10% of the money they claim to have. A significant portion of that 'money' is actually just a pile of IOU's.
What good is an IOU from Tom to Mary going to do for a starving Jason? Not a thing. This doesn't stop at the personal banking level. The same system pervades all the way up to national governments and institutes like the Fed. For instance the requirement for the FDIC which 'insures' against bank runs is below even the 10% set for banks. So if there ever was a run on a significant amount of banks 15-20%+ the insurer wouldn't have the resources to cover it (think AIG but the rescuers are the ones on fire.)
Our entire global economic system is dependent on trusting people who are wholly untrustworthy and preventing panic en mass of a perpetually panicked population.
Essentially if average people actually understood how the monetary system works than it would likely collapse. The rational fear of such a system would lead to runs and collapse almost instantly.
You are just wrong here. Runs rarely happen and only after great economic distress. Even when they do happen, whoever actually manages to pry their savings out of the system they dont turn around and bury them in their yard but put them in some other form of bank. In a well managed systems runs dont happen at all. Well your analysis all lead right to my final parts which you didn't really address. The idea that most of the money isn't there, and most of the 'money' they say is there is actually IOU's, that fact is what I think should shake any rational persons confidence and encourage a run(however counterproductive as it may be). I was suggesting a major reason runs don't happen is because the masses of sheeple don't understand it. A basic understanding that almost 90% of "money" are actually IOU's or even more so that even the notes themselves represent IOU's would lead to such events. + Show Spoiler +Presumably if the IOU's were all within close knit communities that might not be a problem. But when what were talking about is more like a situation of Lenny loans Jimmy $100 then Jimmy loans $90 to his Cousin John then John loans $81 to some guy he passed in the subway and so on it's a whole other ball of wax.
Lenny needs his $100 back to pay a bill problem is Jimmy only has $10 Jimmy says "no worries I'll just call in my loan to John" but John only has $9. So he calls in his loan to the guy on the subway. Of course he lent out his money too and only has $7 and some change. But he says "no worries, Ill call in my loans". Surprise surprise but they don't have the money either only this time turns out they didn't even keep anything in reserves so the trail stops here.
So Lenny's $100 is now about $26 and judgments/IOU's Well Lenny can't pay his rent with IOU's and judgments but let's say for fun he could. Well what we have is a trickle up of IOU wealth.
So what you end up with is a few people with a shit ton of IOU's and a lot of people who owe. So long as the extraction is measured things roll on.
The problem is when those IOU's start to pile up more rapidly. And the rate at which they are honored falls below what the ethereal reserves 'cover'
This is precisely where we are approaching now. The US (and many 1st world countries) hasn't actually mad a sincere effort to pay off it's debt since the 1700's.
If you were to be a creditor and your borrower had an ever increasing balance and an increasing mathematical certainty to the impossibility to ever have a reasonable plan to pay it off, how long would you keep taking their IOU's that they got from someone else as payment on their debt?
Well the truth as I've seen it is, that you can't stop.
The stability of 1st world countries is rooted in the idea that their debt and the debt of others they have accumulated is essentially certain to be paid. The problem is that we have empirical evidence that they wont be (payments are at best kept current). In the most favorable conditions we get even for a year or few with debt to GDP but the debt itself practically never goes away.
So since our growth is dependent on borrowing more money year over year from the federal level on down, and the viability of the increase in lending is dependent on the reliability of the growth we end up in a game of musical chairs. Sooner or later people are going to realize the perpetual global growth isn't sustainable (and perpetuating the myth creates ever worsening conditions) and the music stops and people are left without a chair.
So to go back to my Ponzi analogy, essentially getting in on a Ponzi scheme isn't necessarily a bad thing. If you are one of the first people in and first people out it's all good for you(provided they cant 'prove' you 'knew' you were roping people into a Ponzi scheme[or you have enough money/power to put off the investigators]).
Essentially you have the same thing here on a longer time scale. Like an inter-generational Ponzi scheme. As long as you kick the bucket/can before the music stops it was all a happy ride for you. Unfortunately we are rapidly approaching the event horizon of this scheme. Just like a Ponzi scheme you can do all sorts of accounting tricks, and loan consolidating, payment deferring, and fast talking to keep it going a little bit longer but eventually the house of cards collapses.
You can claim it's 'insured' or 'protected by the courts' but the when the curtain is pulled back the money just simply isn't there.
Got a bit long so I thought I'd spoiler it In a Ponzi scheme there's no unlerlying economic activity, it's just people building a chain on transfers that's inherently unsustainable. In the modern monetary system there's a lot of real underlying activity - you can pay off the loan with the income from the job you have. The reason that the monetary system works the way it does - fractional reserve lending creating new money by lending - is that such a system has been found to have more advantages than disadvantages. As economic activity increases, so does lending, and through that, the money supply grows too. That's an important advantage. If the money supply didn't grow fast enough (can't mine gold fast enough) a lack of money actually prohibits economic activity. Of course on the downside you have more freedom to make reckless lending. Pick your poison. It's important to not put the cart before the horse here. Money creation and economic activity go in tandem. And we also have the Fed to regulate both to maintain stability. It's not perfect, but no one's created monetary perfection yet, so get used to it Well there is economic activity in a Ponzi scheme, maybe not as much as the monetary system but it's there. Some people do make money off of them and they do spend it. Some people spend other money they had with the expectation their Ponzi money is actually there. As for the Fed holy shit. You mean the same Fed that said we essentially didn't need fraud and other consumer protections because the free market would clear up the bad actors? And more so that financial industry CEO's wouldn't risk their companies on high risk dumb bets? (precisely the opposite happened) You mean that Fed is going to protect the monetary system....?
Money has no value in itself, and ponzi scheme is only about that. When a bank loan money, the end goal is to create wealth - there is a link to production more or less. The two are clearly not the same.
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On March 24 2014 03:49 GreenHorizons wrote:Show nested quote +On March 24 2014 00:25 JonnyBNoHo wrote:On March 23 2014 06:14 GreenHorizons wrote:On March 23 2014 04:11 Sub40APM wrote:On March 23 2014 03:53 GreenHorizons wrote:On March 23 2014 03:24 Sub40APM wrote:On March 23 2014 03:16 GreenHorizons wrote:On March 23 2014 02:36 itsjustatank wrote:On March 22 2014 08:11 Sub40APM wrote:On March 22 2014 08:03 JonnyBNoHo wrote:
[quote]
They literally have about 150 billion in the financial system available to be borrowed / invested. They literally do not have 150 billion sitting in a scrooge mc duck vault. in their last 10-k they say they have 14 billion in cash, and another 26 billion or so in short term securities. 'cash' as in deposit accounts, which go on to make more money because of lending. i would suggest anyone who wants to continue commenting on this issue while having zero knowledge about money supply read this first: http://en.wikipedia.org/wiki/Money_supply#United_States So I've taken some econ classes and read the article and another on the money multiplier. Perhaps someone could help me understand how these ideas are not just globally approved Ponzi schemes (besides that schemers essentially promise to keep the lions share of the profits instead of baiting with unrealistic returns for the investor generated by loaning out the Ponzi money?) I mean as a result of these schemes the vast majority of the worlds wealth actually only exists on paper or 1's and 0's, or in IOU's. One promise to pay paid for by another paid for by another promise, and another and so on... I guess the only significant difference I'm picking up on right now is that when these Ponzi's run out of money they can just print more? Someone's debt is someone else's savings. So the increase in debt should be viewed not just as a one directional resource but instead as an interaction between two people and the interest rate is the price that two strangers agree on what the price of the borrowing/savings is. So if the borrower can't or refuses to pay they destroy their wealth and the wealth of the saver correct? part of it would be destroyed, another part of it would not since the creditor would take the debtor to court and sue either for some asset that is equivalent of value or slap a court order on the debtor to garnish some of his income/wage. But I suppose if he is a total bankrupt than yes, his wealth would be destroyed
Also does a Ponzi scheme not have the same mechanic. Where one persons investment is another's return? The 'difference' being that there is allegedly more of an intention on the part of banks to 'pay up' if people come for their money.
If you want to ignore all the things that differentiate it from a Ponzi scheme: market sets the interset rate, the debtor usually provides extensive financials to the creditor so they can guestimate the relative riskiness of the investment, a court system that is ready to act to enforce the creditors rights then sure.
But just like a Ponzi scheme it only works if only a few people want their profits at a time. If lets say anything like 30%+ (possibly less) of savers want their money simultaneously (or in short order) the entire system collapses because the money simply isn't there.
Nope. If the bank is being run well then what they do is go to other banks or the central bank and borrow money from them and hand the money over to the people who demanded for it. Since people generally dont just keep their money in the mattress, the money returns to the monetary system somewhere else. If the bank has been run badly, then the FDIC is the person who makes whole the savers up to 250k and then takes over the assets of the bank to try and get back some of the money it lost (the rest of the money for the FDIC comes from a tax on all banks)
It also only continues to work as long as people keep throwing money into the Ponzi pit. If people lose faith in (fundamentally untrustworthy) lending institutions who have a fraction of money much smaller than the 'reserve requirements' the whole thing collapses.
I guess if at some point in the future people lose complete trust in the system that might be possible, there have been bank runs in history, but in general the actual concept of banking makes a relatively quick come back because -- again -- people dont like to handle all that cash.
The reserves are actually much smaller than the roughly 10% requirement would lead one to believe. The reserve 'money' doesn't have to be money at all. The 'money' can be and often is a promise to pay. So the bank in case of a run or whatever doesn't even have 10% of the money they claim to have. A significant portion of that 'money' is actually just a pile of IOU's.
What good is an IOU from Tom to Mary going to do for a starving Jason? Not a thing. This doesn't stop at the personal banking level. The same system pervades all the way up to national governments and institutes like the Fed. For instance the requirement for the FDIC which 'insures' against bank runs is below even the 10% set for banks. So if there ever was a run on a significant amount of banks 15-20%+ the insurer wouldn't have the resources to cover it (think AIG but the rescuers are the ones on fire.)
Our entire global economic system is dependent on trusting people who are wholly untrustworthy and preventing panic en mass of a perpetually panicked population.
Essentially if average people actually understood how the monetary system works than it would likely collapse. The rational fear of such a system would lead to runs and collapse almost instantly.
You are just wrong here. Runs rarely happen and only after great economic distress. Even when they do happen, whoever actually manages to pry their savings out of the system they dont turn around and bury them in their yard but put them in some other form of bank. In a well managed systems runs dont happen at all. Well your analysis all lead right to my final parts which you didn't really address. The idea that most of the money isn't there, and most of the 'money' they say is there is actually IOU's, that fact is what I think should shake any rational persons confidence and encourage a run(however counterproductive as it may be). I was suggesting a major reason runs don't happen is because the masses of sheeple don't understand it. A basic understanding that almost 90% of "money" are actually IOU's or even more so that even the notes themselves represent IOU's would lead to such events. + Show Spoiler +Presumably if the IOU's were all within close knit communities that might not be a problem. But when what were talking about is more like a situation of Lenny loans Jimmy $100 then Jimmy loans $90 to his Cousin John then John loans $81 to some guy he passed in the subway and so on it's a whole other ball of wax.
Lenny needs his $100 back to pay a bill problem is Jimmy only has $10 Jimmy says "no worries I'll just call in my loan to John" but John only has $9. So he calls in his loan to the guy on the subway. Of course he lent out his money too and only has $7 and some change. But he says "no worries, Ill call in my loans". Surprise surprise but they don't have the money either only this time turns out they didn't even keep anything in reserves so the trail stops here.
So Lenny's $100 is now about $26 and judgments/IOU's Well Lenny can't pay his rent with IOU's and judgments but let's say for fun he could. Well what we have is a trickle up of IOU wealth.
So what you end up with is a few people with a shit ton of IOU's and a lot of people who owe. So long as the extraction is measured things roll on.
The problem is when those IOU's start to pile up more rapidly. And the rate at which they are honored falls below what the ethereal reserves 'cover'
This is precisely where we are approaching now. The US (and many 1st world countries) hasn't actually mad a sincere effort to pay off it's debt since the 1700's.
If you were to be a creditor and your borrower had an ever increasing balance and an increasing mathematical certainty to the impossibility to ever have a reasonable plan to pay it off, how long would you keep taking their IOU's that they got from someone else as payment on their debt?
Well the truth as I've seen it is, that you can't stop.
The stability of 1st world countries is rooted in the idea that their debt and the debt of others they have accumulated is essentially certain to be paid. The problem is that we have empirical evidence that they wont be (payments are at best kept current). In the most favorable conditions we get even for a year or few with debt to GDP but the debt itself practically never goes away.
So since our growth is dependent on borrowing more money year over year from the federal level on down, and the viability of the increase in lending is dependent on the reliability of the growth we end up in a game of musical chairs. Sooner or later people are going to realize the perpetual global growth isn't sustainable (and perpetuating the myth creates ever worsening conditions) and the music stops and people are left without a chair.
So to go back to my Ponzi analogy, essentially getting in on a Ponzi scheme isn't necessarily a bad thing. If you are one of the first people in and first people out it's all good for you(provided they cant 'prove' you 'knew' you were roping people into a Ponzi scheme[or you have enough money/power to put off the investigators]).
Essentially you have the same thing here on a longer time scale. Like an inter-generational Ponzi scheme. As long as you kick the bucket/can before the music stops it was all a happy ride for you. Unfortunately we are rapidly approaching the event horizon of this scheme. Just like a Ponzi scheme you can do all sorts of accounting tricks, and loan consolidating, payment deferring, and fast talking to keep it going a little bit longer but eventually the house of cards collapses.
You can claim it's 'insured' or 'protected by the courts' but the when the curtain is pulled back the money just simply isn't there.
Got a bit long so I thought I'd spoiler it In a Ponzi scheme there's no unlerlying economic activity, it's just people building a chain on transfers that's inherently unsustainable. In the modern monetary system there's a lot of real underlying activity - you can pay off the loan with the income from the job you have. The reason that the monetary system works the way it does - fractional reserve lending creating new money by lending - is that such a system has been found to have more advantages than disadvantages. As economic activity increases, so does lending, and through that, the money supply grows too. That's an important advantage. If the money supply didn't grow fast enough (can't mine gold fast enough) a lack of money actually prohibits economic activity. Of course on the downside you have more freedom to make reckless lending. Pick your poison. It's important to not put the cart before the horse here. Money creation and economic activity go in tandem. And we also have the Fed to regulate both to maintain stability. It's not perfect, but no one's created monetary perfection yet, so get used to it Well there is economic activity in a Ponzi scheme, maybe not as much as the monetary system but it's there. Some people do make money off of them and they do spend it. Some people spend other money they had with the expectation their Ponzi money is actually there. As for the Fed holy shit. You mean the same Fed that said we essentially didn't need fraud and other consumer protections because the free market would clear up the bad actors? And more so that financial industry CEO's wouldn't risk their companies on high risk dumb bets? (precisely the opposite happened) You mean that Fed is going to protect the monetary system....?
Sure Ponzi schemes have *some* economic activity associated with them, but not really much. A mortgage can be reasonably expected to be paid back. Not so with a Ponzi. I don't completely disagree with your Ponzi comparison btw, just as I wouldn't completely disagree with calling social security a Ponzi. There are some Ponzi-like elements there, but really that's what makes a Ponzi so effective - it looks so much like the real deal. Just look at the current "is Herbalife a pyramid scheme?" debate. Sometimes it's not easy to distinguish legitimate from fake, but there is a difference.
And I wouldn't crap on the Fed too much. The Fed isn't perfect, but it's been doing a better job than just any other central bank I can think of.
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Cayman Islands24199 Posts
if you take it that far anything that depends on future income expectation has ponzi elements. it is a genuine positive innovation to unlock future revenue in the service of growth, by the use of credit, so you gotta look at both sides as far as the monetary system is concerned.
a ponzi scheme purely depends on the continuation of the scheme itself to sustain future expectation. in contrast when you take out a loan from banks there's an accounting of real economy productivity somewhere down the chain.
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On March 24 2014 09:04 JonnyBNoHo wrote:Show nested quote +On March 24 2014 03:49 GreenHorizons wrote:On March 24 2014 00:25 JonnyBNoHo wrote:On March 23 2014 06:14 GreenHorizons wrote:On March 23 2014 04:11 Sub40APM wrote:On March 23 2014 03:53 GreenHorizons wrote:On March 23 2014 03:24 Sub40APM wrote:On March 23 2014 03:16 GreenHorizons wrote:On March 23 2014 02:36 itsjustatank wrote:On March 22 2014 08:11 Sub40APM wrote:
[quote]
in their last 10-k they say they have 14 billion in cash, and another 26 billion or so in short term securities. 'cash' as in deposit accounts, which go on to make more money because of lending. i would suggest anyone who wants to continue commenting on this issue while having zero knowledge about money supply read this first: http://en.wikipedia.org/wiki/Money_supply#United_States So I've taken some econ classes and read the article and another on the money multiplier. Perhaps someone could help me understand how these ideas are not just globally approved Ponzi schemes (besides that schemers essentially promise to keep the lions share of the profits instead of baiting with unrealistic returns for the investor generated by loaning out the Ponzi money?) I mean as a result of these schemes the vast majority of the worlds wealth actually only exists on paper or 1's and 0's, or in IOU's. One promise to pay paid for by another paid for by another promise, and another and so on... I guess the only significant difference I'm picking up on right now is that when these Ponzi's run out of money they can just print more? Someone's debt is someone else's savings. So the increase in debt should be viewed not just as a one directional resource but instead as an interaction between two people and the interest rate is the price that two strangers agree on what the price of the borrowing/savings is. So if the borrower can't or refuses to pay they destroy their wealth and the wealth of the saver correct? part of it would be destroyed, another part of it would not since the creditor would take the debtor to court and sue either for some asset that is equivalent of value or slap a court order on the debtor to garnish some of his income/wage. But I suppose if he is a total bankrupt than yes, his wealth would be destroyed
Also does a Ponzi scheme not have the same mechanic. Where one persons investment is another's return? The 'difference' being that there is allegedly more of an intention on the part of banks to 'pay up' if people come for their money.
If you want to ignore all the things that differentiate it from a Ponzi scheme: market sets the interset rate, the debtor usually provides extensive financials to the creditor so they can guestimate the relative riskiness of the investment, a court system that is ready to act to enforce the creditors rights then sure.
But just like a Ponzi scheme it only works if only a few people want their profits at a time. If lets say anything like 30%+ (possibly less) of savers want their money simultaneously (or in short order) the entire system collapses because the money simply isn't there.
Nope. If the bank is being run well then what they do is go to other banks or the central bank and borrow money from them and hand the money over to the people who demanded for it. Since people generally dont just keep their money in the mattress, the money returns to the monetary system somewhere else. If the bank has been run badly, then the FDIC is the person who makes whole the savers up to 250k and then takes over the assets of the bank to try and get back some of the money it lost (the rest of the money for the FDIC comes from a tax on all banks)
It also only continues to work as long as people keep throwing money into the Ponzi pit. If people lose faith in (fundamentally untrustworthy) lending institutions who have a fraction of money much smaller than the 'reserve requirements' the whole thing collapses.
I guess if at some point in the future people lose complete trust in the system that might be possible, there have been bank runs in history, but in general the actual concept of banking makes a relatively quick come back because -- again -- people dont like to handle all that cash.
The reserves are actually much smaller than the roughly 10% requirement would lead one to believe. The reserve 'money' doesn't have to be money at all. The 'money' can be and often is a promise to pay. So the bank in case of a run or whatever doesn't even have 10% of the money they claim to have. A significant portion of that 'money' is actually just a pile of IOU's.
What good is an IOU from Tom to Mary going to do for a starving Jason? Not a thing. This doesn't stop at the personal banking level. The same system pervades all the way up to national governments and institutes like the Fed. For instance the requirement for the FDIC which 'insures' against bank runs is below even the 10% set for banks. So if there ever was a run on a significant amount of banks 15-20%+ the insurer wouldn't have the resources to cover it (think AIG but the rescuers are the ones on fire.)
Our entire global economic system is dependent on trusting people who are wholly untrustworthy and preventing panic en mass of a perpetually panicked population.
Essentially if average people actually understood how the monetary system works than it would likely collapse. The rational fear of such a system would lead to runs and collapse almost instantly.
You are just wrong here. Runs rarely happen and only after great economic distress. Even when they do happen, whoever actually manages to pry their savings out of the system they dont turn around and bury them in their yard but put them in some other form of bank. In a well managed systems runs dont happen at all. Well your analysis all lead right to my final parts which you didn't really address. The idea that most of the money isn't there, and most of the 'money' they say is there is actually IOU's, that fact is what I think should shake any rational persons confidence and encourage a run(however counterproductive as it may be). I was suggesting a major reason runs don't happen is because the masses of sheeple don't understand it. A basic understanding that almost 90% of "money" are actually IOU's or even more so that even the notes themselves represent IOU's would lead to such events. + Show Spoiler +Presumably if the IOU's were all within close knit communities that might not be a problem. But when what were talking about is more like a situation of Lenny loans Jimmy $100 then Jimmy loans $90 to his Cousin John then John loans $81 to some guy he passed in the subway and so on it's a whole other ball of wax.
Lenny needs his $100 back to pay a bill problem is Jimmy only has $10 Jimmy says "no worries I'll just call in my loan to John" but John only has $9. So he calls in his loan to the guy on the subway. Of course he lent out his money too and only has $7 and some change. But he says "no worries, Ill call in my loans". Surprise surprise but they don't have the money either only this time turns out they didn't even keep anything in reserves so the trail stops here.
So Lenny's $100 is now about $26 and judgments/IOU's Well Lenny can't pay his rent with IOU's and judgments but let's say for fun he could. Well what we have is a trickle up of IOU wealth.
So what you end up with is a few people with a shit ton of IOU's and a lot of people who owe. So long as the extraction is measured things roll on.
The problem is when those IOU's start to pile up more rapidly. And the rate at which they are honored falls below what the ethereal reserves 'cover'
This is precisely where we are approaching now. The US (and many 1st world countries) hasn't actually mad a sincere effort to pay off it's debt since the 1700's.
If you were to be a creditor and your borrower had an ever increasing balance and an increasing mathematical certainty to the impossibility to ever have a reasonable plan to pay it off, how long would you keep taking their IOU's that they got from someone else as payment on their debt?
Well the truth as I've seen it is, that you can't stop.
The stability of 1st world countries is rooted in the idea that their debt and the debt of others they have accumulated is essentially certain to be paid. The problem is that we have empirical evidence that they wont be (payments are at best kept current). In the most favorable conditions we get even for a year or few with debt to GDP but the debt itself practically never goes away.
So since our growth is dependent on borrowing more money year over year from the federal level on down, and the viability of the increase in lending is dependent on the reliability of the growth we end up in a game of musical chairs. Sooner or later people are going to realize the perpetual global growth isn't sustainable (and perpetuating the myth creates ever worsening conditions) and the music stops and people are left without a chair.
So to go back to my Ponzi analogy, essentially getting in on a Ponzi scheme isn't necessarily a bad thing. If you are one of the first people in and first people out it's all good for you(provided they cant 'prove' you 'knew' you were roping people into a Ponzi scheme[or you have enough money/power to put off the investigators]).
Essentially you have the same thing here on a longer time scale. Like an inter-generational Ponzi scheme. As long as you kick the bucket/can before the music stops it was all a happy ride for you. Unfortunately we are rapidly approaching the event horizon of this scheme. Just like a Ponzi scheme you can do all sorts of accounting tricks, and loan consolidating, payment deferring, and fast talking to keep it going a little bit longer but eventually the house of cards collapses.
You can claim it's 'insured' or 'protected by the courts' but the when the curtain is pulled back the money just simply isn't there.
Got a bit long so I thought I'd spoiler it In a Ponzi scheme there's no unlerlying economic activity, it's just people building a chain on transfers that's inherently unsustainable. In the modern monetary system there's a lot of real underlying activity - you can pay off the loan with the income from the job you have. The reason that the monetary system works the way it does - fractional reserve lending creating new money by lending - is that such a system has been found to have more advantages than disadvantages. As economic activity increases, so does lending, and through that, the money supply grows too. That's an important advantage. If the money supply didn't grow fast enough (can't mine gold fast enough) a lack of money actually prohibits economic activity. Of course on the downside you have more freedom to make reckless lending. Pick your poison. It's important to not put the cart before the horse here. Money creation and economic activity go in tandem. And we also have the Fed to regulate both to maintain stability. It's not perfect, but no one's created monetary perfection yet, so get used to it Well there is economic activity in a Ponzi scheme, maybe not as much as the monetary system but it's there. Some people do make money off of them and they do spend it. Some people spend other money they had with the expectation their Ponzi money is actually there. As for the Fed holy shit. You mean the same Fed that said we essentially didn't need fraud and other consumer protections because the free market would clear up the bad actors? And more so that financial industry CEO's wouldn't risk their companies on high risk dumb bets? (precisely the opposite happened) You mean that Fed is going to protect the monetary system....? Sure Ponzi schemes have *some* economic activity associated with them, but not really much. A mortgage can be reasonably expected to be paid back. Not so with a Ponzi. I don't completely disagree with your Ponzi comparison btw, just as I wouldn't completely disagree with calling social security a Ponzi. There are some Ponzi-like elements there, but really that's what makes a Ponzi so effective - it looks so much like the real deal. Just look at the current "is Herbalife a pyramid scheme?" debate. Sometimes it's not easy to distinguish legitimate from fake, but there is a difference. And I wouldn't crap on the Fed too much. The Fed isn't perfect, but it's been doing a better job than just any other central bank I can think of.
The transcripts from the Fed's meetings in 2008 reveal how clueless the Fed was before and during the crisis, even when the data was staring them in the face. Any jobless "recovery" we've had in the meantime has been both a direct transfer of wealth from the people to the corporations who caused the crash and has occurred in spite of any action taken by Ben Bernanke.
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On March 24 2014 11:43 IgnE wrote:Show nested quote +On March 24 2014 09:04 JonnyBNoHo wrote:On March 24 2014 03:49 GreenHorizons wrote:On March 24 2014 00:25 JonnyBNoHo wrote:On March 23 2014 06:14 GreenHorizons wrote:On March 23 2014 04:11 Sub40APM wrote:On March 23 2014 03:53 GreenHorizons wrote:On March 23 2014 03:24 Sub40APM wrote:On March 23 2014 03:16 GreenHorizons wrote:On March 23 2014 02:36 itsjustatank wrote:[quote] 'cash' as in deposit accounts, which go on to make more money because of lending. i would suggest anyone who wants to continue commenting on this issue while having zero knowledge about money supply read this first: http://en.wikipedia.org/wiki/Money_supply#United_States So I've taken some econ classes and read the article and another on the money multiplier. Perhaps someone could help me understand how these ideas are not just globally approved Ponzi schemes (besides that schemers essentially promise to keep the lions share of the profits instead of baiting with unrealistic returns for the investor generated by loaning out the Ponzi money?) I mean as a result of these schemes the vast majority of the worlds wealth actually only exists on paper or 1's and 0's, or in IOU's. One promise to pay paid for by another paid for by another promise, and another and so on... I guess the only significant difference I'm picking up on right now is that when these Ponzi's run out of money they can just print more? Someone's debt is someone else's savings. So the increase in debt should be viewed not just as a one directional resource but instead as an interaction between two people and the interest rate is the price that two strangers agree on what the price of the borrowing/savings is. So if the borrower can't or refuses to pay they destroy their wealth and the wealth of the saver correct? part of it would be destroyed, another part of it would not since the creditor would take the debtor to court and sue either for some asset that is equivalent of value or slap a court order on the debtor to garnish some of his income/wage. But I suppose if he is a total bankrupt than yes, his wealth would be destroyed
Also does a Ponzi scheme not have the same mechanic. Where one persons investment is another's return? The 'difference' being that there is allegedly more of an intention on the part of banks to 'pay up' if people come for their money.
If you want to ignore all the things that differentiate it from a Ponzi scheme: market sets the interset rate, the debtor usually provides extensive financials to the creditor so they can guestimate the relative riskiness of the investment, a court system that is ready to act to enforce the creditors rights then sure.
But just like a Ponzi scheme it only works if only a few people want their profits at a time. If lets say anything like 30%+ (possibly less) of savers want their money simultaneously (or in short order) the entire system collapses because the money simply isn't there.
Nope. If the bank is being run well then what they do is go to other banks or the central bank and borrow money from them and hand the money over to the people who demanded for it. Since people generally dont just keep their money in the mattress, the money returns to the monetary system somewhere else. If the bank has been run badly, then the FDIC is the person who makes whole the savers up to 250k and then takes over the assets of the bank to try and get back some of the money it lost (the rest of the money for the FDIC comes from a tax on all banks)
It also only continues to work as long as people keep throwing money into the Ponzi pit. If people lose faith in (fundamentally untrustworthy) lending institutions who have a fraction of money much smaller than the 'reserve requirements' the whole thing collapses.
I guess if at some point in the future people lose complete trust in the system that might be possible, there have been bank runs in history, but in general the actual concept of banking makes a relatively quick come back because -- again -- people dont like to handle all that cash.
The reserves are actually much smaller than the roughly 10% requirement would lead one to believe. The reserve 'money' doesn't have to be money at all. The 'money' can be and often is a promise to pay. So the bank in case of a run or whatever doesn't even have 10% of the money they claim to have. A significant portion of that 'money' is actually just a pile of IOU's.
What good is an IOU from Tom to Mary going to do for a starving Jason? Not a thing. This doesn't stop at the personal banking level. The same system pervades all the way up to national governments and institutes like the Fed. For instance the requirement for the FDIC which 'insures' against bank runs is below even the 10% set for banks. So if there ever was a run on a significant amount of banks 15-20%+ the insurer wouldn't have the resources to cover it (think AIG but the rescuers are the ones on fire.)
Our entire global economic system is dependent on trusting people who are wholly untrustworthy and preventing panic en mass of a perpetually panicked population.
Essentially if average people actually understood how the monetary system works than it would likely collapse. The rational fear of such a system would lead to runs and collapse almost instantly.
You are just wrong here. Runs rarely happen and only after great economic distress. Even when they do happen, whoever actually manages to pry their savings out of the system they dont turn around and bury them in their yard but put them in some other form of bank. In a well managed systems runs dont happen at all. Well your analysis all lead right to my final parts which you didn't really address. The idea that most of the money isn't there, and most of the 'money' they say is there is actually IOU's, that fact is what I think should shake any rational persons confidence and encourage a run(however counterproductive as it may be). I was suggesting a major reason runs don't happen is because the masses of sheeple don't understand it. A basic understanding that almost 90% of "money" are actually IOU's or even more so that even the notes themselves represent IOU's would lead to such events. + Show Spoiler +Presumably if the IOU's were all within close knit communities that might not be a problem. But when what were talking about is more like a situation of Lenny loans Jimmy $100 then Jimmy loans $90 to his Cousin John then John loans $81 to some guy he passed in the subway and so on it's a whole other ball of wax.
Lenny needs his $100 back to pay a bill problem is Jimmy only has $10 Jimmy says "no worries I'll just call in my loan to John" but John only has $9. So he calls in his loan to the guy on the subway. Of course he lent out his money too and only has $7 and some change. But he says "no worries, Ill call in my loans". Surprise surprise but they don't have the money either only this time turns out they didn't even keep anything in reserves so the trail stops here.
So Lenny's $100 is now about $26 and judgments/IOU's Well Lenny can't pay his rent with IOU's and judgments but let's say for fun he could. Well what we have is a trickle up of IOU wealth.
So what you end up with is a few people with a shit ton of IOU's and a lot of people who owe. So long as the extraction is measured things roll on.
The problem is when those IOU's start to pile up more rapidly. And the rate at which they are honored falls below what the ethereal reserves 'cover'
This is precisely where we are approaching now. The US (and many 1st world countries) hasn't actually mad a sincere effort to pay off it's debt since the 1700's.
If you were to be a creditor and your borrower had an ever increasing balance and an increasing mathematical certainty to the impossibility to ever have a reasonable plan to pay it off, how long would you keep taking their IOU's that they got from someone else as payment on their debt?
Well the truth as I've seen it is, that you can't stop.
The stability of 1st world countries is rooted in the idea that their debt and the debt of others they have accumulated is essentially certain to be paid. The problem is that we have empirical evidence that they wont be (payments are at best kept current). In the most favorable conditions we get even for a year or few with debt to GDP but the debt itself practically never goes away.
So since our growth is dependent on borrowing more money year over year from the federal level on down, and the viability of the increase in lending is dependent on the reliability of the growth we end up in a game of musical chairs. Sooner or later people are going to realize the perpetual global growth isn't sustainable (and perpetuating the myth creates ever worsening conditions) and the music stops and people are left without a chair.
So to go back to my Ponzi analogy, essentially getting in on a Ponzi scheme isn't necessarily a bad thing. If you are one of the first people in and first people out it's all good for you(provided they cant 'prove' you 'knew' you were roping people into a Ponzi scheme[or you have enough money/power to put off the investigators]).
Essentially you have the same thing here on a longer time scale. Like an inter-generational Ponzi scheme. As long as you kick the bucket/can before the music stops it was all a happy ride for you. Unfortunately we are rapidly approaching the event horizon of this scheme. Just like a Ponzi scheme you can do all sorts of accounting tricks, and loan consolidating, payment deferring, and fast talking to keep it going a little bit longer but eventually the house of cards collapses.
You can claim it's 'insured' or 'protected by the courts' but the when the curtain is pulled back the money just simply isn't there.
Got a bit long so I thought I'd spoiler it In a Ponzi scheme there's no unlerlying economic activity, it's just people building a chain on transfers that's inherently unsustainable. In the modern monetary system there's a lot of real underlying activity - you can pay off the loan with the income from the job you have. The reason that the monetary system works the way it does - fractional reserve lending creating new money by lending - is that such a system has been found to have more advantages than disadvantages. As economic activity increases, so does lending, and through that, the money supply grows too. That's an important advantage. If the money supply didn't grow fast enough (can't mine gold fast enough) a lack of money actually prohibits economic activity. Of course on the downside you have more freedom to make reckless lending. Pick your poison. It's important to not put the cart before the horse here. Money creation and economic activity go in tandem. And we also have the Fed to regulate both to maintain stability. It's not perfect, but no one's created monetary perfection yet, so get used to it Well there is economic activity in a Ponzi scheme, maybe not as much as the monetary system but it's there. Some people do make money off of them and they do spend it. Some people spend other money they had with the expectation their Ponzi money is actually there. As for the Fed holy shit. You mean the same Fed that said we essentially didn't need fraud and other consumer protections because the free market would clear up the bad actors? And more so that financial industry CEO's wouldn't risk their companies on high risk dumb bets? (precisely the opposite happened) You mean that Fed is going to protect the monetary system....? Sure Ponzi schemes have *some* economic activity associated with them, but not really much. A mortgage can be reasonably expected to be paid back. Not so with a Ponzi. I don't completely disagree with your Ponzi comparison btw, just as I wouldn't completely disagree with calling social security a Ponzi. There are some Ponzi-like elements there, but really that's what makes a Ponzi so effective - it looks so much like the real deal. Just look at the current "is Herbalife a pyramid scheme?" debate. Sometimes it's not easy to distinguish legitimate from fake, but there is a difference. And I wouldn't crap on the Fed too much. The Fed isn't perfect, but it's been doing a better job than just any other central bank I can think of. The transcripts from the Fed's meetings in 2008 reveal how clueless the Fed was before and during the crisis, even when the data was staring them in the face. Any jobless "recovery" we've had in the meantime has been both a direct transfer of wealth from the people to the corporations who caused the crash and has occurred in spite of any action taken by Ben Bernanke.
It wasn't inherently obvious that there was going to be a financial crisis. Few saw it coming and the Fed reacted more quickly and effectively than just about any other central bank out there. Compare it to the ECB and the Fed did fantastic.
Not sure what you are referencing with a transfer of wealth.
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On March 24 2014 12:00 JonnyBNoHo wrote:Show nested quote +On March 24 2014 11:43 IgnE wrote:On March 24 2014 09:04 JonnyBNoHo wrote:On March 24 2014 03:49 GreenHorizons wrote:On March 24 2014 00:25 JonnyBNoHo wrote:On March 23 2014 06:14 GreenHorizons wrote:On March 23 2014 04:11 Sub40APM wrote:On March 23 2014 03:53 GreenHorizons wrote:On March 23 2014 03:24 Sub40APM wrote:On March 23 2014 03:16 GreenHorizons wrote:
[quote]
So I've taken some econ classes and read the article and another on the money multiplier. Perhaps someone could help me understand how these ideas are not just globally approved Ponzi schemes (besides that schemers essentially promise to keep the lions share of the profits instead of baiting with unrealistic returns for the investor generated by loaning out the Ponzi money?)
I mean as a result of these schemes the vast majority of the worlds wealth actually only exists on paper or 1's and 0's, or in IOU's. One promise to pay paid for by another paid for by another promise, and another and so on...
I guess the only significant difference I'm picking up on right now is that when these Ponzi's run out of money they can just print more? Someone's debt is someone else's savings. So the increase in debt should be viewed not just as a one directional resource but instead as an interaction between two people and the interest rate is the price that two strangers agree on what the price of the borrowing/savings is. So if the borrower can't or refuses to pay they destroy their wealth and the wealth of the saver correct? part of it would be destroyed, another part of it would not since the creditor would take the debtor to court and sue either for some asset that is equivalent of value or slap a court order on the debtor to garnish some of his income/wage. But I suppose if he is a total bankrupt than yes, his wealth would be destroyed
Also does a Ponzi scheme not have the same mechanic. Where one persons investment is another's return? The 'difference' being that there is allegedly more of an intention on the part of banks to 'pay up' if people come for their money.
If you want to ignore all the things that differentiate it from a Ponzi scheme: market sets the interset rate, the debtor usually provides extensive financials to the creditor so they can guestimate the relative riskiness of the investment, a court system that is ready to act to enforce the creditors rights then sure.
But just like a Ponzi scheme it only works if only a few people want their profits at a time. If lets say anything like 30%+ (possibly less) of savers want their money simultaneously (or in short order) the entire system collapses because the money simply isn't there.
Nope. If the bank is being run well then what they do is go to other banks or the central bank and borrow money from them and hand the money over to the people who demanded for it. Since people generally dont just keep their money in the mattress, the money returns to the monetary system somewhere else. If the bank has been run badly, then the FDIC is the person who makes whole the savers up to 250k and then takes over the assets of the bank to try and get back some of the money it lost (the rest of the money for the FDIC comes from a tax on all banks)
It also only continues to work as long as people keep throwing money into the Ponzi pit. If people lose faith in (fundamentally untrustworthy) lending institutions who have a fraction of money much smaller than the 'reserve requirements' the whole thing collapses.
I guess if at some point in the future people lose complete trust in the system that might be possible, there have been bank runs in history, but in general the actual concept of banking makes a relatively quick come back because -- again -- people dont like to handle all that cash.
The reserves are actually much smaller than the roughly 10% requirement would lead one to believe. The reserve 'money' doesn't have to be money at all. The 'money' can be and often is a promise to pay. So the bank in case of a run or whatever doesn't even have 10% of the money they claim to have. A significant portion of that 'money' is actually just a pile of IOU's.
What good is an IOU from Tom to Mary going to do for a starving Jason? Not a thing. This doesn't stop at the personal banking level. The same system pervades all the way up to national governments and institutes like the Fed. For instance the requirement for the FDIC which 'insures' against bank runs is below even the 10% set for banks. So if there ever was a run on a significant amount of banks 15-20%+ the insurer wouldn't have the resources to cover it (think AIG but the rescuers are the ones on fire.)
Our entire global economic system is dependent on trusting people who are wholly untrustworthy and preventing panic en mass of a perpetually panicked population.
Essentially if average people actually understood how the monetary system works than it would likely collapse. The rational fear of such a system would lead to runs and collapse almost instantly.
You are just wrong here. Runs rarely happen and only after great economic distress. Even when they do happen, whoever actually manages to pry their savings out of the system they dont turn around and bury them in their yard but put them in some other form of bank. In a well managed systems runs dont happen at all. Well your analysis all lead right to my final parts which you didn't really address. The idea that most of the money isn't there, and most of the 'money' they say is there is actually IOU's, that fact is what I think should shake any rational persons confidence and encourage a run(however counterproductive as it may be). I was suggesting a major reason runs don't happen is because the masses of sheeple don't understand it. A basic understanding that almost 90% of "money" are actually IOU's or even more so that even the notes themselves represent IOU's would lead to such events. + Show Spoiler +Presumably if the IOU's were all within close knit communities that might not be a problem. But when what were talking about is more like a situation of Lenny loans Jimmy $100 then Jimmy loans $90 to his Cousin John then John loans $81 to some guy he passed in the subway and so on it's a whole other ball of wax.
Lenny needs his $100 back to pay a bill problem is Jimmy only has $10 Jimmy says "no worries I'll just call in my loan to John" but John only has $9. So he calls in his loan to the guy on the subway. Of course he lent out his money too and only has $7 and some change. But he says "no worries, Ill call in my loans". Surprise surprise but they don't have the money either only this time turns out they didn't even keep anything in reserves so the trail stops here.
So Lenny's $100 is now about $26 and judgments/IOU's Well Lenny can't pay his rent with IOU's and judgments but let's say for fun he could. Well what we have is a trickle up of IOU wealth.
So what you end up with is a few people with a shit ton of IOU's and a lot of people who owe. So long as the extraction is measured things roll on.
The problem is when those IOU's start to pile up more rapidly. And the rate at which they are honored falls below what the ethereal reserves 'cover'
This is precisely where we are approaching now. The US (and many 1st world countries) hasn't actually mad a sincere effort to pay off it's debt since the 1700's.
If you were to be a creditor and your borrower had an ever increasing balance and an increasing mathematical certainty to the impossibility to ever have a reasonable plan to pay it off, how long would you keep taking their IOU's that they got from someone else as payment on their debt?
Well the truth as I've seen it is, that you can't stop.
The stability of 1st world countries is rooted in the idea that their debt and the debt of others they have accumulated is essentially certain to be paid. The problem is that we have empirical evidence that they wont be (payments are at best kept current). In the most favorable conditions we get even for a year or few with debt to GDP but the debt itself practically never goes away.
So since our growth is dependent on borrowing more money year over year from the federal level on down, and the viability of the increase in lending is dependent on the reliability of the growth we end up in a game of musical chairs. Sooner or later people are going to realize the perpetual global growth isn't sustainable (and perpetuating the myth creates ever worsening conditions) and the music stops and people are left without a chair.
So to go back to my Ponzi analogy, essentially getting in on a Ponzi scheme isn't necessarily a bad thing. If you are one of the first people in and first people out it's all good for you(provided they cant 'prove' you 'knew' you were roping people into a Ponzi scheme[or you have enough money/power to put off the investigators]).
Essentially you have the same thing here on a longer time scale. Like an inter-generational Ponzi scheme. As long as you kick the bucket/can before the music stops it was all a happy ride for you. Unfortunately we are rapidly approaching the event horizon of this scheme. Just like a Ponzi scheme you can do all sorts of accounting tricks, and loan consolidating, payment deferring, and fast talking to keep it going a little bit longer but eventually the house of cards collapses.
You can claim it's 'insured' or 'protected by the courts' but the when the curtain is pulled back the money just simply isn't there.
Got a bit long so I thought I'd spoiler it In a Ponzi scheme there's no unlerlying economic activity, it's just people building a chain on transfers that's inherently unsustainable. In the modern monetary system there's a lot of real underlying activity - you can pay off the loan with the income from the job you have. The reason that the monetary system works the way it does - fractional reserve lending creating new money by lending - is that such a system has been found to have more advantages than disadvantages. As economic activity increases, so does lending, and through that, the money supply grows too. That's an important advantage. If the money supply didn't grow fast enough (can't mine gold fast enough) a lack of money actually prohibits economic activity. Of course on the downside you have more freedom to make reckless lending. Pick your poison. It's important to not put the cart before the horse here. Money creation and economic activity go in tandem. And we also have the Fed to regulate both to maintain stability. It's not perfect, but no one's created monetary perfection yet, so get used to it Well there is economic activity in a Ponzi scheme, maybe not as much as the monetary system but it's there. Some people do make money off of them and they do spend it. Some people spend other money they had with the expectation their Ponzi money is actually there. As for the Fed holy shit. You mean the same Fed that said we essentially didn't need fraud and other consumer protections because the free market would clear up the bad actors? And more so that financial industry CEO's wouldn't risk their companies on high risk dumb bets? (precisely the opposite happened) You mean that Fed is going to protect the monetary system....? Sure Ponzi schemes have *some* economic activity associated with them, but not really much. A mortgage can be reasonably expected to be paid back. Not so with a Ponzi. I don't completely disagree with your Ponzi comparison btw, just as I wouldn't completely disagree with calling social security a Ponzi. There are some Ponzi-like elements there, but really that's what makes a Ponzi so effective - it looks so much like the real deal. Just look at the current "is Herbalife a pyramid scheme?" debate. Sometimes it's not easy to distinguish legitimate from fake, but there is a difference. And I wouldn't crap on the Fed too much. The Fed isn't perfect, but it's been doing a better job than just any other central bank I can think of. The transcripts from the Fed's meetings in 2008 reveal how clueless the Fed was before and during the crisis, even when the data was staring them in the face. Any jobless "recovery" we've had in the meantime has been both a direct transfer of wealth from the people to the corporations who caused the crash and has occurred in spite of any action taken by Ben Bernanke. It wasn't inherently obvious that there was going to be a financial crisis. Few saw it coming and the Fed reacted more quickly and effectively than just about any other central bank out there. Compare it to the ECB and the Fed did fantastic. Not sure what you are referencing with a transfer of wealth.
Well, I agree that it wasnt that obvious but its a sign of how out of touch with the modern financial markets both the Chairman of the Fed ('subprime is contained") and the chief of the NY Fed, the guy in charge of policing the capital markets were.
But I agree, the Fed acted much more swiftly than otherwise -- although hawkish, Republican Fed chiefs still wanted higher interest rates for that hyper inflation of 2010 that was supposed to end the dollar -- and I also agree the Fed's actions cant really be seen as a wealth transfer at all. The high stock market basically allowed the Federal Government to make money off its bailouts of most TARP targets, the only thing that 'cost' the treasury money (and I say cost because not bailing out would have cost even more) was GM and the two GSEs.
But yes, compared to the ECB or the Bank of England, the Fed did act much better.
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It's not a transfer of wealth because the government made money on TARP! How silly of me!
No matter that 95% of the income gains since 2009 have gone to the top 1%, pensions are being slashed left and right, people who lost their homes never got a bailout, people who lost their jobs never got a new one. Yes, how silly of me to call the bailout a transfer of wealth. The banks made a bunch of money on the biggest financial disaster since the great depression, and it trickled right down to everybody else . . .
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On March 24 2014 12:25 IgnE wrote:
It's not a transfer of wealth because the government made money on TARP! How silly of me!
No matter that 95% of the income gains since 2009 have gone to the top 1%, pensions are being slashed left and right, people who lost their homes never got a bailout, people who lost their jobs never got a new one. Yes, how silly of me to call the bailout a transfer of wealth. The banks made a bunch of money on the biggest financial disaster since the great depression, and it trickled right down to everybody else . . .
The banks lost a lot of money.
Edit: also, many homeowners got mortgage modifications or were able to refinance to lower rates or engage in 'strategic defaults'. people who lost their jobs were given extended unemployment and people with jobs were given a cut to their payroll taxes. they didn't get a 'bailout' -- OK, but bailouts weren't free money.
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Cayman Islands24199 Posts
some of this stuff doesn't have to be consciously designed though obviously the interests that be have political influence bought up to keep it going that way. the politics is another way money reinforces money, positive feedback and all.
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On March 24 2014 12:31 JonnyBNoHo wrote:Show nested quote +On March 24 2014 12:25 IgnE wrote:
It's not a transfer of wealth because the government made money on TARP! How silly of me!
No matter that 95% of the income gains since 2009 have gone to the top 1%, pensions are being slashed left and right, people who lost their homes never got a bailout, people who lost their jobs never got a new one. Yes, how silly of me to call the bailout a transfer of wealth. The banks made a bunch of money on the biggest financial disaster since the great depression, and it trickled right down to everybody else . . . The banks lost a lot of money.
Shh, it interrupts the narrative. The rich are profiting at the expense of the poor; they should feel the guilt of pensions, homelessness, and unemployment. The biggest financial disaster was the rich's fault to start. Oh, and I'm sure we can fit in some slander of free markets in here somewhere ... so yeah financial disaster is bad, bad capitalism as well.
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I'm glad you are coming around Danglars. The banks have made more money since 2008 than they lost.
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On March 24 2014 12:25 IgnE wrote:
It's not a transfer of wealth because the government made money on TARP! How silly of me!
No matter that 95% of the income gains since 2009 have gone to the top 1%,
Ya and without Fed action everyne would have been poorer, how is that better?
pensions are being slashed left and right,
A lot of pension funds are invested in the stock market, so chances are that a lot of peoples' savings went up in the last 3-4 years
people who lost their homes never got a bailout,
Some did. Others did. Some people who deserved a bailout got screwed. But some people shouldnt have had those homesi n the first place
Yes, how silly of me to call the bailout a transfer of wealth. The banks made a bunch of money on the biggest financial disaster since the great depression, and it trickled right down to everybody else . . .
Ya again, the other alternative we were discussing was that the Fed being even more conservative, means even more people are screwed for longer.
Would it have been better to have an even looser policy? Yes, of course. But compared to the other central banks, the Fed did a better job.
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On March 24 2014 13:16 Sub40APM wrote:Show nested quote +On March 24 2014 12:25 IgnE wrote:
It's not a transfer of wealth because the government made money on TARP! How silly of me!
No matter that 95% of the income gains since 2009 have gone to the top 1%, Ya and without Fed action everyne would have been poorer, how is that better? A lot of pension funds are invested in the stock market, so chances are that a lot of peoples' savings went up in the last 3-4 years Some did. Others did. Some people who deserved a bailout got screwed. But some people shouldnt have had those homesi n the first place Show nested quote + Yes, how silly of me to call the bailout a transfer of wealth. The banks made a bunch of money on the biggest financial disaster since the great depression, and it trickled right down to everybody else . . . Ya again, the other alternative we were discussing was that the Fed being even more conservative, means even more people are screwed for longer. Would it have been better to have an even looser policy? Yes, of course. But compared to the other central banks, the Fed did a better job.
Yes, the Fed is the only possible tool in the entire universe to rectify this wrong.
Then why is there so much talk recently about cutting pensions? Multiple city, local, and state pension plans are on the chopping block. Everyone is invoking the spectre of Detroit as a pretense to break the deal they made a generation ago. The deal was: you continue working without wage increases for the foreseeable future and we will set you up with a nice pension and financial security. Except now it's oops! we all have to tighten our belts. It's becoming clear that pensions were a bait and switch tactic, by which capital deferred wage increases till tomorrow in the form of a pension. And now that pensions are coming due, they don't want to uphold their end of the bargain. So fuck the workers, because we have corporate profits to preserve.
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On March 24 2014 13:29 IgnE wrote:Show nested quote +On March 24 2014 13:16 Sub40APM wrote:On March 24 2014 12:25 IgnE wrote:
It's not a transfer of wealth because the government made money on TARP! How silly of me!
No matter that 95% of the income gains since 2009 have gone to the top 1%, Ya and without Fed action everyne would have been poorer, how is that better? pensions are being slashed left and right, A lot of pension funds are invested in the stock market, so chances are that a lot of peoples' savings went up in the last 3-4 years people who lost their homes never got a bailout, Some did. Others did. Some people who deserved a bailout got screwed. But some people shouldnt have had those homesi n the first place Yes, how silly of me to call the bailout a transfer of wealth. The banks made a bunch of money on the biggest financial disaster since the great depression, and it trickled right down to everybody else . . . Ya again, the other alternative we were discussing was that the Fed being even more conservative, means even more people are screwed for longer. Would it have been better to have an even looser policy? Yes, of course. But compared to the other central banks, the Fed did a better job. Yes, the Fed is the only possible tool in the entire universe to rectify this wrong. Then why is there so much talk recently about cutting pensions? Multiple city, local, and state pension plans are on the chopping block. Everyone is invoking the spectre of Detroit as a pretense to break the deal they made a generation ago. The deal was: you continue working without wage increases for the foreseeable future and we will set you up with a nice pension and financial security. Except now it's oops! we all have to tighten our belts. It's becoming clear that pensions were a bait and switch tactic, by which capital deferred wage increases till tomorrow in the form of a pension. And now that pensions are coming due, they don't want to uphold their end of the bargain. So fuck the workers, because we have corporate profits to preserve.
Eh? Public pensions aren't doing well, in part because their returns on capital haven't been as high as expected, and so it's a capital conspiracy?
Edit: Detroit pensioners got a better deal than bondholders.
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On March 24 2014 13:29 IgnE wrote:Show nested quote +On March 24 2014 13:16 Sub40APM wrote:On March 24 2014 12:25 IgnE wrote:
It's not a transfer of wealth because the government made money on TARP! How silly of me!
No matter that 95% of the income gains since 2009 have gone to the top 1%, Ya and without Fed action everyne would have been poorer, how is that better? pensions are being slashed left and right, A lot of pension funds are invested in the stock market, so chances are that a lot of peoples' savings went up in the last 3-4 years people who lost their homes never got a bailout, Some did. Others did. Some people who deserved a bailout got screwed. But some people shouldnt have had those homesi n the first place Yes, how silly of me to call the bailout a transfer of wealth. The banks made a bunch of money on the biggest financial disaster since the great depression, and it trickled right down to everybody else . . . Ya again, the other alternative we were discussing was that the Fed being even more conservative, means even more people are screwed for longer. Would it have been better to have an even looser policy? Yes, of course. But compared to the other central banks, the Fed did a better job. Yes, the Fed is the only possible tool in the entire universe to rectify this wrong.
No, but considering how ineffective liberal politicians seem to be and how pathetic the Occupy types were, its the only effective tool
Then why is there so much talk recently about cutting pensions? Multiple city, local, and state pension plans are on the chopping block.
Because a lot of these pension plans are idiotic. Retire at 55 and get 80% of your salary while you take another job?
Everyone is invoking the spectre of Detroit as a pretense to break the deal they made a generation ago. The deal was: you continue working without wage increases for the foreseeable future and we will set you up with a nice pension and financial security. Except now it's oops! we all have to tighten our belts. It's becoming clear that pensions were a bait and switch tactic, by which capital deferred wage increases till tomorrow in the form of a pension. And now that pensions are coming due, they don't want to uphold their end of the bargain. So fuck the workers, because we have corporate profits to preserve.
What corporate profits? You are talking about public pensions and then do a switchero to blaming corporate profits? A lot of public pensions are going broke because they offered ridiculous benefits that are bankrupting the governments that offered them and the tax payer isnt interested in paying up for.
Yes, its true, corporate pensions have been mostly replaced with 401ks, which is why the Fed's intervention in the markets was a good thing for people whose pensions depend on the stock market, which is most employees in America.
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EPT
