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Epocalypse
Canada319 Posts
And observe, that your solution, right or wrong, is just addressing a problem that doesn't need to be there, just remove the original problem, bring back a gold standard, or some kind of standard which makes printing money impossible and then you don't need to fix the problems created by bad monetary policy. It's like you're playing a game of "let's introduce a problem for no reason and then try to create a bunch of regulations to fix it" | ||
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topoulo
253 Posts
You probably mean that bad monney wins from good monney. Like you say, people will hoard the "good" monney and spend the "bad" monney, wich leads to the "bad" monney becoming the dominant currency in trade. This law only aplies when different currencys are used inside one and the same country. This would not happen with a north and south euro, the northern euro would only be legal tender in the north, and the southern euro would only be legal tender in the south. Is like asking for one weak dollar for california and the whole u.s south and a stronger for ny and the north ... why do you think they havent done that yet. I can tell you that at this moment theres a pattern with German banks trying to aquire as much as possible bills issued from the germany rather than southern ones , whenever possible. Imagine with 2 euros. None would have want the weaker one , let alone the problems that would have created ( inflation , loss of consumer power , constand depreciasions towards the stronger euro - difficulity on exchanges and so many other problems to begin with ) Yes germany pays alot less interest then the southern countrys but we cant set this interest at will. The interest is determined by the market and if the market thinks that germany is more likely to pay back its debt then greece they will lend monney at a lower rate to germany. There is realy no way to avoid this and it is also a good thing Actually there is its called eurobond , its has nothing to do with good economic policies when the euro was built fault. Furthemore you seem not to have read the German bailouts that happend or how Germany got into a powerfull position Germany was creaking under its’ welfare/labour laws and also shouldering the costs of an eastern integration. The cost, in the tune of $300 Billion US, was never accounted for in Germany’s federal budget, being kept in a separate account. It became the Strongest European economy since its’ “external” exchange rate was depressed from what it would have been under the DM.Its main trading partners with a higher propensity to inflate labour costs were Trapped in the euro at a fixed parity, essentially indebting themselves to buy German factory output . Furthemore you state countries would have to loose their independancy , where its not true at all you could have been autonomoys for what it matters. Also like it or not is the only way to make it work. Dont take my word for it take delors who created it http://www.bbc.co.uk/news/world-europe-16016131 We cant simply spend monney either though. We can add alot of monney but if we dont use this monney efficiently to produce more, we will just end up with more monney+same amount of goods->higher prices. Adding alot of euros would bring the euro down, After the ecb lend 1 trillion freshly created euros to the banks to avoid imediate collapse the euro went from 1.35 to 1.25. Allow me to disagree , Germany has the lowest inflation , its actually has the lowest 14 month old. The depreciation of the euro has nothing to do with the printing of money , it has to do with investor expectations. Its the politico economic problem as whole that drives euro down. Furthemore its appears that germany wants this since its increases their exports significant . I would like to point out that creating money in a recession doesnt increase inflation. Furthemore , this 1 trillion that was issue wanst printed money , non printed money doesnt create inflation , it wont most likely reach circulation anyway since the banks will just have that in an account as reserve. No, a weak currency is a double edged sword. On one hand your exports are alot better,on the other hand your imports (oil, electronics from asia etc) become alot more expensive wich will lead to inflation. If you look at it in a verry abstract way, you will see that more and more goods are leaving the country and less and less goods are coming in. Tell that to the Germans not me . I would also like to say that , even in the case of Greece - portugal - ireland to follow the mk's ( bailouts) there no way for that to work and its pretty evident. In fact all these countries gdp to debt ration , increased dramatically after the so called " bailouts" Heres a funny thing to understand the mockery behind this. Greece in 2009 debt was around 250-280 billions. Now in theory there were 2 packages one of 110 ( received 80bn) and a second one of 135. there was also a haircut around 100bn. Still Greece now owns 300+ bn and it would own 250+ by the end of 2020. So it would have been much aiser if they would have said we erase 250bn debt to get over with or simply leend 50sih billion with 0 interest rate. How that can happen , in my book this qualifies for an oscar of idiocy in economics , that or is simply big fat lies. Again were waisting all the talks about Greece. I will write it again and it cant be dispute anymore since the Architect of Euro came clean that euro was flawed ( like many knew) http://www.bbc.co.uk/news/world-europe-16016131 ( i will keep posting this link so maybe finally most begun to understand what happening ) | ||
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Vivax
21991 Posts
On May 26 2012 22:12 Rassy wrote: Does it realy matter what inflates? This difference between asset and "normal" inflation is only made to downplay the effects of inflation i sometimes think. The effects always reaches consumers in the end. Consumers spend a huge part of all the monney they make on assets such as houses.Inflation of thoose is important to them. Increasing the euro suply will weaken the euro wich will lead to higher energy cost for example . The banks who use the euros to refinance will spend some of them on dollars and yens to refinance loans in thoose currencys. Even though the extra euros only circulate between banks, the effect from it (a weaker euro) does reach the consumers. Its possible to make a difference between every type of inflation but i dont realy see annything wrong with using it as a broad term to describe all the effects of increasing the monney suply combined. It does matter whether you can't buy a house or a gold ingot as opposed to oil to heat during the winter or food you need to survive. For consumer price inflation, debt-driven consumption is sufficient. When taking a loan, new money is created, and when you take it for consumer goods, it flows directly to them. The banks don't need that money to give out loans to consumers , they just need a percentage of the loans they give, and the control of the money creation process by the interest rate set by the central banks is illustrated in this theoretical scenario, sorry if it's in german, i hope you can identify the words, there aren't that many. ![[image loading]](http://i.imgur.com/Z2552.gif) How do you weaken the Euro?It's always put in relation to another currency, in this case the dollar. It can either be weakened from a psychological effect cause people don't trust the currency anymore, or it can be weakened cause investors owning dollars suddenly have to pay more for european 'stuff'. Thus, using the nominal euro value as a quantification of inflation isn't appropriate. The huge risk is that the Euro isn't linked to anything material, while both dollar and euro are fiat money, the dollar is a petrodollar and linked to the oil price, plus it has been supported by the Chinese government in the past. In theory, the € could go down to 0 anytime if everyone loses the trust into it. + Show Spoiler + And regarding the introduction of a gold standard: It would be wise, and guess what central banks all around the world have been doing the last few years?They have been bunkering gold.Also, once whatever bomb detonates, there will probably a gold owning prohibition being issued. Linking a currency to something with intrinsic value is the only way of preventing todays scenario. But it's a hot topic, so don't quote this either, also, it's offtopic, so spoilered. | ||
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topoulo
253 Posts
Cattivik: You are detaching value from money. Print a gazillionbillion dollars today and hand it out to everyone equally. All you've done is just decrease the value of the dollar. Meaning it will just take more dollars to buy the same thing. So he value of 1 dollar is not the same anymore That , in theory cause inflation actually not devaluation lol. your dead wrong here yet you keep continue. Furthemore electronic money doesnt create inflation like printing money does cause in most cases it doesnt reach circulation. the theory is outdated since electronic money wasnt present back then. also in economies in recession is pretty dubvious how much if at all throwing money will create inflation. for instance U.s today has the lowest interest rates - inflation since civil war or something , yet the printed trillions of dollars to get out of the financial crisis in order to create artificiall stimulus to boost economic prosperity , yet they cant create any inflation yet. thus the liquidity trap the u.s is into at this very moment .. | ||
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Epocalypse
Canada319 Posts
On May 26 2012 22:53 topoulo wrote: That , in theory cause inflation actually not devaluation lol. your dead wrong here yet you keep continue. Furthemore electronic money doesnt create inflation like printing money does cause in most cases it doesnt reach circulation. the theory is outdated since electronic money wasnt present back then. also in economies in recession is pretty dubvious how much if at all throwing money will create inflation. for instance U.s today has the lowest interest rates - inflation since civil war or something , yet the printed trillions of dollars to get out of the financial crisis in order to create artificiall stimulus to boost economic prosperity , yet they cant create any inflation yet. thus the liquidity trap the u.s is into at this very moment .. There are many ways to mask inflation... but you won't see the numbers for a few years. But more generally, and more importantly... you can argue back and forth what economic regulations you want, and what their consequences will be but you're just building castles in the sky. You're arguing from inside the box. If you want to solve the euro debt crisis you have to challenge the premises it was build it. You have to go back all the way to the beginning and see what was it's purpose, and how they figured it would work. You have to challenge the premises from the start... since they are the ones that led to it's failure. Until you understand what went wrong, you won't understand what the solution is. There were many people that predicted the outcome of the whole concept of a euro long before 1999. I've been trying to find those articles I read back then but it's difficult since it was from 1999. If I can find them I will post them... They were detailed as to why it is doom to fail if implemented. | ||
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Vivax
21991 Posts
On May 26 2012 22:59 Epocalypse wrote: There were many people that predicted the outcome of the whole concept of a euro long before 1999. I've been trying to find those articles I read back then but it's difficult since it was from 1999. If I can find them I will post them... They were detailed as to why it is doom to fail if implemented. I really don't like reposting it, but i've already posted in this thread that: Goldman Sachs helped mask Greek debt That was 2002. Mario Draghi was vice president of GS International from 2002 to 2005. Source: http://www.mgrfoundation.org/Mario_Draghi.html He was involved in masking Greek debt. Now he's the president of the ECB coordinating the 'rescue'. LOL. Whatever conclusions you draw from this, they will always be a conspiracy theory to the orthodox guys believing official versions. And those would be conclusions that confirm your version.Implemented to fail | ||
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WhiteDog
France8650 Posts
On May 26 2012 22:59 Epocalypse wrote: There are many ways to mask inflation... but you won't see the numbers for a few years. But more generally, and more importantly... you can argue back and forth what economic regulations you want, and what their consequences will be but you're just building castles in the sky. You're arguing from inside the box. If you want to solve the euro debt crisis you have to challenge the premises it was build it. You have to go back all the way to the beginning and see what was it's purpose, and how they figured it would work. You have to challenge the premises from the start... since they are the ones that led to it's failure. Until you understand what went wrong, you won't understand what the solution is. There were many people that predicted the outcome of the whole concept of a euro long before 1999. I've been trying to find those articles I read back then but it's difficult since it was from 1999. If I can find them I will post them... They were detailed as to why it is doom to fail if implemented. What you say doesn't mean anything, sorry buddy. Economist nowadays knows why the europe is a dead end, and that is mostly because it was made in a way that printing money is impossible. The Central European Bank is completly separated from the european community and only act towards the reduction of inflation and devaluation. Inflation is not always a bad thing in economy, only people with bad knowledge (or specific, mainly quantitativ vision of inflation) of what is inflation think that way. | ||
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3Form
United Kingdom389 Posts
On May 26 2012 22:11 Squeegy wrote: That's nice and all but in fact all I am saying saying is that what you said earlier is wrong. I am fine with stopping here if you agree that E=MC^2 (for example) does not depend on my standing on one leg in my apartment. Jesus Christ man, all I was trying to say was that what we perceive as facts often depends upon our own opinions. This is a point that Epocalypse (whom it was originally directed at) seems to have understood but not agreed with. My allusion to Special Relativity was that in SR, events/objects (i.e. Facts) can appear differently to different observers (i.e. opinions). You are the one mentioning Mass-Energy equivalence, you are the one asking me whether it depends on you standing in your apartment! Answer: No it doesn't. But your perception of relativistic events is affected - which is what I was trying to get at in the first place! I get the impression that you think I was saying "The results of Special Relativity depend on where you stand" which I emphatically was not. | ||
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syntillate
United Kingdom1 Post
On May 26 2012 22:11 Squeegy wrote: That's nice and all but in fact all I am saying saying is that what you said earlier is wrong. I am fine with stopping here if you agree that E=MC^2 (for example) does not depend on my standing on one leg in my apartment. I think you missed the point some time ago... E=MC^2 was derived prior to the theories of relativity. Special relativity whilst there are occasions where Mass Energy Equivalence is poignant it isn't really an important equation in SR. In fact the main equations in SR were just modified by Einstein as they fit with his theories e.g. the Lorentz transformations. So no E=MC^2 does not depend on you standing on your leg in your apartment, however any measurements you take on a relativistic event will be different to the measurements you take standing on one leg in your apartment. So what he said earlier was right, you just picked up on Einstein and threw out what seems to be the only thing you know about him (the rather famous mass energy equivalence equation). | ||
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JustPassingBy
10776 Posts
On May 26 2012 20:00 Cattivik wrote: I'd rather look at it this way: Those were banks giving loans to people who obviously didn't have enough creditworthiness while getting a mortgage on the houses they (the people) had or built with the banks' expectation of rising housing prices. Some people couldn't pay back their loans, the housing prices were a bubble which exploded, and the mortgages ended up being worth a fraction of their previous value. The people who were able to pay back the loans turned out to have taken a too high loan for their housing and sat on a worthless immobile themselves while still paying the interest to the banks. With this huge hole arising in the banks balances, they had to start selling their stocks to fill it and that affected the stock market. The rest is chain reaction. The government could actually have stopped that chain reaction by bailing out the first concerned banks before the fire spread. But then it does mean that people were living at a standard they could not support on their own. Whether it is the fault of the people to accept credits they could not pay back, or the fault of the bank to give out unsafe credits to people who are not credit-worthy, the fault of the government to give the wrong impulses, is a whole different matter (probably a mixture of all three). Well, one thing people do get wrong, though: Obviously the financial aid is not to help those countries to maintain that standard of living they had before the crash, but to prevent the economy to go totally downhill and to prevent the worst case scenario of a nation declaring bancrupcy. Anyways, as long as the legal situation on the social and economic level are similar, modulo adjustments to the current situation, I don't see a reason why one country shouldn't help the other once in a while. Especially since it is also partially in their own interest. | ||
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Maenander
Germany4926 Posts
The facts: Share of German exports going to the countries of the current Eurozone: 1990: 46.5%; 2008: 42.6% Example Italy: 1990: 9.1%, 2008: 5.8% Greece was ranked 19th among the importers of german goods in 1990 and only 27th in 2008. source: www.destatis.de | ||
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Robinsa
Japan1333 Posts
On May 27 2012 01:06 Maenander wrote: It's a myth that Germany increased its exports only due to the massive lending in southern europe or due to the Euro. The facts: Share of German exports going to the countries of the current Eurozone: 1990: 46.5%; 2008: 42.6% Example Italy: 1990: 9.1%, 2008: 5.8% Greece was ranked 19th among the importers of german goods in 1990 and only 27th in 2008. source: www.destatis.de People are not saying that Germany is exporting more to the Eurozone (at least now). Its exports have increased partly because of a weak euro. Its weak because of the countries in "southern europe" as you describe them. The weak euro makes it easier for Germany to export outside of the Eurozone. | ||
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Maenander
Germany4926 Posts
On May 27 2012 01:13 Robinsa wrote: People are not saying that Germany is exporting more to the Eurozone (at least now). Its exports have increased partly because of a weak euro. Its weak because of the countries in "southern europe" as you describe them. The weak euro makes it easier for Germany to export outside of the Eurozone. Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: ![[image loading]](http://i.imgur.com/a7JMs.png) A weak Krona, I guess? | ||
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WhiteDog
France8650 Posts
On May 27 2012 01:50 Maenander wrote: Aaah the "weak" Euro. According to this argument the US should export like crazy. You are from Sweden, aren't you? Let's take a look at Swedish Kronor vs Euros: A weak Krona, I guess? I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way  Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before. | ||
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RvB
Netherlands6215 Posts
On May 26 2012 22:30 Cattivik wrote: It does matter whether you can't buy a house or a gold ingot as opposed to oil to heat during the winter or food you need to survive. For consumer price inflation, debt-driven consumption is sufficient. When taking a loan, new money is created, and when you take it for consumer goods, it flows directly to them. The banks don't need that money to give out loans to consumers , they just need a percentage of the loans they give, and the control of the money creation process by the interest rate set by the central banks is illustrated in this theoretical scenario, sorry if it's in german, i hope you can identify the words, there aren't that many. How do you weaken the Euro?It's always put in relation to another currency, in this case the dollar. It can either be weakened from a psychological effect cause people don't trust the currency anymore, or it can be weakened cause investors owning dollars suddenly have to pay more for european 'stuff'. Thus, using the nominal euro value as a quantification of inflation isn't appropriate. The huge risk is that the Euro isn't linked to anything material, while both dollar and euro are fiat money, the dollar is a petrodollar and linked to the oil price, plus it has been supported by the Chinese government in the past. In theory, the € could go down to 0 anytime if everyone loses the trust into it. + Show Spoiler + And regarding the introduction of a gold standard: It would be wise, and guess what central banks all around the world have been doing the last few years?They have been bunkering gold.Also, once whatever bomb detonates, there will probably a gold owning prohibition being issued. Linking a currency to something with intrinsic value is the only way of preventing todays scenario. But it's a hot topic, so don't quote this either, also, it's offtopic, so spoilered. Gold standard has quite a few problems too like debasement and there's just a limited supply of gold what are you going to do when the gold supply is drying up. It's just very impractical to use its just very impractical. | ||
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Maenander
Germany4926 Posts
On May 27 2012 02:13 WhiteDog wrote: I don't really understand the 2 numbers you put there buddy... The only thing that is important is the commercial balance between grece and germany, and not the relativ part of greece within german exports (because greece is a small country, with difficulties ?). Even if we indeed see that germany is less exporting to greece, it still is the first partner of Greece with around 10652 M USD of importation to greece from germany and only 2809M USD of exportation from greece to germany. So basically around 8 000 M USD in favor of germany (all those numbers are for 2008, here http://www.smartexport.com/fr/Grece.html). Also consider that Greece GPD is 308449 M $ (so 2.5 % of Greece GPD in 2008 had gone from Greece to Germany through importation). Nice way of using numbers to makes them say what you want by the way Your numbers only showed how germany has opened itself to the global economy and how it is not as dependant from European economies as it was before.I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. | ||
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WhiteDog
France8650 Posts
On May 27 2012 02:32 Maenander wrote: I didn't want to talk about Greece, but about the claim that Germany is "exploiting" the weaker members of the Eurozone and that that is the main reason it is doing well now, which is simply not true. And yeah that is claimed again and again, in this thread and all over the internet. By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). | ||
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Maenander
Germany4926 Posts
On May 27 2012 02:37 WhiteDog wrote: By the number I showed, it is true ... As I said, the commercial balance between Greece and Germany is heavily in favor of Germany (2.5% of Greece GPD in 2008...), which mean any public investment made in Greece will heavily go in German hands. It's a fact. It's true that if you take those numbers in relation with German GPD or German exportation overall, it's thin. But that's not because German's doesn't profit from Greece investment, it just mean that German is a big country with a big GPD and high exportation all around the world, and not only in Greece, a small european country (economically). It has been like that for decades, why should it suddenly start to be a problem? If one looks at the GDP growth rate, Greece experienced an economic boost when the Euro arrived, much more so than Germany: ![[image loading]](http://i.imgur.com/IZkrf.gif) We now know how this boost was financed, based on loans with lower interest rates thanks to the Euro. Cheap loans made Greece borrow too much. Now they are no longer cheap. That is the crux of the Greek problem, not some trade imbalances that existed since like forever. The problem Europe has is its decreasing competitiveness on a global scale, Europe as a whole has to find a new - less dominating - place in the ever shifting global economy, it cannot be that Germany is now blamed for making the necessary adjustments. | ||
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Gaga
Germany433 Posts
On May 27 2012 02:14 RvB wrote: Gold standard has quite a few problems too like debasement and there's just a limited supply of gold what are you going to do when the gold supply is drying up. It's just very impractical to use its just very impractical. there are many other ways to desgin out monetary system than gold standart ... no reason to keep the deeply flawed system we have right now. | ||
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Kaitlin
United States2958 Posts
Is this outrageous or acceptable ? Aren't Greeks people too ? Where are the human rights activists ? | ||
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