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On October 08 2008 20:30 geometryb wrote:
edit just to get the last word: if you compare countries that globalized with countries that didn't, i think it becomes pretty clear that countries that reduced trade barriers are doing better.
oh noes communism failed !
That isn't what i said. Japan and China ( for example ) used ( and still use ) trade barriers during their development and they are doing good atm.
Many countries in Africa didnt use trade barriers and they are in a bad situation. No industries, no technologies and they have to buy all their manufactured goods from China or Europe. According to Ricardo they would be in a great situation because they sell raw materials ( their specialisation ) for other goods.
Haha.
Trade barriers are investments. You bet that your own industries will be able to produce better goods than other countries. You just need some time and help of the government ( tax cuts, trade barriers ... ). Then you can get exportable goods, patents and this will lead to higher gains than sweatshops.
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when i picture this for simplicity i see a 3 person world.
i see a bank that creates $1000 and loans it to joe and there is $100 interest over the lifetime of the loan. There is also Sally who is holding $1500. That means the total money supply is $2600.
Joe sells some apples to sally for $1300 dollars so he now has $2300.
He pays back the bank. The bank now has $1100, Joe has $1300, sally has $200.
Bank hires sally. gives her $100 etc etc etc
money is always constant at 2600
edit: unless joe can't pay back his loan. in which case, it would be constant at 2500 or however much he can pay back. i.e. he sells 0 apples and pays back the bank $1000
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but the important part is: debts are paybackable
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But what if the money Sally had was also debt money, so she in fact owed 2600 + 260 to the bank. She wouldn't be able to pay the loan after she bought those apples unless she took another loan wouldn't she?
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oh hmmm. i see now. i was wrong.
it is impossible for everyone to pay back the interest. i guess sally has to declare bankruptcy, it wouldn't make sense for her to get a loan to pay back a loan she couldn't pay back. but does it start working out once enough people go bankrupt?
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Dominican Republic106 Posts
On October 08 2008 15:59 geometryb wrote:
comparative advantage: the video said that underdeveloped countries were being exploited by richer countries through trade and multinational corporations. this is untrue. International trade crushing domestic industries means that they had a misallocation of resources in the first place. Every country has a comparative advantage in something (that is a must) and they should be producing what they're good at rather than things they're bad at producing. They could then trade for the other products and both parties will benefit. Also, multinational companies "exploiting" foreigners via sweatshops is not a bad thing. Any developmental economist will tell you that is good as long as working conditions are not dangerous. The workers will start having disposable incomes, factories will be built, etc etc. The very fact that they are working there means that they are doing it willingly.
Ok, I wasnt going to post because im not that qualified but I im going to tell you in this regard, you are completely wrong. I live in a country that has been exploited by this system since before our proclamation of independence, first from English banks, and now from the FMI(Fondo Monetario Internacional, [which I think is the IMF in english]), remember this is all the news I've been reading locally since I was a child. Loan after loan has put us into a debt that we will obviously never pay off,
its the sole reason why our gallon of gas is equivalent to 6 US dollars, most people make shitty wages and getting by is a hassle even for "middle class" here. Most of teh sweatshops are flocking out at the moment, the goverment is even subsidizing(sp?) some of its cost to retain a few, know why? Privatization of the electric system(another of the points made on the movie) has given us none the less the most expensive electricty in all of latin america. On the bright side the city has grown a lot in the last 10 years, cannot deny this. As for the free trade agreement it has driven whatever local producers we had to bankrupcy(cannot compete anymore). It benefits the US tenfold what little it benefit us, plus the bankrupcy?
Edit:But I get what you mean though, in theory it should work. But corruption makes the funds go where they are not supposed to. And this is the case with the majority of LA.
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On October 08 2008 22:57 geometryb wrote:
oh hmmm. i see now. i was wrong.
it is impossible for everyone to pay back the interest. i guess sally has to declare bankruptcy, it wouldn't make sense for her to get a loan to pay back a loan she couldn't pay back. but does it start working out once enough people go bankrupt?
Once people start going bankrupt you have deflation......which means the money starts disappearing and the banks get all the collateral.
btw they changed the bankruptcy laws in 2005 so its not that easy anymore
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wow.... O.O this thread is amazing...
The movie talks about 20 different subjects, which of each one is further explained in the next. But then people start arguing about rather a linguistic generalization ("money = debt") present in the first few minutes, take it completely out of the original context, miss the point of the actual meaning of that linguistic detail by 86 light years, even tho the result of this discussion would be completely irrelevant to the conclusion of the movie in the first place.
But still, up to page SEVEN and people are still discussing this same irrelevant linguistic detail (and derived subjects), in almost EVERY post. Ignoring the whole point of the movie at all. I've read ALL posts here and NONE of them are talking ANYTHING that is relevant to the whole conclusion of the movie. Then some even post that it's the movie that is crap! omg..
Makes you wonder about the average IQ of public internet forums like TL... scary O.O
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On October 09 2008 10:41 VIB wrote:
wow.... O.O this thread is amazing...
The movie talks about 20 different subjects, which of each one is further explained in the next. But then people start arguing about rather a linguistic generalization ("money = debt") present in the first few minutes, take it completely out of the original context, miss the point of the actual meaning of that linguistic detail by 86 light years, even tho the result of this discussion would be completely irrelevant to the conclusion of the movie in the first place.
But still, up to page SEVEN and people are still discussing this same irrelevant linguistic detail (and derived subjects), in almost EVERY post. Ignoring the whole point of the movie at all. I've read ALL posts here and NONE of them are talking ANYTHING that is relevant to the whole conclusion of the movie. Then some even post that it's the movie that is crap! omg..
Makes you wonder about the average IQ of public internet forums like TL... scary O.O
a.) die of aids
b.) the reason for the focus is because it was the same argument fight or flight was making in the econ thread, so a lot of the same people are continuing that discussion here
c.) the rest of the movie is conspiracy theory
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On October 09 2008 10:41 VIB wrote:
wow.... O.O this thread is amazing...
The movie talks about 20 different subjects, which of each one is further explained in the next. But then people start arguing about rather a linguistic generalization ("money = debt") present in the first few minutes, take it completely out of the original context, miss the point of the actual meaning of that linguistic detail by 86 light years, even tho the result of this discussion would be completely irrelevant to the conclusion of the movie in the first place.
But still, up to page SEVEN and people are still discussing this same irrelevant linguistic detail (and derived subjects), in almost EVERY post. Ignoring the whole point of the movie at all. I've read ALL posts here and NONE of them are talking ANYTHING that is relevant to the whole conclusion of the movie. Then some even post that it's the movie that is crap! omg..
Makes you wonder about the average IQ of public internet forums like TL... scary O.O
Yeah I was annoyed by exactly this. But I would be more surprised if this was not the case. Its kinda like saying "here are a hundred reasons why you suck" then they heartily disagree with point number 42 ignore the rest and run off crying victory. Something to take heart of is that the more ignorant and the most stupid are generally the loudest, I expect that this thread is not indicative of the average level of intelligence, the wisest keep quiet and stay clear. It is evidence of the aggressive denial of Americans who live in a perpetual system of slavery through debt. Everyone else in the west at least lives in this same system, but we are not the ones to blame so we are more comfortable pointing the finger, and feel no obligation to defend that system.
As the movie comments those most comprehensively enslaved are those who falsely believe they are free.
C) It is a conspiracy theory therefore it is false. If you read a post I wrote earlier I will say it yet again. This preconception that conspiracy theories are false is a terrible thing, one should never assume this, particularly when said conspiracy theory involves money and power. Conspiracies revolving around this are a human constant, if it were not for this preconception those behind these conspiracies would have a much harder time getting away with there shenanigans.
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On October 09 2008 12:15 Choros wrote:Show nested quote +On October 09 2008 10:41 VIB wrote:
wow.... O.O this thread is amazing...
The movie talks about 20 different subjects, which of each one is further explained in the next. But then people start arguing about rather a linguistic generalization ("money = debt") present in the first few minutes, take it completely out of the original context, miss the point of the actual meaning of that linguistic detail by 86 light years, even tho the result of this discussion would be completely irrelevant to the conclusion of the movie in the first place.
But still, up to page SEVEN and people are still discussing this same irrelevant linguistic detail (and derived subjects), in almost EVERY post. Ignoring the whole point of the movie at all. I've read ALL posts here and NONE of them are talking ANYTHING that is relevant to the whole conclusion of the movie. Then some even post that it's the movie that is crap! omg..
Makes you wonder about the average IQ of public internet forums like TL... scary O.O Yeah I was annoyed by exactly this. But I would be more surprised if this was not the case. Its kinda like saying "here are a hundred reasons why you suck" then they heartily disagree with point number 42 ignore the rest and run off crying victory. Something to take heart of is that the more ignorant and the most stupid are generally the loudest, I expect that this thread is not indicative of the average level of intelligence, the wisest keep quiet and stay clear. It is evidence of the aggressive denial of Americans who live in a perpetual system of slavery through debt. Everyone else in the west at least lives in this same system, but we are not the ones to blame so we are more comfortable pointing the finger, and feel no obligation to defend that system. As the movie comments those most comprehensively enslaved are those who falsely believe they are free.
stop stroking yourself.
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On October 09 2008 12:16 ahrara_ wrote:Show nested quote +On October 09 2008 12:15 Choros wrote:On October 09 2008 10:41 VIB wrote:
wow.... O.O this thread is amazing...
The movie talks about 20 different subjects, which of each one is further explained in the next. But then people start arguing about rather a linguistic generalization ("money = debt") present in the first few minutes, take it completely out of the original context, miss the point of the actual meaning of that linguistic detail by 86 light years, even tho the result of this discussion would be completely irrelevant to the conclusion of the movie in the first place.
But still, up to page SEVEN and people are still discussing this same irrelevant linguistic detail (and derived subjects), in almost EVERY post. Ignoring the whole point of the movie at all. I've read ALL posts here and NONE of them are talking ANYTHING that is relevant to the whole conclusion of the movie. Then some even post that it's the movie that is crap! omg..
Makes you wonder about the average IQ of public internet forums like TL... scary O.O Yeah I was annoyed by exactly this. But I would be more surprised if this was not the case. Its kinda like saying "here are a hundred reasons why you suck" then they heartily disagree with point number 42 ignore the rest and run off crying victory. Something to take heart of is that the more ignorant and the most stupid are generally the loudest, I expect that this thread is not indicative of the average level of intelligence, the wisest keep quiet and stay clear. It is evidence of the aggressive denial of Americans who live in a perpetual system of slavery through debt. Everyone else in the west at least lives in this same system, but we are not the ones to blame so we are more comfortable pointing the finger, and feel no obligation to defend that system. As the movie comments those most comprehensively enslaved are those who falsely believe they are free. stop stroking yourself.
Yeah good comeback.
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yeah let's believe that super awesome movie even though no one in this thread can explain to me how money is created out of "thin air" and destroyed.
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this post probably wasnt called for
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Physician
United States4146 Posts
On October 09 2008 10:41 VIB wrote:
wow.... O.O this thread is amazing...
The movie talks about 20 different subjects, which of each one is further explained in the next. But then people start arguing about rather a linguistic generalization ("money = debt") present in the first few minutes, take it completely out of the original context, miss the point of the actual meaning of that linguistic detail by 86 light years, even tho the result of this discussion would be completely irrelevant to the conclusion of the movie in the first place.
But still, up to page SEVEN and people are still discussing this same irrelevant linguistic detail (and derived subjects), in almost EVERY post. Ignoring the whole point of the movie at all. I've read ALL posts here and NONE of them are talking ANYTHING that is relevant to the whole conclusion of the movie. Then some even post that it's the movie that is crap! omg..
Makes you wonder about the average IQ of public internet forums like TL... scary O.O
wonder? why the doubt? lol.. welcome to teamliquid general forums
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On October 09 2008 12:49 mahnini wrote:
yeah let's believe that super awesome movie even though no one in this thread can explain to me how money is created out of "thin air" and destroyed.
okay, I registered an account just so I can explain this. Try and follow me here.
Money being created out of "thin air" is a concept of the fractional reserve banking system.
Fractional reserve means that for every deposit you make at the bank, they hold onto a fraction of it in reserve while lending out the rest.
Lets assume the fractional reserve ratio is 10%
Say Albert deposits $100 into the bank. He gets a reciept that says he has $100 in his account.
The bank puts 10% of $100, or $10, into reserve. Where does the other $90 go?
Well, the bank turns around, and there just happens to be a guy, Brian, that needs $90. The bank lends it out to him.
Now what do we have? Albert thinks he has $100, and Brian thinks he has $90. $100+$90 = $190...
Now, lets take this a step further, Brian spends his $90 at a small business called Carlton's. Carlton's deposits that money into their bank account, and the bank holds onto 10% of $90 which is $9, and loans out $81 to the next guy... Darryl.
Albert still thinks he has $100, Carlton's thinks they are $90 richer, and Darryl thinks he just borrowed $81..... $100+$90+$81....
Now when Darryl pays back his loan, and Brian pays back his loan, we're back at $100.... but then again, that money just gets loaned out again, and it all gets so much messier when you factor in interest etc.
Point is, money is both created out of thin air and CAN be destroyed, but more of the latter than the former by far. This is actually one of the fundamentals of a capitalist economy... while the video made this idea sound quite sinister it also has benefits of efficiency: no capital is ever laying around idle, but rather is always in constant use/investment. This is why capitalist economies grow so fast.
The movie got some of its economics right, and some of it wrong. But one of the more remarkable things is that in its examples of fractional reserve banking, they used 10% as the reserve ratio when in reality it is something closer to 0.5%. The lower the ratio, the faster an economy grows, and the faster inflation grows too as money supply is increased exponentionally.
What is even more frightening that the video did not mention is that the bailout called for 0% reserve ratio, which essentially allows for unbounded growth of the money supply. This is what we call desperate monetary measures... it DOES provide more liquidity but at what cost? Hyper-inflation is to be expected... I'd keep going on and on but it's a very complex issue and nobody truly understands it, but this video raises very legitimate points.
Think about it, critcize it, but do it based on facts and research. Do NOT simply dismiss it.
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Oh, and the claim that money = debt has PLENTY of validity.
It should be plain for you to see with my example there... this is no big secret as the video makes it seem, its econ 101.
In a stable economy, most people are content with keeping their money in the bank. But when people lose confidence in the system and start withdrawing their money... well, its obvious that there's not enough to go around if everyone wanted their money back.
The entire system is based on everyone owing everybody else, or, debt backing debt, aka money = debt.
In a way, it provides a ton of liquidity for free enterprise, but when free enterprise overextends itself... blammo, subprime crisis 2008!
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that's just it though it's not really what people would say "out of thin air". that is it's not random or arbitrary with no records or repercussions. a liability account still exists to record this money the banks just don't make money for no reason whenever they please. also, i don't think what you explained was the full extent of how money supply is increased or "created".
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Fractional reserve banking is effective because it allows that initial deposit to be used more effectively, rather than just being hoarded in one account. The only case where it can fail is during a bank run, and it's become clear that central banks globally are willing to guarantee every cent of every deposit before allowing that to happen. It's a system with risks, but then what isn't. The alternative is a world without credit, which um, well enjoy.
edit:
To confuse fractional reserve banking with "printing money arbitrarily" (a rhetorical device the creaters of this video use to the detriment of your intellect) is just about the most ignorant thing you can say in this discussion. Please don't do it again. It makes you look ridiculous.
edit2:
I appreciate your posts gor.
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One more key point, just to clarify what i believe is the core of the subprime crisis:
i've explained how money is created, and i've explained how it can be destroyed.
money is created when a loan is taken out, money is destroyed when a loan is paid back.
when alot of people cant pay back their loans... like right now.... then the money supply never shrinks, everyone's just poorer because of it.
i mean, the system is already designed to be inflationary, but when loans dont get paid back, its so much worse.
while everything else about this is quite complicated, that much should be clear and simple to understand.
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EPT
