When your currency collapses that is what you do. You use something else as money, usually foreign currency that is available. That is what will happen in Greece if they try to go back to the drachma....it is not currency debasement in the sense of inflation; it is currency collapse; currency rejected in private trade. Inflation is a process that requires the currency to persist as credit formation and leverage increase facilitates the transfer of value from financial assets to tangible assets...without private credit formation the transfer does take place.
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Austerity problem or something else?
- Thread starter TimtheEnchanter
- Start date
Quote from achilles28:
That's a big IF. There's a difference between financing consumer and Government debt, and the investment in goods producing assets. One stimulates growth. The other consumes it. If prosperity were as easy as adding ones and zeros on the accounting ledger, Zimbabwe ought to be a Super Power by now. They print a shitload! Heck, we could handout million dollar checks to every American, and be 30 times richer, overnight! You really are a genius, Trefoil.. Argentina, Russia, Mexico, the entire African continent. History is littered with examples where debasement heralded prosperity.
Zimbabwe doesn't have an economy to speak of because of its governance.
Argentina, same thing.
Russia, ditto.
Mexico, not as bad, actually. They're actually doing OK.
Europe and the US after WWII did, which is why they came back. It depends, once again, on who gets the money.
Big difference.
Instead of shooting your mouth off, observe reality.
Observe. Don't try to dictate to it, reality doesn't care what you think.
Quote from Ed Breen:
When your currency collapses that is what you do. You use something else as money, usually foreign currency that is available. That is what will happen in Greece if they try to go back to the drachma....it is not currency debasement in the sense of inflation; it is currency collapse; currency rejected in private trade. Inflation is a process that requires the currency to persist as credit formation and leverage increase facilitates the transfer of value from financial assets to tangible assets...without private credit formation the transfer does take place.
Interesting. That's at the end of the process though. Which depends on how much faith the economy puts in it's currency, to begin with. Also guarantees the fallout is deflationary, because the lack of commercial banks to issue USD (in the case of Greece), means financing business expansion and credit lines, reverts back to traditional banking model - savers > loan> borrowers.
Quote from trefoil:
Zimbabwe doesn't have an economy to speak of because of its governance.
Argentina, same thing.
Russia, ditto.
Mexico, not as bad, actually. They're actually doing OK.
Europe and the US after WWII did, which is why they came back. It depends, once again, on who gets the money.
Big difference.
Instead of shooting your mouth off, observe reality.
Observe. Don't try to dictate to it, reality doesn't care what you think.
Ah yes. And only you know what reality is... Give me a fucking break.
Your example only holds water because capital was used to finance goods producing assets, like I said. 9 times out of 10, debauching the currency wreaks an economy because it's used as a means to pay off debt, in worthless paper notes. Without tax, regulatory and trade policy to promote capital investment, all that debt goes to finance consumption, which ends up in foreigners hands. Ex the Chinese Sovereign wealth fund valued at 4 Trillion dollars. You are not some wise old man. Half the stuff you post is worthless left-wing shit. We just went through the largest period of private (and now Government) debt expansion in history, and where are we now? All those trillions are in T-bills to finance Government spending on TSA molesters and useless wars to kill brown people. Where o where is this fabled pay off in goods producing capital assets, you speak of? After all, we are the most "dynamic economy" in the world? Please observe reality and get back to me
Quote from achilles28:
SS is broke, the money isn't there. It was spent in the fiscal year it was paid in.
This is incorrect! As I have pointed out in these forums many times now, the current pension trust has a 3 trillion surplus. Nevertheless, according to the actuaries a 2 cent on the earned dollar increase in contribution is needed (1cent employee/1 cent employer) to adjust for changing demographics.
The disability part of social security, a separate trust, is somewhat less sound but still easily fixable.
Current contributions to S.S. do NOT pay the pensions of S.S. retirees. Pensions are paid first from your own contributions over your most recent 35 years of contribution plus interest and when that is exhausted they are paid from the residual contributions plus interest of those who died before their actuarial death age.
The problem for S.S. is two fold: 1) The government has no money to redeem the Trust's bonds other than to "print" it or take it from programs in the discretionary budget, i.e., defense, homeland security, DEA, etc., and monetizing of U.S. debt will mean that retirees are paid with deflating dollars and inflation will in a sense steal from their pensions. 2) Social Security is the focus of a concerted effort led by Wall Street to kill it, and if it can't be killed, than the effort will turn toward weakening it in stages.
The great value of social security comes from its shared risk feature; thus most pay in far less per month for a given pension income that they could not outlive than they would otherwise have to contribute to a private pension plan, such as a 401K. This is of tremendous advantage to the low wage earner.
The problems of medicare and medicaid are different and apart from those of S.S. and ought not to be lumped together.
Quote from achilles28:
Ah yes. And only you know what reality is... Give me a fucking break.
Your example only holds water because capital was used to finance goods producing assets, like I said. 9 times out of 10, debauching the currency wreaks an economy because it's used as a means to pay off debt, in worthless paper notes. Without tax, regulatory and trade policy to promote capital investment, all that debt goes to finance consumption, which ends up in foreigners hands. Ex the Chinese Sovereign wealth fund valued at 4 Trillion dollars. You are not some wise old man. Half the stuff you post is worthless left-wing shit. We just went through the largest period of private (and now Government) debt expansion in history, and where are we now? All those trillions are in T-bills to finance Government spending on TSA molesters and useless wars to kill brown people. Where o where is this fabled pay off in goods producing capital assets, you speak of? After all, we are the most "dynamic economy" in the world? Please observe reality and get back to me
Riight.
You just keep on thinking that stuff. Like I said, every time this euro stuff comes up, it's always the same crap: parasitical Greeks! Hard working Germans! or... Greedy, imperialist Germans! poor, victimized Greeks!
That ain't economics: it's bad anthropology and worse history.
As for this "investment" stuff, please. Here's an example of how regeneration works: a friend of mine ran into a former colleague who'd gotten a package. He used it as seed money to start his own business, and he's doing quite well right now. Did he sit around thinking about all that crap you just spewed? Nope. He just went out and did it.
Reality doesn't care about that stuff.
As for the US, it'll take care of itself, for the same reason. You guys are always lamenting the coming doomsday. Repent! And yet it never comes.
Kondratieff had it right: no matter how bad the down is, the free world will always come back. And guys like you will sit around wondering how the heck that happened.
What I meant was - SS contributions are "invested" in Treasury securities. That means, contributions go directly into general Government revenues, which are spent in the fiscal year they're received. All that's left in it's place is a Treasury bond. Or, so the rumors go, not even that. The money was never "invested". It was spent on things like welfare, foodstamps, the vietnam war, the b2 bomber. SS only has a claim to the future income of American workers, via federal taxation. That means current workers, pay for retired workers. That's a total ponzi scheme. Had the money been invested in a goods producing asset, like a corporation via dividend paying shares, that actually creates wealth, then the scheme would not have been ponzi. but that's not the case at all.
Quote from trefoil:
Riight.
You just keep on thinking that stuff. Like I said, every time this euro stuff comes up, it's always the same crap: parasitical Greeks! Hard working Germans! or... Greedy, imperialist Germans! poor, victimized Greeks!
That ain't economics: it's bad anthropology and worse history.
As for this "investment" stuff, please. Here's an example of how regeneration works: a friend of mine ran into a former colleague who'd gotten a package. He used it as seed money to start his own business, and he's doing quite well right now. Did he sit around thinking about all that crap you just spewed? Nope. He just went out and did it.
Reality doesn't care about that stuff.
As for the US, it'll take care of itself, for the same reason. You guys are always lamenting the coming doomsday. Repent! And yet it never comes.
Kondratieff had it right: no matter how bad the down is, the free world will always come back. And guys like you will sit around wondering how the heck that happened.
Reality? Have you looked at the employment numbers recently? Maybe the NFP? The size of the deficit? Ever heard of Reinhardt and Rogoff? Connect the dots much? Great for your buddy. That anecdotal and worthless story might be worth a glance if he started his business after 2008. Pretty easy to make a buck before then? Not sure if you're aware of it or not, but there's a ton of structural problems facing western economies, and we're basically heading for a Great Depression, of some sort. That's where all this debt is coming from. But I'm sure you knew that. So tell us, since you clearly know everything, how will the "Free World" grow itself out this mess?
Quote from achilles28:
Reality? Have you looked at the employment numbers recently? Maybe the NFP? The size of the deficit? Ever heard of Reinhardt and Rogoff? Connect the dots much? Great for your buddy. That anecdotal and worthless story might be worth a glance if he started his business after 2008. Pretty easy to make a buck before then? Not sure if you're aware of it or not, but there's a ton of structural problems facing western economies, and we're basically heading for a Great Depression, of some sort. That's where all this debt is coming from. But I'm sure you knew that. So tell us, since you clearly know everything, how will the "Free World" grow itself out this mess?
I have no idea how it will do it. It just does.
And yes, that new business was started around 2008, the guy got his package that very year.
Quote from achilles28:
What I meant was - SS contributions are "invested" in Treasury securities. That means, contributions go directly into general Government revenues, which are spent in the fiscal year they're received. All that's left in it's place is a Treasury bond. Or, so the rumors go, not even that. The money was never "invested". It was spent on things like welfare, foodstamps, the vietnam war, the b2 bomber. SS only has a claim to the future income of American workers, via federal taxation. That means current workers, pay for retired workers. That's a total ponzi scheme. Had the money been invested in a goods producing asset, like a corporation via dividend paying shares, that actually creates wealth, then the scheme would not have been ponzi. but that's not the case at all.
That's better, however you fail to recognize that the situation for the S.S. trust is little different than for any other U.S. holder of Treasury bonds, including individuals, mutual funds, state pension plans, and 401K's.
To refer to Social Security as a "Ponzi" scheme reveals a certain naive understanding of the social security model. Social Security is somewhat related in structure to the annuities sold by insurance companies, and it is most definitely not a Ponzi scheme. I will repeat once again for you edification that current retiree pensions are not paid by current workers.