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Printing $....simple answer please.
- Thread starter Stosh
- Start date
Quote from kxvid:
Do yourself a favor and take the crash course:
http://www.chrismartenson.com/crashcourse
ohhh my.
Thank god his website will help me find a place to purchase gold... Where are the gun ads?
Everyone listen to scriabinop23, he is probably the only one on this thread that knows what he is talking about.
Just to add something to that subject:
Does anyone here (scriabinop23 I am sure you do) know what is wealth? Look, you have to know at leastr the answer to this question before blabling things like the fed should do this, inconstitutional tha,t and et cetera.
Is money wealth? Money just a proxy of wealth. Is gold wealth? No (not considering its industrial use for the sake of the econ example I am going to show). Gold is a proxy of wealth as well. What essentialy differentiates gold from money is the invulnerable scarcity of the first because no fed president or crazy dictator can "print" gold.
Let's say I find 1.000.000.000 tons of previously unknown gold in my yard. Would it make me rich? Yes. Would it make the world richer? No. If I start to put all this new "wealth" to use (i.e., go spend it all) I will end up causing a inflationary spike in gold terms in the economy (gold would lose a % of its value). In the bottom line, all my wealth would have been created at the expense of the other gold holders around the world - zero sum game, the world didnt got any richer. So no, gold is definetaly not wealth.
So what is wealth, and what phenomena increases wealth in the economy?
The answer is very simple. Wealth is any good or service that fullfills necessities of us, the human beings. And when we produce more of those goods and services (compared to, for example, last year), we create wealth in real terms. Goods and services, and only this, is wealth. So, the bottom line is money and gold are proxies, representatives of goods and services.
If you understand how this works, you will know that what causes inflation is not the money printing per se. What causes inflation is, in a simplistic explanation, a growth rate in money supply (via printing or debt, it doesnt matter) bigger than the rate of growth of supply of goods and services in the economy. So, lets say I am a dictator of a country that produced 10 bananas last year, and in this year it produced 20 bananas, I can double the money supply via money printing and not cause any inflation at all in the economy. Actually, I would have to do so if I dont want my country to enter in a deflationary stage. And oh, did I mention that if I raise the money supply 2 times more than the growth of bananas production via the "right way" - i.e.,debt, not "out of thin air" - it will cause big inflation in this economy anyway?
Do you get it now?
(btw, I may say I live in Brazil, so you probably will find this banana example funny, lol)
Of course, what I have just explained is a very simplified model, but it is the essence of moneys role in any capitalist economy. It is the pure basics, but I will admit most people (even economists) dont understand this concept at all.
Just to add something to that subject:
Does anyone here (scriabinop23 I am sure you do) know what is wealth? Look, you have to know at leastr the answer to this question before blabling things like the fed should do this, inconstitutional tha,t and et cetera.
Is money wealth? Money just a proxy of wealth. Is gold wealth? No (not considering its industrial use for the sake of the econ example I am going to show). Gold is a proxy of wealth as well. What essentialy differentiates gold from money is the invulnerable scarcity of the first because no fed president or crazy dictator can "print" gold.
Let's say I find 1.000.000.000 tons of previously unknown gold in my yard. Would it make me rich? Yes. Would it make the world richer? No. If I start to put all this new "wealth" to use (i.e., go spend it all) I will end up causing a inflationary spike in gold terms in the economy (gold would lose a % of its value). In the bottom line, all my wealth would have been created at the expense of the other gold holders around the world - zero sum game, the world didnt got any richer. So no, gold is definetaly not wealth.
So what is wealth, and what phenomena increases wealth in the economy?
The answer is very simple. Wealth is any good or service that fullfills necessities of us, the human beings. And when we produce more of those goods and services (compared to, for example, last year), we create wealth in real terms. Goods and services, and only this, is wealth. So, the bottom line is money and gold are proxies, representatives of goods and services.
If you understand how this works, you will know that what causes inflation is not the money printing per se. What causes inflation is, in a simplistic explanation, a growth rate in money supply (via printing or debt, it doesnt matter) bigger than the rate of growth of supply of goods and services in the economy. So, lets say I am a dictator of a country that produced 10 bananas last year, and in this year it produced 20 bananas, I can double the money supply via money printing and not cause any inflation at all in the economy. Actually, I would have to do so if I dont want my country to enter in a deflationary stage. And oh, did I mention that if I raise the money supply 2 times more than the growth of bananas production via the "right way" - i.e.,debt, not "out of thin air" - it will cause big inflation in this economy anyway?
Do you get it now?
(btw, I may say I live in Brazil, so you probably will find this banana example funny, lol)
Of course, what I have just explained is a very simplified model, but it is the essence of moneys role in any capitalist economy. It is the pure basics, but I will admit most people (even economists) dont understand this concept at all.
scriabinop23 & aradiel - thanks for your thoughts.
I think you both referred to expansion of money supply as being necessary to offset increases in production and population.
How important is it, that population and production driven deflation be avoided?
Are there historical examples that illustrate the necessity? I'd be interested if you want to expand on that.
I think you both referred to expansion of money supply as being necessary to offset increases in production and population.
How important is it, that population and production driven deflation be avoided?
Are there historical examples that illustrate the necessity? I'd be interested if you want to expand on that.
Quote from aradiel:
Everyone listen to scriabinop23, he is probably the only one on this thread that knows what he is talking about.
Well, at this point, since we are turning this thread into comedy, let's just have it moved to chit chat.
I suggest you learn about money & its history, cause you don't know what you are talking about.
Quote from aradiel:
Everyone listen to scriabinop23, he is probably the only one on this thread that knows what he is talking about.
Just to add something to that subject:
Does anyone here (scriabinop23 I am sure you do) know what is wealth? Look, you have to know at leastr the answer to this question before blabling things like the fed should do this, inconstitutional tha,t and et cetera.
Is money wealth? Money just a proxy of wealth. Is gold wealth? No (not considering its industrial use for the sake of the econ example I am going to show). Gold is a proxy of wealth as well. What essentialy differentiates gold from money is the invulnerable scarcity of the first because no fed president or crazy dictator can "print" gold.
Let's say I find 1.000.000.000 tons of previously unknown gold in my yard. Would it make me rich? Yes. Would it make the world richer? No. If I start to put all this new "wealth" to use (i.e., go spend it all) I will end up causing a inflationary spike in gold terms in the economy (gold would lose a % of its value). In the bottom line, all my wealth would have been created at the expense of the other gold holders around the world - zero sum game, the world didnt got any richer. So no, gold is definetaly not wealth.
So what is wealth, and what phenomena increases wealth in the economy?
The answer is very simple. Wealth is any good or service that fullfills necessities of us, the human beings. And when we produce more of those goods and services (compared to, for example, last year), we create wealth in real terms. Goods and services, and only this, is wealth. So, the bottom line is money and gold are proxies, representatives of goods and services.
If you understand how this works, you will know that what causes inflation is not the money printing per se. What causes inflation is, in a simplistic explanation, a growth rate in money supply (via printing or debt, it doesnt matter) bigger than the rate of growth of supply of goods and services in the economy. So, lets say I am a dictator of a country that produced 10 bananas last year, and in this year it produced 20 bananas, I can double the money supply via money printing and not cause any inflation at all in the economy. Actually, I would have to do so if I dont want my country to enter in a deflationary stage. And oh, did I mention that if I raise the money supply 2 times more than the growth of bananas production via the "right way" - i.e.,debt, not "out of thin air" - it will cause big inflation in this economy anyway?
Do you get it now?
(btw, I may say I live in Brazil, so you probably will find this banana example funny, lol)
Of course, what I have just explained is a very simplified model, but it is the essence of moneys role in any capitalist economy. It is the pure basics, but I will admit most people (even economists) dont understand this concept at all.
Good post.
Good example what happens when you confuse real wealth with gold. Spain 15-16 century.
http://www.straightdope.com/columns...-to-all-the-gold-spain-got-from-the-new-world
Of course, what I have just explained is a very simplified model, but it is the essence of moneys role in any capitalist economy. It is the pure basics, but I will admit most people (even economists) dont understand this concept at all.
Steve Forbes is one of them. Proponent of gold standard and stable value of money. Stable value of money is obviously ideal but how he thinks gold standard would achieve it is beyond me.
Quote from scriabinop23:
Last - there is no 'fraud' in the government paying interest to the Fed, since the Fed by mandate has to pay its profits right back to the government.
Can someone provide a link to this specific mandate on a reputable website (such as law school)? Seems like there are quite a few people around here who think otherwise and point to conspiracist websites, but I've found it difficult to pinpoint hard evidence one way or the other.
Quote from nicuss:
Can someone provide a link to this specific mandate on a reputable website (such as law school)? Seems like there are quite a few people around here who think otherwise and point to conspiracist websites, but I've found it difficult to pinpoint hard evidence one way or the other.
How is the Federal Reserve funded?
The Federal Reserve's income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. Other sources of income are the interest on foreign currency investments held by the System; fees received for services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations; and interest on loans to depository institutions (the rate on which is the so-called discount rate). After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury.
http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm
And what you are looking for:
http://www.federalreserve.gov/aboutthefed/section7.htm