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When Inflation Wipes out a Country's Currency...
- Thread starter zghorner
- Start date
I love it I love Rand Paul. Anyone who explains the system of monetary inflation any other way is just trying to mask the reality of what's really going on.Yes. This is why the Fed is the richest institution on the planet.
I never would claim to be an economist. I am a serious student of economics however. My intention is certainly not to be condescending, and I apologize if that's how my posts come across to you. My intention is to point out money theory that a growing number of economists believe is correct, and that what was thought correct previously is not.Your a self proclaimed economist basically that brings rationale to a subject that is simpler then you have explained it.... However you would like to name the fiduciary media is fine with me talking to people like they know less than you just shows your own ignorance. I've read plenty of economics in the last 20 years and the only thing that makes sense to me is the Austrian School mises bastiat rothbard etc. Your explanation just sounds like a defensive statement interventionism put crafty words on printing money and diluting our currency. The bottom line is inflation is theft
I have no interest in trying to convert anyone in their thinking. My interest is personal. I know from feedback I have received that others here are also interested in the topics that interest me. I post mainly to make it clear that there is, from the perspective of a growing number of economists, a serious defect in the past way we have perceived deficits and debt for a nation, such as the United States, that creates its own currency at will and does not borrow in another nations currency.
Nothing I have ever posted should be interpreted as meaning a nation can create money without limit without dire consequences. What has been shown, however, and it is not difficult to demonstrate the truth in it, is that for economies that are growing in population and productivity, deficits are essential if deflation is to be avoided. For obvious reasons, significant deflation can not be tolerated in modern economies that run on credit.
From my perspective, many of the problems allayed to "money" printing are due to other causes. It is a fact that many people, including yourself most likely, believe, and will say so, that the U.S. Central Bank determines how much money to print. This, despite it being a trivial matter to prove it cannot be the case. And this is just one of many common beliefs regarding our U.S. money that is easily shown to be false. I also know that there is a steadfast belief among some that the U.S. Central Bank is today a privately owed, for private profit institution. Of course nothing could be further from the truth. Those who believe these incorrect things will be precluded from understanding our U.S. money and Federal "Debt" and "Deficits," and be doomed to attribute economic events to false reasons.
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This is the smartest thing I have ever seen you write. But what happens when the credit that is the lifeblood of the economy goes belly up? When where is so much credit, when everyone is drowning in credit, that the system cannot support itself?For obvious reasons, significant deflation can not be tolerated in modern economies that run on credit.
Ah, you were so close, but now you've ruined it. If there was no money printing, there wouldn't be 90% of the problems we have. War would be too expensive, and income and wealth inequality wouldn't exist. We then wouldn't even need to argue about what's causing problems because we wouldn't be in the state that we are in today.From my perspective, many of the problems allayed to "money" printing are due to other causes.
Its too bad we can't print food or energy, then our problems would really be solved. But its easy to print money, and hence this is exactly what is at the root of all the problems.
I understand what you're saying but it is best to keep those speculators in the market and especially big speculators to have skin in the game and the largest speculator in the market with respect to securities and monies and all that sort of thing is the government and they aren't exactly good at managing risk much less allocating any sort of resource and I understand there are tons of economists that rationalize all kinds of statistical econometric style rationalizations of dilution of the currency the bottom line is once you start inflating currency it tends to build on itself. In the little YouTube clip that he posted it explains how the banking system exponentially expands the money that is loan to them in the reserves.. I feel and this is my thinking in my opinion again that the Austrian School of economics in the most pragmatic way explains in layman's terms what's really going onI never would claim to be an economist. I am a serious student of economics however. My intention is certainly not to be condescending, and I apologize if that's how my posts come across to you. My intention is to point out money theory that a growing number of economists believe is correct, and that what was thought correct previously is not.
I have no interest in trying to convert anyone in their thinking. My interest is personal. I know from feedback I have received that others here are also interested in the topics that interest me. I post mainly to make it clear that there is, from the perspective of a growing number of economists, a serious defect in the past way we have perceived deficits and debt for a nation, such as the United States, that creates its own currency at will and does not borrow in another nations currency.
Nothing I have ever posted should be interpreted as meaning a nation can create money without limit without dire consequences. What has been shown, however, and it is not difficult to demonstrate the truth in it, is that for economies that are growing in population and productivity, deficits are essential if deflation is to be avoided. For obvious reasons, significant deflation can not be tolerated in modern economies that run on credit.
From my perspective, many of the problems allayed to "money" printing are due to other causes. It is a fact that many people, including yourself most likely, believe, and will say so, that the U.S. Central Bank determines how much money to print. This, despite it being a trivial matter to prove it cannot be the case. And this is just one of many common beliefs regarding our U.S. money that is easily shown to be false. I also know that there is a steadfast belief among some that the U.S. Central Bank is today a privately owed, for private profit institution. Of course nothing could be further from the truth. Those who believe these incorrect things will be precluded from understanding our U.S. money and Federal "Debt" and "Deficits," and be doomed to attribute economic events to false reasons.
Suppose a closed system.I never would claim to be an economist. I am a serious student of economics however. My intention is certainly not to be condescending, and I apologize if that's how my posts come across to you. My intention is to point out money theory that a growing number of economists believe is correct, and that what was thought correct previously is not.
I have no interest in trying to convert anyone in their thinking. My interest is personal. I know from feedback I have received that others here are also interested in the topics that interest me. I post mainly to make it clear that there is, from the perspective of a growing number of economists, a serious defect in the past way we have perceived deficits and debt for a nation, such as the United States, that creates its own currency at will and does not borrow in another nations currency.
Nothing I have ever posted should be interpreted as meaning a nation can create money without limit without dire consequences. What has been shown, however, and it is not difficult to demonstrate the truth in it, is that for economies that are growing in population and productivity, deficits are essential if deflation is to be avoided. For obvious reasons, significant deflation can not be tolerated in modern economies that run on credit.
From my perspective, many of the problems allayed to "money" printing are due to other causes. It is a fact that many people, including yourself most likely, believe, and will say so, that the U.S. Central Bank determines how much money to print. This, despite it being a trivial matter to prove it cannot be the case. And this is just one of many common beliefs regarding our U.S. money that is easily shown to be false. I also know that there is a steadfast belief among some that the U.S. Central Bank is today a privately owed, for private profit institution. Of course nothing could be further from the truth. Those who believe these incorrect things will be precluded from understanding our U.S. money and Federal "Debt" and "Deficits," and be doomed to attribute economic events to false reasons.
100,000 units of paper currency are 'created' and lent out at 10% interest due in 1 year.
A year rolls by, time to complete the deal.
The Borrower needs to pay the Lender 110,000 units of paper currency.
Where do the additional 10,000 units of paper currency come from?
Dalio is of the opinion that this is the cause of the "credit cycle". I'm thinking "belly up " is not the best descriptor for what happens. Their is "belt tightening", as people are maxed out on credit and are forced to spend less and pay down loans. The economy contracts due to decreased consumption and a recession results.But what happens when the credit that is the lifeblood of the economy goes belly up? When where is so much credit, when everyone is drowning in credit, that the system cannot support itself?
You'd have to go back a long way to find a time when there was no money printing. But reams have been written on various money systems. You can find out what happens when there is no printing by studying the history of money.If there was no money printing, there wouldn't be 90% of the problems we have.
Of course for a long long time we have had money printing. For example, under a gold standard, governments print gold certificates that could then be used to buy gold and could also circulate as money convertible to gold. If the government wanted to expand the money supply they would just print up some gold certificate and use them to buy gold from the private sector. Now the government had gold and the private sector had more money,i.e., the gold certificates. Eventually as trust was built in the government's money, the government could print new non-convertible money and buy gold with it. Then the government would tax the private sector to raise revenue to buy the goods and services the government needed.
This system has two drawbacks, one big, the other insurmountable. The first is it is very inconvenient when the government needs to expand the money supply very rapidly , as in a depression, war or other emergency, (see the intentional rapid devaluation of the dollar under Roosevelt that was resisted by Congress and the Central Bank, but nevertheless allowed Roosevelt to convince enough of the Congress to adopt Keynesian economics. This had already begun to lift the U.S. out of the Great Depression well before we entered WWII in 1941. And then there is the real killer: not enough gold! So the price of gold rises destabilizing the money it backs -- exactly as Keynes said, in 1944, would happen. It did happen! And only 14 years after the Bretton wood accord was fully implemented by 1957! The gold standard could no longer be sustained, because the U.S. could no longer maintain the price of gold constant. Fiat money is far more convenient and flexible! We will never go back to a gold standard because we can't, but why on Earth, even if we could, would we want to do that and completely hamstring ourselves every time a hard recession hits?
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I am of the opinion that there is no way to get through a recession anymore.Dalio is of the opinion that this is the cause of the "credit cycle". I'm thinking "belly up " is not the best descriptor for what happens. Their is "belt tightening", as people are maxed out on credit and are forced to spend less and pay down loans. The economy contracts due to decreased consumption and a recession results.
If you start out at 200lbs body weight and go hungry, you can easily drop 50lbs and still be alive. But when you start out at 100lbs, you don't have 50lbs to lose before you die. Given the state of income inequality and the dire situation for most that are not in the top 20%, I don't think they can weather a recession. The government can print more money, but it will have little effect. That $1200 cheque people got is now costing so much more in terms of inflation. Another round of "free" money from the government will make things even worse.
About the only thing the government should be doing now is sourcing food to give to the needy. the only thing the stimulus did was end up in the hands of corporations since everyone took their cheques and spent it. China got a good chunk of it, and real estate investors were able to collect some rent. But all it did for keep the poor people afloat for a little while longer. With a contracting economy, I just don't think poor people have anything left to lean on, and the rising interest rates just take a bigger pie out of whatever money they had left over to buy essentials.
What?I am of the opinion that there is no way to get through a recession anymore.
Instead of focusing on money printing per se, don't you think it would be better to focus instead on these two things. 1: how much printing we should do relative to levels of productivity growth and need for increased private savings and investment, and 2: the root cause of a rapid acceleration in wealth disparity.
There is general agreement on why wealth disparity increases over time in capitalist countries. But there is disagreement on what has caused a rapid acceleration in wealth disparity beyond what can be attributed to return on capital exceeding the growth in GDP. I have my own ideas why there has been an acceleration. If I am right, then I also know what to do about it.
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I used to think that yes, money had to increase with increasing productivity and population. But I came across Jeff Booth where talks about how the future is deflationary but the system is only built on inflation, so we have these two opposing forces.What?
Don't you think instead of focusing on money printing we should focus instead on these two things. 1: how much printing we do relative to levels of productivity growth and need for increased private savings and investment, and 2: the root cause of a rapid acceleration in wealth disparity. There is general agreement on why wealth disparity increases over time in capitalist countries. But there is disagreement on what has caused a rapid acceleration in wealth disparity beyond what can be attributed to return on capital exceeding the growth in GDP. I have my own ideas why there has been an acceleration. If I am right, then I also know what to do about it.
If you believe we should just keep the money supply constant than I won't discuss this further with you because in my opinion that is absurd and would lead rather quickly to first recession and then a deep depression.
Inflation is tax, simple as that, and things should actually get cheaper when the costs to produce them go down. But of course if you increase people all chasing the same thing, then if money supply doesn't increase, prices will naturally go up.
But I do think that the government is the worst at controlling the money supply. Just like we have a separation of religion and the state, we need this separation from the government and money. The government should after all only collect taxes and allocate those funds in such a way as to serve the greatest number in the best way possible. Giving them the power to print money and to set interest rates is exactly why we are in this mess. Capitalism works, but what we have a fake form where we privatize the gains and socialize the losses, so its not really capitalism.
The best way forward, and what the world right now is desperately needing is a system that is outside of the control of any one entity. Crypto is the only way forward. I will not trust anything or anyone else, and if you have no trust in a system, you have nothing.