Everything you think you know about economics is WRONG!

[Ward Smith + 6,615]

4 hours ago, remake it said:

Those are not at issue, as it is what you somehow magically propose as money given that prior to and after fiat money is introduced tangible assets underpin wealth and remain means of exchange.

Money = debt 

Currency = money

Currency = debt

I gave multiple links. Wallow in your ignorance. Sir

[canadas canadas + 136]

12 hours ago, Ward Smith said:

The inflation already existed even when we were on gold. The damage being done to the gold reserves was extensive as our "allies" like France demanded gold for dollars. We were already bankrupt by the Bretton Woods Agreement by the time Nixon took us off the gold standard. 

The best way to look at prices of commodities is think of them as fixed and the dollars buying them as fluctuating. Based on various issues the dollars'value is going up and down. Kind of mind bending but not wrong.  

In other words, the actual material goods are physically real items that are really needed and used while money is a man made volatile value measuring and carrying device.  Funny how it's made to look the other way around like as if money is everything.  The scary part is that there is probably more money around than certain goods. However, if certain life sustaining things like fresh water was to become very scarce then all of the money in the world might not be enough.  It's interesting how some charities give the impression that if they can raise millions or billions then they can cure almost anything.  We are falsely led to believe that by throwing millions or billions of dollars at any real problem that it can be overcome.  At some point, humanity could be facing a big crisis that our false sense of money supremacy alone cannot solve.  Are devastating environmental problems one of these?  Plastics in oceans are starting to choke out algae and plankton. Remember how algae and plankton led to petroleum which led to plastics?  How ironic. If these die out then everything down the line that depends on them for food will also die out in a fast devastating domino effect that will eventually affect humans who depend on food from the sea.

 

 

Edited December 7, 2019 by canadas canadas

[remake it + 288]

1 hour ago, Ward Smith said:

Money = asset debt 

Currency = asset = money

Currency = money debt

debt = liabilty

You are not interested in intelligent conversation, so stop your multiple pretenses.

[Tom Kirkman + 8,860]

^ irony.jpg

This is entertainment indeed.

[Ward Smith + 6,615]

7 hours ago, remake it said:

debt = liabilty

You are not interested in intelligent conversation, so stop your multiple pretenses.

As Tom says, you've pinged the irony meter. I know full well what they teach you in school. I've already said IN the title that it's wrong!  Read @canadas canadas post above. So called "money" is created out of thin air via Debt. Period. 

[remake it + 288]

4 hours ago, Ward Smith said:

As Tom says, you've pinged the irony meter. I know full well what they teach you in school. I've already said IN the title that it's wrong!  Read @canadas canadas post above. So called "money" is created out of thin air via Debt. Period. 

Again that's not an argument, just as empty claim, unless you are only talking about unbacked fiat money as distinct from "money" more broadly which as unrestricted currency provides a means of exchange.

[Marcin + 519]

On 12/5/2019 at 2:09 AM, Ward Smith said:

Cheers @Marcin, @Papillon, @Tom Kirkman, @DayTrader. Hopefully we can have an intelligent discussion here about these things and I'm interested in hearing your thoughts. 

I am sorry @Ward Smith but I am no longer capable of conducting discussion (especially intelligent discussion) about economics.  I just do not remember in detail economics courses past elementary subjects of freshman year.

Will give you some examples on the basis of actual comments of this thread, that I just read:

On 12/5/2019 at 2:09 AM, Ward Smith said:

Money = Debt and nothing else. "Money" is created into existence only when a bank loans it out, their ability to "create" the money only limited by their "assets". Initial assets are created by the Central Bank when it "purchases" debt from the sovereign government and "creates" notes. 

Yes: The amount of money created is limited by money multiplier of each economy. "Assets" or "Initial assets is M0, monetary base circulated by Central Bank. But I cannot conduct discussion because I no longer remember how to apply this equations in to real life problems. Like what impact on US economy since 2008 Crisis had increase in monetary base and decrease of M1 multiplier ? It would be too much effort to learn this again. It would be usefull I admit.

I know that negative real interest rates have very negative impact of US, EU and Japan economies but I cannot prove it on the basis of economics. This is against underlying principles of economics as future benefits are smaller than the same benefits received together. The difference is the interest rate "price of money"

One of effects is that it is now stupid to save and wise to over leverage yourself for current consumption: the detrimental effects of this fallacy and direct effect of NIRP policy are currently visible in faltering US economy. This is one of major reasons why US lost hegemony war with China, and US dollar will loose reserve currency status, when Chinese military and technology will be on par with American.

This in turn is the effect of loss of independece of FED that conducts irresponsible monetary policy (NIRP). Loss of independence of FED is caused by its faulty staffing policy. Members of FED Board of Governors do not respect this position. It is convenient point in their CV. They jump into FED Board for a few years (out of 14 years term) and jup out into lucrative postions in government or business. They do not want to destroy their future careers by conducting prudent monetary policy and thus not "helping" their future employers (Presidents) to win next election.

This is all very sad.

 

 

 

 

[remake it + 288]

4 minutes ago, Marcin said:

Yes: The amount of money created is limited by money multiplier of each economy. "Assets" or "Initial assets is M0, monetary base circulated by Central Bank.

Mr  Van Eck has pointed out elsewhere Central Banks are not limited to how much money they can print and fiat money is not the only form of currency so the thread title seems limited to modern banking systems rather than economics.

[Marcin + 519]

Next example:

When @remake it (certainly NOT a bot) said:

When you logically regress the the proposition Money = Debt then you arrive at the bank of empty promises, and that's why Irving Fisher's ideas remain paramount in stabilizing the international monetary system.

He alluded probably  to Fisher equation, and also possibly to detrimental effects of NIRP FED policy. FED governors certainly do not like Fishers theory of future and current benefits (refer to my previous comment).

Next @Ward Smith and @remake it you clashed about the nature of money.

@remake it just stated that fiat money and fractional reserve banking are just one sort of money. Gold, direct bearer of value is another one. VIsualisation of gold as a money is useful to understan that as @remake it rightly said the strength of currency is determined by real goods that are behind this money.

The power of US dollar is currently only kept by the barrel of US guns, that is its military, through mandatory usage of US dollar in sale transactions of oil and gas rich nations.

Only 3 countries until very recently tried to use different than US dollar currencies: Iran, Iraq and Libya.

You know what happened to Iraq in 2003 and Liba in 2011 (it was no coincidence that both countries tried to sell oil in Euro (Iraq) and Gold (Libya) just 6 months earlier.

The only country until recently was Iran , and you know what are the relations of Iran with United States.

Recently also Venezuela tried to sell oil in different than US dollar currency - it is miracle that they hold unoccuppied for such a long time.

Last month also Russia changed oil contract currency from US dollar to Euro.

When Chinese technology and military will be more or less on par with US , the Arab countries will ask US military to leave their countries. And than they will have a choice: US producing on ly military gear or China producing everything (also military gear). This will be the moment of the end of US dollar as reserve currency.

Again a coincidence, US has military bases in all oil rich countries (bar Iran , Russia and Venezuela, I do not have to repeat about their relations with US).

But unfortunately for all of us , United States will not give up this privilege without a fight.

With this knowledge I am sure you will undestand why I am concerned about nuclear war.

 

[Jan van Eck + 7,558]

22 hours ago, Zhong Lu said:

All economies are based on trust and belief.  Destroy the trust/belief, and the economy fails.  

The Israeli economy is not based on either trust or belief.  Seems to be running along.  

Meanwhile, the Iranian economy runs on both trust and belief, and it seems to be in free-fall collapse. 

[Ward Smith + 6,615]

1 hour ago, Marcin said:

Next example:

When @remake it (certainly NOT a bot) said:

When you logically regress the the proposition Money = Debt then you arrive at the bank of empty promises, and that's why Irving Fisher's ideas remain paramount in stabilizing the international monetary system.

He alluded probably  to Fisher equation, and also possibly to detrimental effects of NIRP FED policy. FED governors certainly do not like Fishers theory of future and current benefits (refer to my previous comment).

Next @Ward Smith and @remake it you clashed about the nature of money.

@remake it just stated that fiat money and fractional reserve banking are just one sort of money. Gold, direct bearer of value is another one. VIsualisation of gold as a money is useful to understan that as @remake it rightly said the strength of currency is determined by real goods that are behind this money.

The power of US dollar is currently only kept by the barrel of US guns, that is its military, through mandatory usage of US dollar in sale transactions of oil and gas rich nations.

Only 3 countries until very recently tried to use different than US dollar currencies: Iran, Iraq and Libya.

You know what happened to Iraq in 2003 and Liba in 2011 (it was no coincidence that both countries tried to sell oil in Euro (Iraq) and Gold (Libya) just 6 months earlier.

The only country until recently was Iran , and you know what are the relations of Iran with United States.

Recently also Venezuela tried to sell oil in different than US dollar currency - it is miracle that they hold unoccuppied for such a long time.

Last month also Russia changed oil contract currency from US dollar to Euro.

When Chinese technology and military will be more or less on par with US , the Arab countries will ask US military to leave their countries. And than they will have a choice: US producing on ly military gear or China producing everything (also military gear). This will be the moment of the end of US dollar as reserve currency.

Again a coincidence, US has military bases in all oil rich countries (bar Iran , Russia and Venezuela, I do not have to repeat about their relations with US).

But unfortunately for all of us , United States will not give up this privilege without a fight.

With this knowledge I am sure you will undestand why I am concerned about nuclear war.

@remake it is a bot, but occasionally its human comes out to play, hence my response to it. 

Your list of countries running afoul of petrodollars could just as easily point to countries who refuse to join the Central Bank cabal. Take a good look at countries who refuse to play the internationally owned (and controlled) Central Banks game and then look what happens to them. It's all related. 

There are those (and I might be among them) who agree that every country with a Central Bank is at its Beck and Call, including Wars. Nuclear war? Bad for bidness 

[Ward Smith + 6,615]

Two good articles on China in SCMP here

[Zhong Lu + 845]

1 hour ago, Jan van Eck said:

The Israeli economy is not based on either trust or belief.  Seems to be running along.  

Meanwhile, the Iranian economy runs on both trust and belief, and it seems to be in free-fall collapse. 

When someone hands you a dollar, do you trust and believe you can exchange that dollar to someone else for goods or services? 

Edited December 8, 2019 by Zhong Lu

[Jan van Eck + 7,558]

17 hours ago, Tom Kirkman said:

This is entertainment indeed.

Actually, Tom, I don't find it particularly funny.  The discussions on the US Federal Reserve Bank are incoherent, and foreign readers should understand that these discussions posted above do not reflect how the Fed works, or how the directors of the fed operate.  Taking it a step further, the comments as to the Social Security trust Fund are inapposite; the so-called "Trust Fund" is a fiction of politicians, it does not exist and never did. It is not like the Caisse de Depot et Placements du Quebec, where there is some huge pool of capital set aide for future benefits to retirees and currently available for investment in economic growth.  

We have serious problems with finance and the development of capital, and discussions off the mark are not helpful.  As to the Dollar, the main reason it has so much sway is that it is fully convertible and liquid.  The dollar has universal acceptance and its value against local currencies can be readily ascertained, which is not the cased for currencies from countries with exchange controls or quasi-exchange controls, such as say Nigeria.  The dollar remains capital's "safe haven" currency and is secure against both default and inflation, ugly surprises that international capital intensely dislikes.

The Euro is an artificial construct, and the big issue with it is that individual countries lose the ability to devalue, and thus maintain external capital flows.  The Euro benefits the legacy countries for which it was designed, specifically France, Germany, Benelux,  It is not a great currency for either Spain or Greece, and a marginal one for Italy, and not suitable at all for the Balkans, Slovakia, Hungary, Romania, and so forth into the weak-currency zones.  Those countries are going to continue to have capital-formation problems and currency pressures as a result of the Euro.  Will the Euro continue with the core countries?  Probably.

The US Dollar will continue to be the international currency of trade simply because it is stable and convertible.  Just because some poster doesn't like US politics is irrelevant. 

[Jan van Eck + 7,558]

4 minutes ago, Zhong Lu said:

When someone hands you a dollar, do you trust and believe you can exchange that dollar to someone else for goods or services? 

No. 

[Zhong Lu + 845]

Then why do you accept money for your labor? 

[remake it + 288]

1 hour ago, Ward Smith said:

Your list of countries running afoul of petrodollars could just as easily point to countries who refuse to join the Central Bank cabal. Take a good look at countries who refuse to play the internationally owned (and controlled) Central Banks game and then look what happens to them. It's all related. 

Conspiracy theorists run amok here.

[canadas canadas + 136]

11 hours ago, Zhong Lu said:

Then why do you accept money for your labor? 

Someone or some company wants 1001 things done in their own way but they are only one person with limited time and ability.

So they hire people to buy their precious time and ability in order to do more things for them their way. 

Now instead of having two hands and 8 hours of time in the day, they can have 10 hands and 40 hours of time in the day to do what they want to be done.

Now time is very precious and priceless. 

It is probably the most precious and priceless thing there is in life that you have for you.

At some point, a rich person values their time more than their money because it is a scarcer thing but they value everyone else's as the opposite that can be bought for minimum wage since they try to make money scarcer and less available for the majority of people. 

This is only possible because there are so many people available for labor hire at low cost. 

Make no mistake about it, time is the most precious thing we the living each have. 

The only problem is that we have left it to become devalued by money. 

Poor person has much time and little money in their hands. 

Rich person has much money and little time on their hands. 

If we had a time buying auction instead of a labor one the value may change. 

Time is a very precious commodity that we each have but it is also the most unappreciated and undervalued one for most.

Think of how many years of your best time a corporation that you worked for has sucked out of you and how much in total they have paid you for it.   

They say time is money. 

Really?

Do you think it was worth it, if you think about it this way? 

Was your best time and prime years of your life not worth more? 

As I near retirement, now I feel cheated out of my best past time that no amount of money in the world can ever replace or buy back.   

Are our values all somehow skewed around money as the be all and end all?

Edited December 8, 2019 by canadas canadas

[Guest]

Only just seen this Ward, sorry. I think I'm right in saying there is literally zero I can now add, and in fairness while reading the thread opener I thought of Enthalpic as he has mentioned a lot previously about this kinda stuff that was verging on gold. I say 'verging' as I don't want his head to get too big as he may not be able to leave the house ...  

Edited December 8, 2019 by Guest

[Jan van Eck + 7,558]

14 hours ago, Zhong Lu said:

Then why do you accept money for your labor? 

Assuming that this was directed at me  (and if you want me to see it, then you do have to quote some part of it, or it does not "ding" at my "notifications" bell), I would respond that your question originally was:  "Do you trust and believe " that the dollar your receive can be exchanged..., etc.  I don't "trust" and "believe" anything about the US Dollar.  Instead, I know for a certainty that it will be accepted and exchanged for goods and services, at least inside the USA and Canada, and apparently Argentina   (not inside Europe, due to counterfeiting problems by the North Koreans, who incidentally support their economy by the mass counterfeiting of US currency). 

Knowing something for a certainty takes out the mythology of currency and reduces it to the mundane level of being a convenient medium of exchange, even if only expressed as debit and credit entries on some credit-card statement. "Trust and believe" are quasi-religious experiences, which might work inside Russia with and for the ruble, but not in the rest of the planet for real-world exchanges.  Trust and belief are peculiarly unsuited for currencies.  Certainty is what is suited for currencies.  

And that, by the way, is why the Euro endures, despite its obvious flaws in disrupting monetary policies in the Outer Rim countries of Europe. 

Edited December 8, 2019 by Jan van Eck
scrivener error

[Jan van Eck + 7,558]

4 hours ago, canadas canadas said:

As I near retirement, now I feel cheated out of my best past time that no amount of money in the world can ever replace or buy back.

Then again, it is your Canadian society that you voted for that was constructed to take your time and substitute it for some money, and all along you rolled with it, now didn't you?   So the complaining now is a bit late.  OK, if you were a member of the International Left and spent your youth marching in May Day parades and fighting with the police, then I take that back.  But otherwise, it is your society, and you willingly participated in it.  So, who cheated whom?

[Enthalpic + 1,496]

3 hours ago, Jan van Eck said:

A "Do you trust and believe " that the dollar your receive can be exchanged..., etc.  I don't "trust" and "believe" anything about the US Dollar.  Instead, I know for a certainty that it will be accepted and exchanged for goods and services, at least inside the USA and Canada, and apparently Argentina 

I always travel with some of that boring looking cash.  I recognize that our pretty notes are not as internationally accepted.

[remake it + 288]

18 hours ago, Jan van Eck said:

The dollar remains capital's "safe haven" currency and is secure against both default and inflation, ugly surprises that international capital intensely dislikes.

The USD and the Euro are just paper money and neither are secure from those factors, while the USD benefits over the Euro by being the world's reserve currency, which also means that China (which holds about 5% of US debt) wields a double sided blade while the trade war continues. 

Edited December 8, 2019 by remake it

[Marcin + 519]

19 hours ago, Ward Smith said:

@remake it is a bot, but occasionally its human comes out to play, hence my response to it. 

Your list of countries running afoul of petrodollars could just as easily point to countries who refuse to join the Central Bank cabal. Take a good look at countries who refuse to play the internationally owned (and controlled) Central Banks game and then look what happens to them. It's all related. 

There are those (and I might be among them) who agree that every country with a Central Bank is at its Beck and Call, including Wars. Nuclear war? Bad for bidness 

And the timing of both invasions is coincidental ?

What do you mean by Central Bank cabal. Each country has Central Bank. Each of the mentioned countries are members of UN, IMF, World Bank etc. Normal countries, but stopped using US dollars, and naturally are punished by US for doing this.

In the future if yuan will be reserve currency China will do exactly the same, only in the more subtle manner.

Because hegemony of Chinese economy will be total (that is why we really need strategy), China can just economically starve disobedient countries, without invasion.

Well, when I have written the line abouve, I made up my mind, US invasions are better than starving.

 

[Ward Smith + 6,615]

3 minutes ago, Marcin said:

And the timing of both invasions is coincidental ?

What do you mean by Central Bank cabal. Each country has Central Bank. Each of the mentioned countries are members of UN, IMF, World Bank etc. Normal countries, but stopped using US dollars, and naturally are punished by US for doing this.

In the future if yuan will be reserve currency China will do exactly the same, only in the more subtle manner.

Because hegemony of Chinese economy will be total (that is why we really need strategy), China can just economically starve disobedient countries, without invasion.

Well, when I have written the line abouve, I made up my mind, US invasions are better than starving.

Marcin, do you believe that every country which has a "Central Bank" has one that is part of the government or completely independent (as the Federal Reserve is)? Do you believe that 100% of the control of said "Central Bank" is in the hands of whatever government is in control where it resides?