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Thread: Economic paradoxes

  1. #101  
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    Not sure what that has to do with my response Boing3000?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Not sure what that has to do with my response Boing3000?
    I though it was about determining what has value for whom.

    Non-physical currency represent 90% of the money, and actually are much easier to play with. The video even go so far as stating that money/transactions are playing with us
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    The discussion is complicated and seems off-topic.

    The Water- Diamond Paradox was solved by marginalists. The value of a good in economics is now measured by its marginal utility.

    If people consume little water and diamond, the marginal utility of water is higher than that of diamond.

    If people consume many water and diamond, the marginal utility of water is also higher than that of diamond.

    But in reality, people consume many water and consume little diamond, the marginal utility of water is lower than that of diamond. So, the market price of diamond is higher. But, as a whole, the total utility of consumption of all water on the Earth is higher than that of all diamond.
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    In Paradox of consumption, why don't we combine 2 schools?

    Such as, we may have a consumption function like this.

    consumption = f( marginal propensity to consume out of wealth, marginal propensity to consume out of income)

    This was also mentioned in the Life-cycle hypothesis by Modigliani.
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    Quote Originally Posted by gonzales56 View Post
    Paper money has been around for thousands and thousand of years,
    Not at all. It was accidentally invented when rich people start exchanging the recipe of the gold they had stored in the goldsmith vault.

    Quote Originally Posted by gonzales56 View Post
    and it is not what has advanced humanity or civilizations.
    Very questionable. Carrying lighter means of exchange may actually have saved many backs.

    Quote Originally Posted by gonzales56 View Post
    On the contrary, the debasing of currencies and the theft of wealth have long crippled and help destroyed many great civilizations that mediums of exchanges and stores of wealth, like gold and silver, helped forge, build, grow sustain and maintain.
    That much is true. It is even true for gold and silver. Those atoms have not more values that carbon. They are more rare, but then you cannot eat it, they don't sustain anything.
    You must understand that money is not the value. It is a mean of differed exchange based on trust. You don't even need money to exchange your cars with the one of your friends. Just switch the key, and sign a paper.

    Quote Originally Posted by gonzales56 View Post
    From Sumeria to Egypt, from Rome to the United States, all were built, grew and were sustained by intrinsically valuable currencies,
    No they were build on workforce, mainly slavery. Whatever you found more sexy in Rome empire , than the one of the Rockefeller.

    Quote Originally Posted by gonzales56 View Post
    not fiat currencies nor the debasing of currencies.
    Correct, it is people who build things. Not gold, nor paper. Fiat money does not exist anymore. Private corporation like the federal bank issue whatever money they which, the only condition is that find slaves to repay "THE INTEREST". That ponzy sheme is very funny, where the interest are supposed to come from ?

    Anyway, those who claims that economic model are something comparable to scientific theory are just people with agenda (and a job to keep). That is why there are paradox in economy, and unsolvable law like "demand and supply", with not even a coherent mathematical formulation.
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    Quote Originally Posted by Lynx_Fox View Post
    The American working class has never had it better in America. The only problem is their gains have been relatively flat compared to the upper class. (and that has implications for societal stability). Without the easiest exchangeable forms of currency neither would be able to thrive in a modern society.

    Not sure why you completely avoided my point about "intrinsic value" either. Perhaps you should define it. Because my opinion is the only things that truly have "intrinsic" value aren't exchangeable enough to be useful in a modern context. Many of those "intrinsic" value items (e.g. bushels of wheat), are also highly variable. Paper/digital currency allows us tools to soften wild swings and absorb local crisis more than other systems.
    The working class does not have it better getting paid in fiat currency vs getting paid in gold and silver. Gold and silver has also been pretty stable throughout all recorded history. It is fiat currency that create wild swings and economic crisis, not gold and silver.

    "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. ... This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." - Alan Greenspan

    "Gold is not necessary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money." - Adolf Hitler

    Intrinsic value is easy to understand. It is the actual value of assets or companies, based on current perceptions, needs, wants, etc.. Now I will make the argument that gold and silver has, in good times and bad times, over thousands and thousands of years, proven its intrinsic value, while fiat paper currency, with no value other than fear of punishment for not using it, has proven to be the tool of theft, oppression and brutality, and as soon as the people have had enough, they do away with the intrinsically worthless and brutal currency and vow to never use it again.
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    That is laughable. Gold and Silver hold absolutely no intrinsic value beyond their practical use for industry....none what so ever.
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    Quote Originally Posted by gonzales56 View Post
    "Gold is not necessary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money." - Adolf Hitler
    Godwin's law FTW! Just to confirm, you are against all cash money right?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by Lynx_Fox View Post
    That is laughable. Gold and Silver hold absolutely no intrinsic value beyond their practical use for industry....none what so ever.
    That is your belief.. You are wrong but, you are entitled to it.

    "An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense -- perhaps more clearly and subtly than many consistent defenders of laissez-faire -- that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other." - Alan Greenspan

    You may not care one bit about the beauty and properties of gold and silver, and you may not think them worth a piece of paper outside of "industrial use" but, throughout all time, today and I will bet in the future, people do and will.

    The one thing that holds true and has held true is that the fiat paper currency you support so much has a short life, will crash and many will suffer, while those that hold and have gold and/or silver, regardless of the type of crash, will be OK.

    I know that a cattle rancher will always prefer, and know it better, to get his wife a gold piece rather than a bag of poo, and that cattle rancher will give up a lot for it. Same goes for most anyone and everyone who has a bit extra. Status, fine things, desires, rare things, limited things, etc., will never change, and it is this beauty and property of gold and silver, combined with its natural properties to serve as a store of wealth and a medium of exchange, that makes it intrinsically valuable.

    People do not have to want it in a phone to make gold and silver valuable, they can want it around their necks, as crowns on their heads, as rings on their fingers, adored on clothing or statues, etc., and this is because it is gold and silvers natural properties and beauty that makes it valuable, nothing else. Add in the supply side, the relative rarity, and the market value increases it but, it is still intrinsically valuable. It has been, it is, and it will be..
    Last edited by gonzales56; November 28th, 2012 at 05:28 PM.
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    Quote Originally Posted by gonzales56 View Post
    You may not care one bit about the beauty and properties of gold and silver, and you may not think them worth a piece of paper outside of "industrial use" but, throughout all time, today and I will bet in the future, people do and will.
    You do realise you have just admitted that golds value is merely a belief - much like paper money? Anyway, I propose we revert to the Rai standard as that is the only true store of value.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    You may not care one bit about the beauty and properties of gold and silver, and you may not think them worth a piece of paper outside of "industrial use" but, throughout all time, today and I will bet in the future, people do and will.
    You do realise you have just admitted that golds value is merely a belief - much like paper money? Anyway, I propose we revert to the Rai standard as that is the only true store of value.
    The actual value of all things is always going to be dictated by people's beliefs. Its always about what people want and what they are willing to trade or do for it.

    As a businessman, I know that everything is valuable but, as a businessman, I know that certain intrinsic properties make some items more valuable as a store of wealth and means of exchange than others. After all, investing is all about storing/putting ones wealth in the right place/s.

    If you believe that gold is not valuable, that it is nothing but a useless chunk of silly metal, then that's your prerogative, that's your belief. Likewise, if you believe that the intrinsic properties of paper currency and gold are identical, that their values are identical, then that's your belief. Maybe your wife believes the same and you can roll one of those Zimbabwe bills into a ring and give it to her in exchange for her gold ring...
    question for you likes this.
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    It seems to me the dream has been sold and the people who bought into it been sold out.

    I think where societies go wrong is by allowing rich people into public institutions. They go around shouting about freedom and liberty but all they want is the freedom to fleece other peoples hard work.

    The banks should be owned by the people for the people just like all other institutions should be. Not freedom for profiteers, just freedom for the people who work together and make things happen for the good of all.
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    Quote Originally Posted by question for you View Post
    The banks should be owned by the people for the people just like all other institutions should be. Not freedom for profiteers, just freedom for the people who work together and make things happen for the good of all.
    People can't be that nice! there must be hidden agenda if that happen. How could people willingly work for others without expecting benefit?
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    Quote Originally Posted by msafwan View Post
    How could people willingly work for others without expecting benefit?
    How couldn't they ? That is called reciprocity. They benefit from his work, as he benefit from their. That had last for thousandths of millennium. Did I miss something ? Our 'modern' way to thinking that profit/benefit can be extracted from the operation is really dumb. That is a closed system. Nothing is created from nothing.
    Last edited by Boing3000; November 29th, 2012 at 02:36 PM.
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    Quote Originally Posted by msafwan View Post
    Quote Originally Posted by question for you View Post
    The banks should be owned by the people for the people just like all other institutions should be. Not freedom for profiteers, just freedom for the people who work together and make things happen for the good of all.
    People can't be that nice! there must be hidden agenda if that happen. How could people willingly work for others without expecting benefit?
    Yes it isn't about being nice, just wise and fair minded.

    Our current system has people working for little benefit to themselves but bigger benefits for people higher up the chain who do less work for more money.
    If governments stopped privatising institutions and companies to their wealthy friends then the profits from the companies would stay in the peoples kitty.
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    Quote Originally Posted by gonzales56 View Post
    The actual value of all things is always going to be dictated by people's beliefs. Its always about what people want and what they are willing to trade or do for it.
    I'm battling to follow your logic here, paper money is bad as it is worthless and gold is good because it is not, but all value is based on belief, so both values are based on belief, but gold is better because it has something other than belief behind it (is is "valuable" but paper money is not"), but all value is belief?

    And once again, just to confirm, you are against all cash money right?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    I'm battling to follow your logic here, paper money is bad as it is worthless and gold is good because it is not, but all value is based on belief, so both values are based on belief, but gold is better because it has something other than belief behind it (is is "valuable" but paper money is not"), but all value is belief?

    And once again, just to confirm, you are against all cash money right?
    The difference is obvious...

    Gold is and always has been considered attractive and 'special' and even magical and powerful. It is beuatiful and you can make all sorts of things with it that other desire, regardless of culture etc... people will always be willing to trade some of there excess product, for a little bit of gold or a rare and beutiful precious stone. These things have an intrinsic value.

    Paper trading notes only have value as long as the bank that printed it is willing to exchange the paper trading note for gold, and as long as that happens then people on the street are willing to accept the trading note in exchange for produce.

    The gold has a vastly more stable value than the paper.

    It even has a more stable value than food, as food rots.

    Ofcourse the value of gold can be hyped up or played down... but not as much as paper, whose entire value is based on hype and confidence.
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    Quote Originally Posted by question for you View Post
    Quote Originally Posted by river_rat View Post
    I'm battling to follow your logic here, paper money is bad as it is worthless and gold is good because it is not, but all value is based on belief, so both values are based on belief, but gold is better because it has something other than belief behind it (is is "valuable" but paper money is not"), but all value is belief?

    And once again, just to confirm, you are against all cash money right?
    The difference is obvious...

    Gold is and always has been considered attractive and 'special' and even magical and powerful. It is beuatiful and you can make all sorts of things with it that other desire, regardless of culture etc... people will always be willing to trade some of there excess product, for a little bit of gold or a rare and beutiful precious stone. These things have an intrinsic value.

    Paper trading notes only have value as long as the bank that printed it is willing to exchange the paper trading note for gold, and as long as that happens then people on the street are willing to accept the trading note in exchange for produce.

    The gold has a vastly more stable value than the paper.

    It even has a more stable value than food, as food rots.

    Ofcourse the value of gold can be hyped up or played down... but not as much as paper, whose entire value is based on hype and confidence.
    And that's it. They think gold and silver is worthless but, they forget or think nothing of its properties and how gold and silver, themselves, are commodities and are made into items people have always desired to own and put a high value on. Paper currency only has value by way of decree, by law, by threat of punishment if not used. Last time a checked, you do not need to have law, threat of punishment, to get people to have, hold and or use/utilize gold (at least not the vast majority of sane people).

    Remove the law, the threat, the punishment, and the fiat paper currency dies. That in itself explains it all.
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    Quote Originally Posted by river_rat View Post
    And once again, just to confirm, you are against all cash money right?
    Not at all.. For starters, I believe people and companies should have the right to sell whatever they have for whatever product or medium of exchange they want. If they wish to take paper in exchange for the things they have, so be it.

    What I do not agree with though is today's unbacked government fiat paper currency.
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  20. #120  
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    Quote Originally Posted by question for you View Post
    The difference is obvious...
    Its not the difference, its the logical inconsistency in the position I am questioning.

    Gold is and always has been considered attractive and 'special' and even magical and powerful. It is beuatiful and you can make all sorts of things with it that other desire, regardless of culture etc... people will always be willing to trade some of there excess product, for a little bit of gold or a rare and beutiful precious stone. These things have an intrinsic value.
    So were shells, beads, stones. So lets go back to the Rai standard.

    Paper trading notes only have value as long as the bank that printed it is willing to exchange the paper trading note for gold, and as long as that happens then people on the street are willing to accept the trading note in exchange for produce.
    And so what? This is a tautology - X only has value as long as people on the street are willing to accept X in exchange for produce.

    Ofcourse the value of gold can be hyped up or played down... but not as much as paper, whose entire value is based on hype and confidence.
    Everything is based on confidence - either confidence in gold or confidence in the state.

    Quote Originally Posted by gonzales56 View Post
    They think gold and silver is worthless but, they forget or think nothing of its properties and how gold and silver, themselves, are commodities and are made into items people have always desired to own and put a high value on. Paper currency only has value by way of decree, by law, by threat of punishment if not used. Last time a checked, you do not need to have law, threat of punishment, to get people to have, hold and or use/utilize gold (at least not the vast majority of sane people)
    Imagine I am an advanced alien race that has never seen gold - how do you prove to me that it is valuable?

    Anyway, lets look at the relative value of gold to silver:

    silver-gold-ratio.jpg

    This analysis suggests that gold is dramatically overvalued relative to silver - not great for a store of value now is it?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by gonzales56 View Post
    Not at all.. For starters, I believe people and companies should have the right to sell whatever they have for whatever product or medium of exchange they want. If they wish to take paper in exchange for the things they have, so be it.

    What I do not agree with though is today's unbacked government fiat paper currency.
    But this magical gold backed currency existed during the great depression??? So what did you have against the dollar as it existed in 1928?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    So, what articles should the fiat currency be backed? Food? Water? Medical services? We have no answer.
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    Quote Originally Posted by hokuto118 View Post
    So, what articles should the fiat currency be backed? Food? Water? Medical services? We have no answer.
    Well I'm not sure that's entirely true, we do have ways of backing our fiat currencies otherwise they wouldn't hold their value, the thing is we can't back currencies against one thing alone because the laws of supply and demand mean that if there ever became either an abundance or shortage of that particular thing backing our currencies they would all end up seriously skewed. So what we do have is a curious mix of real and intangible things that support our paper money. Ultimately though it is our governments responsibility and ability to back these currencies that allow them to keep their value, i.e. when a particular currency is losing value against others then usually the government of the country of that currency might step in to start buying up their own currency from the international markets to reduce the available trading supply and thus help shore up it's value.
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    Quote Originally Posted by hokuto118 View Post
    So, what articles should the fiat currency be backed? Food? Water? Medical services? We have no answer.
    You have the answer, NOTHING. Just a confidence it will be exchange again to something else. If you prefer some gold to be negociated with gold owner, go for it.
    Personally I'd prefer to by backed by the laws of a government of millions of people, or even the few hundreds that live nearby and can provide me with products, and doesn't gives a sh*t about a yellow weak metal.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by question for you View Post
    The difference is obvious...
    Its not the difference, its the logical inconsistency in the position I am questioning.
    We can all see that, I just wished to point out that the logic of boing on these point is not as inconsistent as you first percieved. Gold is intrinsically more valuable than paper to every human being who ever lived... It's not perfect as a standard but what better is there? IDK.

    Quote Originally Posted by river_rat View Post
    Gold is and always has been considered attractive and 'special' and even magical and powerful. It is beuatiful and you can make all sorts of things with it that other desire, regardless of culture etc... people will always be willing to trade some of there excess product, for a little bit of gold or a rare and beutiful precious stone. These things have an intrinsic value.
    So were shells, beads, stones. So lets go back to the Rai standard.
    To a person who cannot work with gold or metal then these things might be more valuable. Without the ability to do jewellry then gold loses a lot of it's value. I don't know what the Rai standard is, will have to look it up to see if your being sarcastic or earnest with that comment.

    Quote Originally Posted by river_rat View Post
    Ofcourse the value of gold can be hyped up or played down... but not as much as paper, whose entire value is based on hype and confidence.
    Everything is based on confidence - either confidence in gold or confidence in the state.?
    But somethings more so than others. For example papers value is more based on hype than Golds.

    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    They think gold and silver is worthless but, they forget or think nothing of its properties and how gold and silver, themselves, are commodities and are made into items people have always desired to own and put a high value on. Paper currency only has value by way of decree, by law, by threat of punishment if not used. Last time a checked, you do not need to have law, threat of punishment, to get people to have, hold and or use/utilize gold (at least not the vast majority of sane people)
    Imagine I am an advanced alien race that has never seen gold - how do you prove to me that it is valuable?
    We need more knowledge about the motivations of these aliens before we create a successful sales pitch.

    Possible angles are 'this is one of the rarest ellements we have', 'it's durable', 'we consider it beuatiful', 'it's good for getting people to work for you', 'you can enslave the Human race with this stuff'... 'it has properties that our advanced minds have not discovered, you advanced gentlealiens will be able to find many more uses for this rare substance than we managed', 'the value of this substance has consistently grown on our planet' That kind of thing.

    How will the sales pitch for bank notes that can be used to trade for gold at anytime in the forseeable future go?

    It perishes, it burns easy, it's cheap, it's not naturally occuring, it has an image of a 'lowly' Human on it looking rather grandiouse, it's value has consistently decreased more so than any other 'wealth', and by the time you get back from your voyage to the andromena supernoid constelation, the bank that printed it will have probably perished too. On the plus side, the future Time Team crew will be very interested in seeing your well preserved early 3rd millenia paper trading notes.

    Quote Originally Posted by river_rat View Post
    Anyway, lets look at the relative value of gold to silver:

    silver-gold-ratio.jpg

    This analysis suggests that gold is dramatically overvalued relative to silver - not great for a store of value now is it?
    I'm sure it is. For what ever reasons, and we all know them, demand is higher for gold.


    Have you ever heard the expression pounds sterling? As in sterling Silver... I wonder if this means pounds are or were ever backed by Silver?
    Last edited by question for you; November 30th, 2012 at 12:55 PM.
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    Quote Originally Posted by Chrisgorlitz View Post
    the thing is we can't back currencies against one thing alone because the laws of supply and demand mean that if there ever became either an abundance or shortage of that particular thing backing our currencies they would all end up seriously skewed. So what we do have is a curious mix of real and intangible things that support our paper money..
    Your worries are correct.

    I have a wild idea. Can we hook the value of a currency on a basket of necessities? And the weights are inversely related to their market prices. This may prevent skewed demand of a good. However, all these necessities may also be hyped, and this may cause humanitarian problems, such as hunger.
    Last edited by hokuto118; November 30th, 2012 at 10:14 AM.
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    Quote Originally Posted by Boing3000 View Post
    Quote Originally Posted by hokuto118 View Post
    So, what articles should the fiat currency be backed? Food? Water? Medical services? We have no answer.
    You have the answer, NOTHING. Just a confidence it will be exchange again to something else. If you prefer some gold to be negociated with gold owner, go for it.
    Personally I'd prefer to by backed by the laws of a government of millions of people, or even the few hundreds that live nearby and can provide me with products, and doesn't gives a sh*t about a yellow weak metal.
    I agree. But the laws of a government of millions of people are backed by another confidence. How could you exchange the products from your few hundreds that live nearby? What is the medium of exchange?

    I think the ultimate solution is that everyone has a machine which can produce everything he needs. Therefore, people do not need exchange for goods, and there is no hype and cheat. Economists should study natural and applied sciences only. They should not study distribution of products, but production of them. This kidding seems meaningful. I do not know it is right or wrong.
    Last edited by hokuto118; November 30th, 2012 at 10:13 AM.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    Not at all.. For starters, I believe people and companies should have the right to sell whatever they have for whatever product or medium of exchange they want. If they wish to take paper in exchange for the things they have, so be it.

    What I do not agree with though is today's unbacked government fiat paper currency.
    But this magical gold backed currency existed during the great depression??? So what did you have against the dollar as it existed in 1928?
    The federal reserve notes in 1928 were counterfeit. They were a lie. They were backed by nothing.

    The gold standard did not exist in 1928, and thus the confiscation of all gold from all the people, and not the giving of gold by the government to the people who wanted their notes to protect their gold and then to obtain their gold. The government did not only NOT have the gold they swore they did, they did not even have the number of counterfeit notes they promised they had. This crime, this counterfeiting, this gold theft, those fake and false markets, that is what caused the great depression.
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    Quote Originally Posted by hokuto118 View Post
    Quote Originally Posted by Chrisgorlitz View Post
    the thing is we can't back currencies against one thing alone because the laws of supply and demand mean that if there ever became either an abundance or shortage of that particular thing backing our currencies they would all end up seriously skewed. So what we do have is a curious mix of real and intangible things that support our paper money..
    Your worries are correct.

    I have a wild idea. Can we hook the value of a currency on a basket of necessities? And the weights are inversely related to their market prices. This may prevent skewed demand of a good. However, all these necessities may also be hyped, and this may cause humanitarian problems, such as hunger.
    Well it's an interesting idea, though there are some drawbacks in as much as currencies would be subject to manipulation of the necessities backing them as the combined world supply is likely to be less valuable than the total amount of currency that exists with the worlds richest countries, also you would effectively be 'price fixing' the necessities themselves, which is never good for the consumer or free trade.
    Last edited by Ascended; November 30th, 2012 at 12:36 PM. Reason: typo
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    ~sorry for the long rant~

    The actual value of all things is always going to be dictated by people's beliefs. Its always about what people want and what they are willing to trade or do for it.
    The monetary detachment from reality and functionality, is emblematic of why this archaic money worshiping civilization is going down the drain and needs to be replaced. When trillions are allocated to fuming ponzi derivatives because people think they will get to trade it for more, in essence, speculation trumping actual production, while millions starve because they dont have access to basic production, or people without a house are standing in the rain staring at an empty foreclosed house thats also sitting there (and while the eco-systems that makes life possible are destroyed or poisoned to get that extra derivative that people think will get them more of what people think will have speculative value), you have to wonder.

    Wealth is not gold or paper, its access to production. You cant eat or drink a gold bar, you cant breathe it if there's no oxygen, nor sit on it to harvest a field or to cross the ocean, or stare at it to see bacterias or galaxies, or use it to communicate with others on the other side of the planet, or plug a TV on it, or place a satelite on a gold bar and hope its catapulted into orbit by the intrinsic value of gold. Gold has about the same socially-induced-arbitrary-value as Dr.Wanton's Wonderous Snake Oil Placebo Elixir, it has less Functional value than food, water, oxygen, a tractor, a plane, a hammer, a house, a microscope, a rocket, an encyclopedia. Thats one of that many flaws of the monetary system, it induces delusional speculative obsession for which ever arbitrary meaningless conduit that happens to be used (gold, paper money, whatever) to the point where people loose sight of functional reality (in addition to the many other problems like corruption, conflicts of interests and concentration of influence), also loosing sight of other people, society, cooperation, and ecosystems; no one even stops and thinks what is the Functional use for a derivative nor that there are people that are dying because they lack basic functional production, they just say "hey if I get that piece of fictional smoke and mirrors "value", I can sell it for more to someone that thinks someone else will want the smoke and mirror...".

    Theres nothing abnormal with the monetary mindset that virtually everyone suffers from, its as normal as it is to burn an old woman alive on a pire because people think she's in league with a mythological character with horns and a fork (at a point in time where society thinks thats "normal"), we have been raised, breathe, soak in this society which is the outcome of archaic societies falling down the stairs of centuries, bing bang, plock, klank, here, thats the society we ended up with. But now, the internet grants us access to broader information and diverging points of views and the opportunity to pause and reconsider the foundations of our civilization, unlike feudal peasants of the middle ages, we can look back an evaluate our civilization with new understanding and insights.

    Gold is speculation, you are not allocating resources to building a production facitly, or "investing" but speculating, if everyones stops their dayjob to buy gold or speculate, civilization would collapse.

    So gold has no intrinsic value, gold backed money can still vanish with a fractional reserve system, gold has to be paid for which is a racket and a waste of human activity because you are allocating activity and production for an arbitrary social figment while not allocating this activity to functional production. Imagine you are on a Mars colony, and someone says "hey instead of building a backup emergency power generator, expanding the hydroponics and building a community center, lets go out and start building the infrastructure for and start spending hundreds of hours in tunnels for getting gold, cause we need sound money". What matters more is who controls the money and who gets it, and what matters more than money is functional production. If you are parachuted on Mars you dont want gold bars or a bag filled with derivatives, you want air and water recycling, hydroponics, 3d printers that can print parts and tools, power generators, etc)
    Last edited by icewendigo; November 30th, 2012 at 01:10 PM.
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    Quote Originally Posted by icewendigo View Post
    ~sorry for the long rant~

    The actual value of all things is always going to be dictated by people's beliefs. Its always about what people want and what they are willing to trade or do for it.
    The monetary detachment from reality and functionality, is emblematic of why this archaic money worshiping civilization is going down the drain and needs to be replaced. When trillions are allocated to fuming ponzi derivatives because people think they will get to trade it for more, in essence, speculation trumping actual production, while millions starve because they dont have access to basic production, or people without a house are standing in the rain staring at an empty foreclosed house thats also sitting there (and while the eco-systems that makes life possible are destroyed or poisoned to get that extra derivative that people think will get them more of what people think will have speculative value), you have to wonder.

    Wealth is not gold or paper, its access to production. You cant eat or drink a gold bar, you cant breathe it if there's no oxygen, nor sit on it to harvest a field or to cross the ocean, or stare at it to see bacterias or galaxies, or use it to communicate with others on the other side of the planet, or plug a TV on it, or place a satelite on a gold bar and hope its catapulted into orbit by the intrinsic value of gold. Gold has about the same socially-induced-arbitrary-value as Dr.Wanton's Wonderous Snake Oil Placebo Elixir, it has less Functional value than food, water, oxygen, a tractor, a plane, a hammer, a house, a microscope, a rocket, an encyclopedia. Thats one of that many flaws of the monetary system, it induces delusional speculative obsession for which ever arbitrary meaningless conduit that happens to be used (gold, paper money, whatever) to the point where people loose sight of functional reality (in addition to the many other problems like corruption, conflicts of interests and concentration of influence), also loosing sight of other people, society, cooperation, and ecosystems; no one even stops and thinks what is the Functional use for a derivative nor that there are people that are dying because they lack basic functional production, they just say "hey if I get that piece of fictional smoke and mirrors "value", I can sell it for more to someone that thinks someone else will want the smoke and mirror...".

    Theres nothing abnormal with the monetary mindset that virtually everyone suffers from, its as normal as it is to burn an old woman alive on a pire because people think she's in league with a mythological character with horns and a fork (at a point in time where society thinks thats "normal"), we have been raised, breathe, soak in this society which is the outcome of archaic societies falling down the stairs of centuries, bing bang, plock, klank, here, thats the society we ended up with. But now, the internet grants us access to broader information and diverging points of views and the opportunity to pause and reconsider the foundations of our civilization, unlike feudal peasants of the middle ages, we can look back an evaluate our civilization with new understanding and insights.

    Gold is speculation, you are not allocating resources to building a production facitly, or "investing" but speculating, if everyones stops their dayjob to buy gold or speculate, civilization would collapse.

    So gold has no intrinsic value, gold backed money can still vanish with a fractional reserve system, gold has to be paid for which is a racket and a waste of human activity because you are allocating activity and production for an arbitrary social figment while not allocating this activity to functional production. Imagine you are on a Mars colony, and someone says "hey instead of building a backup emergency power generator, expanding the hydroponics and building a community center, lets go out and start building the infrastructure for and start spending hundreds of hours in tunnels for getting gold, cause we need sound money". What matters more is who controls the money and who gets it, and what matters more than money is functional production. If you are parachuted on Mars you dont want gold bars or a bag filled with derivatives, you want air and water recycling, hydroponics, 3d printers that can print parts and tools, power generators, etc)
    Not really the case but, you are entitled to your opinion and I am tired of kicking this dead horse for now. For that, I do apologize to you. We are not cattle, we are complex, we require more than water and food, and what is intrinsically valuable for cows or lab rats does not apply or set a limit for humans. You sell humans short and you undervalue and underestimate their needs, desires and wants, as well as their need and drive to obtain them.

    Again, there is no difference between the need or use of gold in space craft and the need or use of gold around ones neck or crowned upon their heads. Both are, have been, and will continue to be part of the human condition. Golds value is in its intrinsic properties. That is what gives it its intrinsic value.
    Last edited by gonzales56; November 30th, 2012 at 06:49 PM.
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    Quote Originally Posted by gonzales56 View Post
    Again, there is no difference between the need or use of gold in space craft and the need or use of gold around ones neck or crowned upon their heads. Both are, have been, and will continue to be part of the human condition. Golds value is in its intrinsic properties. That is what gives it its intrinsic value.
    Then why don't you try to sell this idea to people that actually would buy this fable ? You seems to have endured a very strong conditionement in your childhood by all this tales of king and pirates with all their chest full of gold/diamond and the likes. Believing in fairy tales is in fact one the the very few distinctions between humans and other species. But, minds you, I will try to have a more mature approach of economics and 'spend' my life 'exchanging' with people (ideas or goods, or good ideas)
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    Gold has intrinsic or application value actually. It can be used in jewelry, medicine, electrons and commercial industry.

    Gold - Wikipedia, the free encyclopedia
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    Quote Originally Posted by Boing3000 View Post
    Quote Originally Posted by gonzales56 View Post
    Again, there is no difference between the need or use of gold in space craft and the need or use of gold around ones neck or crowned upon their heads. Both are, have been, and will continue to be part of the human condition. Golds value is in its intrinsic properties. That is what gives it its intrinsic value.
    Then why don't you try to sell this idea to people that actually would buy this fable ? You seems to have endured a very strong conditionement in your childhood by all this tales of king and pirates with all their chest full of gold/diamond and the likes. Believing in fairy tales is in fact one the the very few distinctions between humans and other species. But, minds you, I will try to have a more mature approach of economics and 'spend' my life 'exchanging' with people (ideas or goods, or good ideas)


    Again, you have the right to believe that gold, silver, diamonds, etc., are worthless. That's your prerogative.
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    Quote Originally Posted by gonzales56 View Post
    The federal reserve notes in 1928 were counterfeit. They were a lie. They were backed by nothing.
    Explain to me how the dollar was not convertible at 1.5g of gold per dollar in 1928.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    The federal reserve notes in 1928 were counterfeit. They were a lie. They were backed by nothing.
    Explain to me how the dollar was not convertible at 1.5g of gold per dollar in 1928.
    Because there was far more paper dollars than there was gold. The paper dollars were counterfeit and the government was never going to exchange them all for gold, never. In 1934 they finished the theft by confiscate all the gold the american people had in banks, in their homes, and in their pockets.
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    Quote Originally Posted by gonzales56 View Post
    Because there was far more paper dollars than there was gold.
    So you don't like the idea of a gold reserve and want 100% convertibility? You do realize that the dollar has never been 100% convertible to gold or silver outside times of sever global economic stress right? The gold reserve ratio has always bounced around 10% to 40%.

    But ignoring that fact, how does that effect that on the margin the dollar was convertible to gold at 1.5g per dollar?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    Because there was far more paper dollars than there was gold.
    So you don't like the idea of a gold reserve and want 100% convertibility? You do realize that the dollar has never been 100% convertible to gold or silver outside times of sever global economic stress right? The gold reserve ratio has always bounced around 10% to 40%.

    But ignoring that fact, how does that effect that on the margin the dollar was convertible to gold at 1.5g per dollar?
    You do realize, in america, gold, silver and copper coin was all the treasury was allowed to stamp into money, right? Money was gold, silver and copper, 100%. Any note or contract written to anyone on paper was a promise to pay the bearer of that note/contract x amount of gold, silver or copper. It was not a promise/contract to pay the bearer 10 to 40%. The theft of the gold by the government through issuing of counterfeit notes/contracts is not and was not a matter of just and fair practice as you are and have been stating. It was theft, plan and simple.

    The United States of America stole at least 700 million troy ounces of gold from the American people. What is that, roughly 30-35% of the total amount of gold ever mined and refined throughout the entire history of mankind?

    You may not give two piles of poo about that theft but, do you really think the theft stopped with the gold? The foreign gold standard removal for the US in the 1970s, as well as the removal and theft of all silver coins in the 1960s by the US government, has allowed the US government, over the last 40 years, to focus and work on stealing everything else from the American people.

    The American people, as well as the rest of the worlds people, are being mined for their wealth and labor. It is being devalued and stolen. You do not have to see it, you do not even have to agree with it but, it is a reality.
    Last edited by gonzales56; December 3rd, 2012 at 02:06 PM.
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    Quote Originally Posted by gonzales56 View Post
    The United States of America stole at least 700 million troy ounces of gold from the American people. What is that, roughly 30-35% of the total amount of gold ever mined and refined throughout the entire history of mankind?
    Wow, interesting. Ι am curious where are the data '700 million' and '30-35% 'from?

    If currency was backed by anything desirable, did the economy have depression in 1920s?

    If the gold standard did not exist in 1928, where was the gold?
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  40. #140  
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    Quote Originally Posted by gonzales56 View Post
    You do realize, in america, gold, silver and copper coin was all the treasury was allowed to stamp into money, right? Money was gold, silver and copper, 100%. Any note or contract written to anyone on paper was a promise to pay the bearer of that note/contract x amount of gold, silver or copper. It was not a promise/contract to pay the bearer 10 to 40%. The theft of the gold by the government through issuing of counterfeit notes/contracts is not and was not a matter of just and fair practice as you are and have been stating. It was theft, plan and simple.
    This doesn't answer the question, how on the margin was the dollar not convertible to gold at 1.5g per dollar.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by hokuto118 View Post
    Quote Originally Posted by gonzales56 View Post
    The United States of America stole at least 700 million troy ounces of gold from the American people. What is that, roughly 30-35% of the total amount of gold ever mined and refined throughout the entire history of mankind?
    Wow, interesting. Ι am curious where are the data '700 million' and '30-35% 'from?

    If currency was backed by anything desirable, did the economy have depression in 1920s?

    If the gold standard did not exist in 1928, where was the gold?
    link
    What counted was the soaring US
    stock. Before the price rise to $35 the US held 6,070 m.t., by 1938 they had 11,340 m.t.,
    and by 1942 20,205 m.t., with the ultimate peak just over 22,000 m.t. in the late 1940s and
    early 1950s (being 75% of all monetary gold by then and half of all gold ever mined).

    What is most important to note is not the claims people make, or how and why but, to look at the numbers, specifically the increase in US government holdings/stockpile of gold. The US Government went from 6,000 metric tonnes (which they mostly obtained/acquired by printing counterfeit paper currency pre-1934) pre-1934 to 20,000 metric tonnes by 1942 (after their open decree and open policy of theft in 1934).

    Like with all government numbers, the 20,000 mt does not add up either. It clearly was much higher.
    Last edited by gonzales56; December 4th, 2012 at 11:24 AM.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    You do realize, in america, gold, silver and copper coin was all the treasury was allowed to stamp into money, right? Money was gold, silver and copper, 100%. Any note or contract written to anyone on paper was a promise to pay the bearer of that note/contract x amount of gold, silver or copper. It was not a promise/contract to pay the bearer 10 to 40%. The theft of the gold by the government through issuing of counterfeit notes/contracts is not and was not a matter of just and fair practice as you are and have been stating. It was theft, plan and simple.
    This doesn't answer the question, how on the margin was the dollar not convertible to gold at 1.5g per dollar.
    There is no margin, they either have the gold to back the paper or the paper is counterfeit. The great depression happened because people like you who talk about "on the margins", which is a ponzi scheme, theft, thought the people would never turn in their counterfeit government issued paper for the real deal (gold). The paper was not convertible to gold and thus the collapse of the economic system, the theft of the peoples gold, the decree that the american people could not own, have or convert (turn in) any paper notes for constitutional coin/money/gold, they could only exchange/turn in their counterfeit currency for fiat paper the government was now selling as "dollars" themselves, and not notes, deposit slips, contracts or promises to pay/exchange for real dollars/money as the paper had been prior to 1934.

    Prior to 1934, there was no such thing as a paper dollar. The paper was a bank note, a slip of paper showing a deposit was made of real dollars, a government guarantee that x amount of dollars (gold and silver) was deposited and if you had that bank note/deposit slip, anyone could go to the bank or treasury and get their deposit/money/dollars out of the bank or treasury.
    Last edited by gonzales56; December 4th, 2012 at 11:53 AM.
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  43. #143  
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    Quote Originally Posted by gonzales56 View Post
    There is no margin, they either have the gold to back the paper or the paper is counterfeit.
    I think we have different ideas of what on the margin means - If in 1928 you went with one million dollar notes and asked for gold how would you not receive it? Gold is not some magical metal and in the gold standard it is this convertibility which controls the money supply.

    Prior to 1934, there was no such thing as a paper dollar. The paper was a bank note, a slip of paper showing a deposit was made of real dollars, a government guarantee that x amount of dollars (gold and silver) was deposited and if you had that bank note/deposit slip, anyone could go to the bank or treasury and get their deposit/money/dollars out of the bank or treasury.
    Which is why I am asking about 1928...
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    There is no margin, they either have the gold to back the paper or the paper is counterfeit.
    I think we have different ideas of what on the margin means - If in 1928 you went with one million dollar notes and asked for gold how would you not receive it? Gold is not some magical metal and in the gold standard it is this convertibility which controls the money supply.

    Prior to 1934, there was no such thing as a paper dollar. The paper was a bank note, a slip of paper showing a deposit was made of real dollars, a government guarantee that x amount of dollars (gold and silver) was deposited and if you had that bank note/deposit slip, anyone could go to the bank or treasury and get their deposit/money/dollars out of the bank or treasury.
    Which is why I am asking about 1928...
    And I have told you over and over again.... in 1928 the counterfeit notes did not represent deposits of gold, this is what makes them counterfeit notes, and the people could not take those deposit slips/notes into the bank/s and get their gold.. It was not there, it was already stolen. As long as only a few people, a very small percentage of the people, went to the banks and treasury and made a withdraw then the theft and counterfeit deposit notes could be maintained and issued in secret. When the people started going into the banks and treasury in 1929 and beyond, they realized there was theft going on, and it is the fractional gold reserves and then fractional deposit slips/fed notes of deposit slips/fed notes themselves that caused the people to start a run on the banks and it led to the great depression, the gold confiscation and then the creation of a new fiat dollar. .
    Last edited by gonzales56; December 5th, 2012 at 04:40 AM.
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    What mechanism of money creation do you prefer, in face of raising money demand?
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    Quote Originally Posted by hokuto118 View Post
    What mechanism of money creation do you prefer, in face of raising money demand?


    What do you mean by "raising money demand"?
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    Quote Originally Posted by gonzales56 View Post
    What do you mean by "raising money demand"?
    I mean how can we deal with the raising money demand. In the long-run demand and supply model of money, money supply curve is vertical and fixed due to 100% backing by gold or silver. The demand for money is rising because of rising transaction need and liquidity need as the human population is growing. If money supply is vertically fixed and money demand is raising, cost of using money is high. High interest rate will constrain the activities in the economy.

    So, what mechanism of money creation is preferable?
    Last edited by hokuto118; December 7th, 2012 at 03:32 AM.
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    Quote Originally Posted by hokuto118 View Post
    Quote Originally Posted by gonzales56 View Post
    What do you mean by "raising money demand"?
    I mean how can we deal with the raising money demand. In the long-run demand and supply model of money, money supply curve is vertical and fixed due to 100% backing by gold or silver. The demand for money is rising because of rising transaction need and liquidity need as the human population is growing. If money supply is vertically fixed and money demand is raising, cost of using money is high. High interest rate will constrain the activities in the economy.

    So, what mechanism of money creation is preferable?
    The world is estimated to be roughly 160 trillion dollars in debt yet only produces 60 trillion worth of products, goods and services each year. Today's fiat currencies are not produced to service the need of a medium of exchange. They are produced to take wealth, assets and fairly priced labor away from common people.

    Gold, silver and copper are still the best way, even today, to help protect common people from the abuse and abuses of governments and their friends. These things have to be mined, they cannot be created out of thin air by governments, and gold, silver and copper can keep up with production.

    Gold, silver and copper will not only keep up with the needs and wants of people, they also help prevent over population and the over production of products, goods and services. Today's fiat currencies do the exact opposite.
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    A true paradox is the system of COLA (cost of living adjustment). This may be timely as it is being discussed by congress.

    Current COLA is measured as a percentage, which is then used to calculated the actual increase in dollars. This system is so unbalanced it is unbelievable why this has not yet been addressed.

    Allow me an example.
    When the average cost of living has risen say, +600.00 (on a previous year when cost of living @ 30,000.00). This equals 2% increase in COL.
    b) This 2% increase will be added to your paycheck as a COLA and will be calculated against your current salary/income.

    The unintended consequence is that in practice this results in a totally scewed distribution of wealth.
    If you make 30,000 a year your 2% COLA will equal 600 dollars which is the actual cost of living increase.
    If you make 600,000 a year your 2% COLA will equal 6000 dollars which is a 5400 dollar profit.

    My simple solution. If the actual cost of living increases by 600 dollars, then the COLA should be distributed as 600 dollars, not as a percentage of income.
    The idea is to maintain a fair Costs of Living, not a Cost of Lifestyle.
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    So you think wealthy people shouldn't maintain their cost of living? You think the things they buy arent' considered in the COLA? COA adjustments functionally have no effect on the distribution of wealther, in fact given more social programs keyed to COA changes benefit the poor as a % of income, the COA adjustments are already heavily biased AGAINST the wealthy.
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    Quote Originally Posted by Lynx_Fox View Post
    So you think wealthy people shouldn't maintain their cost of living? You think the things they buy arent' considered in the COLA? COA adjustments functionally have no effect on the distribution of wealther, in fact given more social programs keyed to COA changes benefit the poor as a % of income, the COA adjustments are already heavily biased AGAINST the wealthy.
    Are you satisfied with a situation where a wealthy person should profit far in excess of the "actual cost" in dollars?

    You are overlooking the fact that 600 dollars is 2% of 30,000 dollars. It is only .2% of a person earning 300,000 dollars. Yet this person "receives" a 2% COLA, just like the guy making 30,000.
    I'm sorry, no matter how this can be argued, current COLA offers an inherent advantage to the wealthy.

    As I said COLA means cost of "living" not cost of "lifestyle".
    Last edited by Write4U; December 18th, 2012 at 08:55 PM.
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    Quote Originally Posted by Write4U View Post
    Quote Originally Posted by Lynx_Fox View Post
    So you think wealthy people shouldn't maintain their cost of living? You think the things they buy arent' considered in the COLA? COA adjustments functionally have no effect on the distribution of wealther, in fact given more social programs keyed to COA changes benefit the poor as a % of income, the COA adjustments are already heavily biased AGAINST the wealthy.
    Are you satisfied with a situation where a wealthy person should profit far in excess of the "actual cost" in dollars?
    Absolutely yes. As a % of wealth, which is what counts, they have no advantage in COA adjustments.

    I'm sorry, no matter how this can be argued, current COLA offers an inherent advantage to the wealthy.
    How so, what does it apply to that favors the wealthy? The wealthy arent' eligible or it's caps at a lower % of their income for most social programs COA adjust for.

    As I said COLA means cost of "living" not cost of "lifestyle".
    Incorrect. It's a adjustment of cost to maintain a particular lifestyle--whether that be a family of five living in a broken down efficiency apartment, or the family across the tracks living in their 5000 square foot home with marble floors and a live in maid.
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  53. #153  
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    I am sorry, but we are not talking about any percentages at all except in the adjustment.

    From wiki,

    Cost of Living

    Most economists and compensation analysts would consider the idea of predetermined future "cost of living increases" to be misleading for two reasons: (1) For most recent periods in the industrialized world, average wages have actually increased faster than most calculated cost-of-living indexes[citation needed], reflecting the influence of rising productivity, efficiency wages, and worker bargaining power rather than simply living costs, and (2) most cost-of-living indexes (see above) are not forward-looking, but instead compare current or historical data.[citation needed]

    Cost of living allowance is equal to the nominal interest minus the real interest rate
    If I make 20,000 my COLA would be 400.00 while the actual cost is 600.00. I lose 200.00 in actual dollars.
    Last edited by Write4U; December 19th, 2012 at 12:12 AM.
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  54. #154  
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    Quote Originally Posted by Write4U View Post
    If I make 20,000 my COLA would be 400.00 while the actual cost is 600.00. I lose 200.00 in actual dollars.
    And if I make 200,000 my COLA would be 4000.00 while the actual cost is 6000.00. I lose 2000.00 in actual dollars.

    That's why it's done as a % and not in actual dollars, because cost of goods go up across the board, not just for things less well off purchase.


    Where most social programs account for your concern is by setting eligibility points based on actual dollars so those not in need of providing basic good for their families don't get those programs.
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  55. #155  
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    Quote Originally Posted by Lynx_Fox View Post
    Quote Originally Posted by Write4U View Post
    If I make 20,000 my COLA would be 400.00 while the actual cost is 600.00. I lose 200.00 in actual dollars.
    And if I make 200,000 my COLA would be 4000.00 while the actual cost is 6000.00. I lose 2000.00 in actual dollars.

    That's why it's done as a % and not in actual dollars, because cost of goods go up across the board, not just for things less well off purchase.


    Where most social programs account for your concern is by setting eligibility points based on actual dollars so those not in need of providing basic good for their families don't get those programs.
    No it doesn't
    Cost of living increases result from market conditions and does not include the cost of a luxury yacht. It has nothing to do with income. Only in the COLA does income become the determining factor of how much youget back.

    When the cost of living has risen 600.00 in actual dollars, that cost of living increase applies to all consumers.

    A millionaire has a cost of living increase of 600, just like a guy making 12,000. The milionaire gets back 6000 while the guy making 12,000 gets back $200, which is less than the ACTUAL cost of living increase in dollars.
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  56. #156  
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    [QUOTE=Write4U;377687]
    Quote Originally Posted by Lynx_Fox View Post
    Quote Originally Posted by Write4U View Post
    If I make 20,000 my COLA would be 400.00 while the actual cost is 600.00. I lose 200.00 in actual dollars.
    And if I make 200,000 my COLA would be 4000.00 while the actual cost is 6000.00. I lose 2000.00 in actual dollars.

    That's why it's done as a % and not in actual dollars, because cost of goods go up across the board, not just for things less well off purchase.

    Where most social programs account for your concern is by setting eligibility points based on actual dollars so those not in need of providing basic good for their families don't get those programs.
    No it doesn't
    Cost of living increases result from market conditions of basic living costs and does not include the cost of a luxury yacht. It has nothing to do with income. Only in the Adjustment does income become the determining factor of how much you get back. The more you make the more you get back, even as your cost of living goes up 600.00

    When the cost of living has risen 600.00 in actual dollars, that cost of living increase applies to all consumers.

    A millionaire has a cost of living increase of 600, just like a guy making 12,000. The milionaire gets back 6000 while the guy making 12,000 gets back $200, which is less than the ACTUAL cost of living increase in dollars
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    It gets applied to income test for many programs.

    While you are correct COLA wouldn't adjust to yatchs, it would include the changing cost of top end cars a wealthy person might buy, or the rent on that penthouse apartment. It's most based on CPI surveys: Here's a bit of it here:
    What goods and services does the Consumer Price Index (CPI) cover?

    And I still don't know what you're driving at. Even rereading your comment it seems like a basic misunderstanding of arithmatic %.
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    Quote Originally Posted by Write4U View Post
    A true paradox is the system of COLA (cost of living adjustment). This may be timely as it is being discussed by congress.

    Current COLA is measured as a percentage, which is then used to calculated the actual increase in dollars. This system is so unbalanced it is unbelievable why this has not yet been addressed.

    Allow me an example.
    When the average cost of living has risen say, +600.00 (on a previous year when cost of living @ 30,000.00). This equals 2% increase in COL.
    b) This 2% increase will be added to your paycheck as a COLA and will be calculated against your current salary/income.

    The unintended consequence is that in practice this results in a totally scewed distribution of wealth.
    If you make 30,000 a year your 2% COLA will equal 600 dollars which is the actual cost of living increase.
    If you make 600,000 a year your 2% COLA will equal 6000 dollars which is a 5400 dollar profit.

    My simple solution. If the actual cost of living increases by 600 dollars, then the COLA should be distributed as 600 dollars, not as a percentage of income.
    The idea is to maintain a fair Costs of Living, not a Cost of Lifestyle.
    It is not just that, the numbers are manipulated and played with to understate inflation. Now, Obama and company are going to manipulate the numbers even lower.

    CNN
    "Mr Obama agreed to apply a less generous measure of inflation to government calculation, which would result in lower benefits in the Social Security pension scheme over time"
    Last edited by gonzales56; December 19th, 2012 at 09:08 AM.
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    Quote Originally Posted by Lynx_Fox View Post
    It gets applied to income test for many programs.

    While you are correct COLA wouldn't adjust to yatchs, it would include the changing cost of top end cars a wealthy person might buy, or the rent on that penthouse apartment. It's most based on CPI surveys: Here's a bit of it here:
    What goods and services does the Consumer Price Index (CPI) cover?

    And I still don't know what you're driving at. Even rereading your comment it seems like a basic misunderstanding of arithmatic %.
    Try again.
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    Quote Originally Posted by Write4U View Post
    My simple solution. If the actual cost of living increases by 600 dollars, then the COLA should be distributed as 600 dollars, not as a percentage of income.The idea is to maintain a fair Costs of Living, not a Cost of Lifestyle.
    I think you mean the 600,000-earner and 30000-earner both suffer 600-dollar increase in living costs. If the 600,000-earner gets 2% COLA from the employment contracts, he will profit 5400 dollars. Right?

    Your solution might balance the advantages among various levels of earners, if the index reflects the true cost of living. However, if the 600,000-earner gets 600 dollars from the employment contracts, his boss will get the 5400-dollar benefit. I guess most bosses are wealthy. Unfortunately, this method still benefits the rich.

    In my city's economy, we even still have no such COLA, and suffer more..........
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    Quote Originally Posted by Write4U View Post
    Try again.
    Read how CPI is put together; I provided the link.

    "
    • FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals and snacks);
    • HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture);
    • APPAREL (men's shirts and sweaters, women's dresses, jewelry);
    • TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance);
    • MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services);
    • RECREATION (televisions, cable television, pets and pet products, sports equipment, admissions);
    • EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
    • OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses)."
    It's surveys of all those expenses above. A question about your car payment, whether that be your 2nd hand Toyota Corola, or your Jaguar; your educational expense at your community college or Yale; your cost for the Goodwill suit, or the custom fitting $500 shirts--it's about average cost to maintain your current cost of your particular life style. Many adjustments stem off those CPI surveys, including COLA adjustments. Most income by wealthy isn't adjusted for COLA anyhow--the universal programs (e.g. SS) are a tiny bit of their income and their retirement salaries/pensions typically don't come from government jobs.

    --
    I'm glad Obama is showing some grit. He can be even more pragmatic than usual now faced by the realities of future debt projections. I'm not happy he's offered to make the cut line $400K/year instead of $250K/year--that hurts our near term debt accumulation. I'm still hopping we go over the cliff and am writing my representatives this week to tell them as much.
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    Quote Originally Posted by Lynx_Fox View Post
    I'm still hopping we go over the cliff and am writing my representatives this week to tell them as much.
    Hopefully nothing gets done.. If they do nothing then the dollar will strengthen, the US credit rating will not go down but up and the working american people will be better off in the medium to long run..
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