Thread: Economic paradoxes

Hello there, this is my first post on the forum. So I'll try to be a bit entertaining..


At some stages I must admit I found Economy tiring and boring, and that's why I intend to force myself to find something interesting to keep me attached to it. Economic paradoxes indeed did their job, there are bunch of interesting paradoxes about Economy, I'll share few with you, and I'll try with other Economists and non Economists to solve them.

Paradox Water- Diamond

''Things that have the biggest usefulness are often free or cheap, and the things that have the lowest usefulness are often expensive''

In this case we talk about Water and Diamond. As we know, a Diamond have a very low or doesn't have a usefulness at all, but it's cost is an enormous. While the Water is 'free' and we all know how useful water is.

This paradox is one of the basic pointers how the things in Economy aren't always rational. A.Smith wrote ''Nothing is more useful than water, but we can hardly get something in exchange for it, while the Diamond got an extremely low usefulness but we can get a lot in exchange for it''.

Now my own opinion is that we can solve this paradox on multiple ways, the basic one is.
The water is plentiful, while the Diamonds are scarce.

But this is not enough, there are many other factors that depends on it. For an instance, if a hunter needs 2 weeks to hunt 1 wolf, and 2 hours to hunt 1 rabbit. It would be rational and normal that the wolf would cost much more. From this we can conclude that the good value depends on work product. How many effort/time a single man putted into the creating process of a certain good.

The third speculation is , and I believe it's not just a speculation. The price of a certain good depends on the rareness of goods and on the demand for it. If the demand is high, and the good is rare. The price would be an astounding high.
If the demand is low and the goods are plentiful, the price would fall.

What bothering me about this is , why the values are so twisted. Why the people are so irrational? This we cannot explain only with the help of an Economy, but we rather need some Psychological explanations. The best case to understand that is to explain why are the people willing to give 1M $ for a small diamond.


If someone have some other interesting paradoxes post them.
P.S Sorry for some grammar mistakes, English isn't my first neither my second language.

In a rather high level view, prices are set by supply and demand. So scarce things that everyone wants will cost more than plentiful things everyone needs.

That is reasonable, and that's what bothering me. Why is that reasonable. Why does the people have an urge to buy ''pointless'' things, for a high price? I know answer to this question, but what I am trying to point here is that Economy is rather irrational than rational how everyone is trying to prove.

Why do you think it is irrational? The person who buys a diamond for a million dollars already has all the water he needs. Why buy more water?

Originally Posted by HB3l1

That is reasonable, and that's what bothering me. Why is that reasonable. Why does the people have an urge to buy ''pointless'' things, for a high price? I know answer to this question, but what I am trying to point here is that Economy is rather irrational than rational how everyone is trying to prove.

Firstly river_rat is perfectly correct values are usually assigned by supply and demand and thus is so with the case of diamonds, however to go a bit deeper you can say that diamonds are a special case as well, in as much of them being special in the way the supply and demand issue is assigned or in this case manipulated. Pretty much in the same way that art works by famous artists are valuable even though you could have an almost identical copy for a few pounds so are diamonds, because we have the technology, and have had for some time, to produce diamonds artifically and as many as we want. But the trick has been in convincing everybody that they should want natural diamonds.

Also diamonds themselves perform very little function other than that of adornments and symbols of wealth. Again this is just like any other advertising campaign you might see for some supposed product or gadget you supposedly have to have, the only difference is the desire for diamonds has been going on for centuries if not longer.
In reality there are thousands and thousands of diamonds stashed away in vaults deliberetly kept off the market to ensure prices are kept high. Also why all the fuss over so called conflict diamonds?, well if the countries that mine them can't sell them then all of a sudden companies with vaults full have don't have the same levels of competition, meaning less supply but the same levels of demand again all designed to keep prices high. It's just all plays into the idea of perception of value, people are told something is valuable they believe it is therefore they are willing to exchange a large amount of money for it therefore it becomes valueable.

As for water, most of the planet is covered in water, ok yes salt water but we easily have the technology to desalinate it and transport where it's needed, the thing is that usually happens to be in poor areas of the world so more often than not is not seen as comercially valuable. Which is I suppose a bit of a paradox in as much as the water can be so valuable to some people that need it it can make the difference between life and death, whilst also at the very same time be so worthless to people who are capable of getting it to the needy as for them simply not to bother, paradox or rich v poor perspective, difficult to really say on that one.

I think there's also abit of speculation on valuing certain stuff. ie: When someone says something is worth fortune then the "value" of that thing will go up, but when someone say it is worthless then the "value" of that thing goes down. -Its like stock market where people sell or buy specific stock because they expect the price will drop or increase, but... then everybody did the same thing (because they all hear the same speculation) and thus the price really go down & up because everybody is zombified to do the same thing...

I completely agree with all of you, I just wanted to expand the idea and to discuss about this more. It's all clear, prices are set by supply and demand, usually. But in a special cases this definition isn't correct, these special cases are mostly irrational so they are not in the focus of Economy.

I'll post second paradox.



Paradox of consumption

''Does the people change their consumption with the change of their income - with the income growth they increase consumption, and with a decline they reduce it, or they are more cautious and they pay more attention''


The answer is well hidden in the philosophy of Economy. Let's take a look what Keynesians and Monetarists say about it.

''Keynesians believe that consumption depends on the absolute level of income and that on this basis the state should intervene. Maintaining an employments provides income to people who will spend and so they will play for the economy. Their CONCLUSION is spending changes with every change in current income.''

''Monetarists believe that consumption depends on the other factors as well, that people spend their money bearing in mind their past earnings and future spending plans.The CONCLUSION is that the state incitement doesn't affect them, because their consumption is stable and independent of the current income.


Dr.M.Kejns found that people spent in accordance with the principle of absolute income, on the lower level of income people spend proportionately more, and on the higher less. The lesson of economic policy is a redistribution of income can affect aggregate demand, so that will increase the incomes of the poor. Knowing of their marginal propensity to consume, aggregate demand will increase either. Against this Keynes 'absolute' hypotesis Nobel Laureates M.Fridman and F.Modilijani formulated a hypothesis about the relative income:

M.Fridman argued that people spend in accordance with the ''permanent'' income as weighted size of past income and F.Modilijani extends to the entire service life and proves that people saving ( and spend ) in accordance with the cycles of life, regardless of current income. Having in mind their life span as the time horizon. Consumption is not exclusively a function of propensity to consume , it's rather an inherited wealth and lifetime earnings of an individual.

Economic Paradoxes are an interesting topic. I have an artistic inspiration, like art, is up to each viewer to find the meaning he wants.

economic_art.JPG

Originally Posted by HB3l1

Dr.M.Kejns found that people spent in accordance with the principle of absolute income, on the lower level of income people spend proportionately more, and on the higher less. The lesson of economic policy is a redistribution of income can affect aggregate demand, so that will increase the incomes of the poor. Knowing of their marginal propensity to consume, aggregate demand will increase either.

Its really hard to get what this mean. Does it mean rich people spend their money less (in proportion to total), while poor people spend all their money to buy stuff? -So it mean if we give more money to the poor then they will spend it all to buy more stuff, and then both rich & poor (aggregate demand) also will buy more stuff?

. Does it mean rich people spend their money less (in proportion to total), while poor people spend all their money to buy stuff?

Yes because poor people's basic necessities are on the line, they spend a greater % for subsistence and at a higher velocity. If you are hungry you will spend the money to buy food, and, you will do so immediately (and on something that is more likely to circulate faster and generate more activity per buck). To simplify, Lord Black will not buy a million hamburgers today with his 5 millions, but wait a few months to buy the right famous painting for his foyer, which in a few month will generate the activity of "having a butler move the tableau from his gated community neighbor Bernard Madoff to his house" instead of generating a million hamburgers and some activity in hundreds of small restaurants. Ask a poor person how much he has stashed in his caiman island tax haven bank and in his Bubai derivatives account, odds are it wont be much.

Originally Posted by msafwan

Originally Posted by HB3l1

Dr.M.Kejns found that people spent in accordance with the principle of absolute income, on the lower level of income people spend proportionately more, and on the higher less. The lesson of economic policy is a redistribution of income can affect aggregate demand, so that will increase the incomes of the poor. Knowing of their marginal propensity to consume, aggregate demand will increase either.

Its really hard to get what this mean. Does it mean rich people spend their money less (in proportion to total), while poor people spend all their money to buy stuff? -So it mean if we give more money to the poor then they will spend it all to buy more stuff, and then both rich & poor (aggregate demand) also will buy more stuff?

Exactly what you said. Although there are some exceptions, but overall in theory it would work that way.

But than again we hit another paradox now, if we give the poor people a lot of money, they won't become poor anymore and they won't spent as they used to.
Thanks for the explanations icewendigo. I believe I managed to clearly describe the obvious situation in the picture above. And your continuation with pictures, is unfortunately the truth. The fact is that the gasp between poor and rich is an enormous, and it is constantly expanding. The rich get rich at the expenses of the poor.

There have been several political discussions about how to stop the gap bewteen rich and poor getting out of hand, the problem is thus by definition most rich people are far better at managing and making money than the poor, that's how they either got rich or stay that way. This is important to understand because it's needs to be taken into consideration when discussing ways to level the playing field. It means that realistically what ever measures are taken the rich will still be better at using the new rules imposed to their advantage. Now couple this with the fact that the rich are also able to leave their money to their children and then they to their children, children insidentely who will have gone to the best schools and universities and had the best education money can buy, introduced to the 'right' people to ensure the start off on the right foot in their chosen careers and you begin to get a sense of the monumental task of improving social mobility for the underprivileged. So you have a ever expanding gap between the rich and poor and very little chance for many of them to escape the poverty trap.

With all this in mind one of the ways discussed that may have some impact is the idea of putting limits on inheritance, so that parents wouldn't be able to leave their childen any more money than what an average person is capable is leaving in their will. Whilst it won't make much of a difference in terms of social mobility, it might help to limit the total wealth of the richest and thus reduce the concentration of generations of inherited wealth. This would give back to the state some of this vast accumalation of wealth for fairer distribution amongst everybody and also help to level the playing field for succesive generations. As yet though no government has been bold enough to introduce such a policy, to say it's a controversial idea though would be an understatement. Just from a fairness perspective though I have to wonder if we should really be intitled to massive inherited wealth, would it not be fairer to have only what we oursleves have earned?

Originally Posted by Chrisgorlitz

Just from a fairness perspective though I have to wonder if we should really be intitled to massive inherited wealth, would it not be fairer to have only what we oursleves have earned?

I find this ironic since your whole purpose seems to be transferring wealth from people who earned it to those who did not, just to equalize the distribution of income.

Originally Posted by Harold14370

Originally Posted by Chrisgorlitz

Just from a fairness perspective though I have to wonder if we should really be intitled to massive inherited wealth, would it not be fairer to have only what we oursleves have earned?

I find this ironic since your whole purpose seems to be transferring wealth from people who earned it to those who did not, just to equalize the distribution of income.

Not really understanding you here. The person inheriting the wealth usually DID NOTHING to earn it--they were just lucky to be born into a wealthy family. Usually they also received huge benefits just by having resources such as education, living in a better lower crime community, better medical care etc giving them a boot strap even without the inheritance. In some ways inheritance goes against the very ideals our nation is founded on. Of course we compromise since we want to at least honor the last desires of the deceased in most cases. I have no objections to substantial inheritance taxes for the very wealthy.

Originally Posted by Lynx_Fox

Originally Posted by Harold14370

Originally Posted by Chrisgorlitz

Just from a fairness perspective though I have to wonder if we should really be intitled to massive inherited wealth, would it not be fairer to have only what we oursleves have earned?

I find this ironic since your whole purpose seems to be transferring wealth from people who earned it to those who did not, just to equalize the distribution of income.

Not really understanding you here. The person inheriting the wealth usually DID NOTHING to earn it--they were just lucky to be born into a wealthy family.

At least the transfer of wealth goes from somebody who earned it to soembody who that person wants to have it. Whereas the transfer of wealth that Chris wants is from somebody who earned it to somebody who has done nothing to earn it, and means nothing to the person who did earn it.

Originally Posted by Harold14370

Originally Posted by Chrisgorlitz

Just from a fairness perspective though I have to wonder if we should really be intitled to massive inherited wealth, would it not be fairer to have only what we oursleves have earned?

I find this ironic since your whole purpose seems to be transferring wealth from people who earned it to those who did not, just to equalize the distribution of income.

Apologies if I did not make it clear, I wasn't talking about wealth redistribution by taking money away from people who have earned it, but more about away in which everybody starts from a level playing field and nobody having money they didn't actually earn themselves. Obviously I'm not talking about completely stopping inheritances, just that they should reasonable to give some a start in life, i.e help them get on the property ladder or buy a car ect.., but not handing down millions or billions from one generation to the next.
Also the actual idea of inheritance is of itself anti-capitalistic because capitalism dictates that the most successful should succeed, this is on their own merits (at least in business) and not though artificial subsidy or funding, inheritance is an artificial way of subsidising some who didn't actually earn that money.

BTW, this is not just some idea I plucked out of thin air this is a real idea that has been given real consideration, though in fairness unlikely to be enacted any time soon. I do think though if people's wealth was returned to the state after their death then it would allow governments to lower taxes on living peoples's actual earning's which I think would be fairer and a better system, also when we are dead should we really still have a right to dictate how our money is used?, I don't think so.

To me it's as simple are removing arristocrasy thinking.

Originally Posted by Chrisgorlitz

Originally Posted by Harold14370

Originally Posted by Chrisgorlitz

Just from a fairness perspective though I have to wonder if we should really be intitled to massive inherited wealth, would it not be fairer to have only what we oursleves have earned?

I find this ironic since your whole purpose seems to be transferring wealth from people who earned it to those who did not, just to equalize the distribution of income.

Apologies if I did not make it clear, I wasn't talking about wealth redistribution by taking money away from people who have earned it, but more about away in which everybody starts from a level playing field and nobody having money they didn't actually earn themselves.

Of course you will take money from people who earned it. Where else will you get the money?

BTW, this is not just some idea I plucked out of thin air this is a real idea that has been given real consideration

Yes, and communism was given real consideration, too. Read Pyoko's thread on the Soviet Union to see how that worked out.

Originally Posted by Harold14370

Of course you will take money from people who earned it. Where else will you get the money?

Well I would politely suggest when most people die they don't take there money with them, they tend to kind of leave it behind, I guess it might having something to do with the fact they don't need money when they are dead.

Must admit though the idea of people being buried with or cremated with all their money is quite amusing.

Originally Posted by Chrisgorlitz

Originally Posted by Harold14370

Of course you will take money from people who earned it. Where else will you get the money?

Well I would politely suggest when most people die they don't take there money with them, they tend to kind of leave it behind, I guess it might having something to do with the fact they don't need money when they are dead.

Must admit though the idea of people being buried with or cremated with all their money is quite amusing.

Spin it however you want, Chris, but if you don't allow someone to do what they want with their money, you've taken it.

Originally Posted by Harold14370

Originally Posted by Chrisgorlitz

Originally Posted by Harold14370

Of course you will take money from people who earned it. Where else will you get the money?

Well I would politely suggest when most people die they don't take there money with them, they tend to kind of leave it behind, I guess it might having something to do with the fact they don't need money when they are dead.

Must admit though the idea of people being buried with or cremated with all their money is quite amusing.

Spin it however you want, Chris, but if you don't allow someone to do what they want with their money, you've taken it.

Harold I agree with you to a point, I'm quite happy with people doing as they wish with their money whilst they are alive, I just think giving the dead rights over how money is spent is going a bit far. When they are dead I don't want to take their money, I just want it to return to whence it came.

You know what Harold I might not agree with you but at least you're honest and stick to your guns which gets my respect, so I'm going to give you a like.

IMO regular tax is enough, but the government itself must want to help poor people. Its blinding obvious that government did gets alot of money, and what they wanted to do they can do (if they want it), its just that they have to be really really smart in spending them. For example: look at US government and lets imagine/assume for a second that you could use their military strenght to evaluate how much money they have... its really alot of money. (of course we must NOT criticise people for wanting to defend themselves)

My point is: There exist money (ie: in government around the world), which has not enough focus on helping poor people. Helping poor people could be like a project or some campaign at a scale of preparing for a war IMO. Its possible; politic always make it possible.

If one can support billion of $ to do project like "WAR against cancer", then why not "war against poverty"? Obviously there is priority issues going on here... Sometimes politics can be really really powerful, such that you could do impossible projects.

The inherent unfairness of capitalism requires a social net of some sort and the costs of that net have to fall disproportionately on the wealthy as it is their wealth it protects.

Msafwan,
More than half of our budget now is social programs, a role which was hardly even envisioned by our founding fathers except for those who worked or were retired directly for the federal government (e.g. merchant marine, Soldiers, representatives etc), and a State responsibility. I very much think we're we went astray as a nation is when we started given checks directly to people, rather than directing money to states to handle, or just being back up for the States, which is how we should be. The feds might help build a school, but shouldn't direct pay people for example. Or help poor by setting up a business center through the state--but not pay unemployment to people--that's a state problem. The more we cut the states, counties and towns out of their responsibilities the more inefficient things become before it's one-size fits all solutions rather than being tailors to a localities needs. Anyhow....

government itself must

Not really, It's "we the people." The government has no independent will.

Lynx_Fox,
I believe government has more resources and manpower to do stuff than an individual can do. So when we voted for a president, its because we hoped that he could do a favour to us, like helping us secure jobs or to help us obtain our necessity. -It is not a managerial government that an individual wants, only a big & powerful private enterprise wanted a managerial government (since they only need the budget).

Such that, if government is not just a manager, then it must also be a worker, that also hold the responsibility for making stuff done.

Originally Posted by msafwan

Lynx_Fox,
I believe government has more resources and manpower to do stuff than an individual can do.

The government has nothing except what it takes from its individual citizens in the form of taxes. Where do people get the idea that the government is actually the source of anything?

It is not a managerial government that an individual wants

I notice you don't distinquish between federal and state roles. Even if one accepts that perhaps the government should help individuals, why should they expect it to come from 3 and 4 levels of government above them when their town, county and state is so much better understands the needs of their communities? The reality is the federal government doesn't have the resourses you think it does. Federal work force has been going down or flat for the past 70 years and we have an historically high deficit. Lastly why do we dislike our US Constitution so much. It's pretty simple for me. When we look for places to cut, we should look first at things the federal government spends on that aren't in the US Constitution. Big Bird/PBS: Yes as part of supporting arts and science; Interstate infrastructure: Yes; Unemployment benifits: No: social security: No; US military: Yes etc.

Lynx_Fox,
Individual voter vote for the president. These votes represent the collective interest of the voters. So president should lean toward the voter's interest as one of his responsibility.

In other country president is elected by internal vote in the party or the parliment or by an autocratic entity. This way you could say that the president is responsible for the state's interest or the party's interest or the authority. In such scheme, you didn't vote for president, instead you vote for representative that represent you in parliment/party/congress.

*I'm pointing out the difference here.*

-----
Harold13470,
There are things that you cannot do alone and need the collective strenght of a government. ie: the police. Every nation on this planet has government running some sort of establishment that benefit the society.

This prove that individual do need the government, as too the government is sustained by your taxes.

Lynx_Fox,

Individual voter vote for the president.

Not in the US they don't. The vote is a signal to the state electoral college member. In some states the electoral college members aren't even bound to follow that popular vote within the state, though in recent years few have broken from that standard.

Originally Posted by Lynx_Fox

It's pretty simple for me. When we look for places to cut, we should look first at things the federal government spends on that aren't in the US Constitution. Big Bird/PBS: Yes as part of supporting arts and science; Interstate infrastructure: Yes; Unemployment benifits: No: social security: No; US military: Yes etc.

I just remembered that there's a problem with thinking this way (that social security & unemployment benefit is not usefull). The issue is that: when people adopted a modern culture & lifestyle their 'social net' will be less than living communally (ie: as a villager) or when they are part of a large family. Without unemployment benefit or social security: being single & not having a relatives will mean you have no financial support when you encounter financial trouble and you'll go bankrupt really easily and everything will go downhill from that point forward.

-----
There are real people living in the street with this trouble, and it is not easy to fix.
Cutting support just because we believe it would fix itself is too harsh and heartless.
The good thing is that those people can use the government support to live independently even when nobody in the neigborhood cares about them.

The inequalitiy is institutional.

You can get a level playing feild just through taxing those who can afford it.

The whole education system is designed to produce haves and have nots.

Economy is built on a system of haves at the top and have nots at the bottom.

The whole established order that we conservatively follow is unequal and encourages inequality... inequality is essential for us to keep 'progressing' materially.

To have equality... I propose it would require a fundamental change to culture begining with education. The poor need to be taught how to accumalate money better, the rich need to be taught how to spend and share better.

Generally speaking the poor(ly educated) need to be a little more ruthless, emotionally insecure, and selfish. The rich need to be a bit more relaxed, confident and educated about the benefits of sharing and caring.

Inheritance does create real problems... 'ownership' of excessive materials creates problems. What can ya do?

Originally Posted by Lynx_Fox

It's pretty simple for me. When we look for places to cut, we should look first at things the federal government spends on that aren't in the US Constitution. Big Bird/PBS: Yes as part of supporting arts and science; Interstate infrastructure: Yes; Unemployment benifits: No: social security: No; US military: Yes etc.

I'm not american... But it seems to me that as 'citizens' or 'civilians' we adhere to a social way of living which imposes a lot of laws and regulations that inhibited our freedom to live freely as we see fit. We don't actually get a choice, we'r born into it, our parents sign us into it on the birth certificate.

There are a lot of sarifices that a healthy strong man is making in order to be part of this society that has an agender of doing 'the greatest good to the greatest number'... Therefor one of the 'benefits' he recieves in return for his abiding by the rules and regulations for the good of all, is that if no work is available Then he is given a minimal amount of trading notes so that he can get enough comodities to stay alive.

Society mostly benefits the weak, unhealthy, and the rich/greedy/pathological types...

What do you think all the taxes people pay should be for? They are for helping people who need it.

The government prints money at the mint. When one hundred pounds are printed I imagine the best way to put it into curculation is to spend it. So the government can buy £100 worth of gold. Then the gold seller has to pay his income tax, a percentage of that £100 goes straight back to the government. Then the gold trader spends the remainder of his money of goods, rent/mortgage etc. As it is spent each person who recieves it pays a percentage of income tax back to the government. Then they all go spend their money, and as it passes hands again... tax is paid again.

Monney only has to pass hands a few times and it's all back where it started with the government who printed it. They can now put it back into circulation by spending it on more gold.

This is how it has always seemed to me.... I pray that somebody can explain to me that it doesn't really work like this... that they don't havve such a monopoly on the world.


*when I say government, I don't mean councilors, I don't mean police commissioners... I mean the people who print the money.

Originally Posted by HB3l1

Hello there, this is my first post on the forum. So I'll try to be a bit entertaining..


At some stages I must admit I found Economy tiring and boring, and that's why I intend to force myself to find something interesting to keep me attached to it. Economic paradoxes indeed did their job, there are bunch of interesting paradoxes about Economy, I'll share few with you, and I'll try with other Economists and non Economists to solve them.

Paradox Water- Diamond

''Things that have the biggest usefulness are often free or cheap, and the things that have the lowest usefulness are often expensive''

In this case we talk about Water and Diamond. As we know, a Diamond have a very low or doesn't have a usefulness at all, but it's cost is an enormous. While the Water is 'free' and we all know how useful water is.

This paradox is one of the basic pointers how the things in Economy aren't always rational. A.Smith wrote ''Nothing is more useful than water, but we can hardly get something in exchange for it, while the Diamond got an extremely low usefulness but we can get a lot in exchange for it''.

Now my own opinion is that we can solve this paradox on multiple ways, the basic one is.
The water is plentiful, while the Diamonds are scarce.

But this is not enough, there are many other factors that depends on it. For an instance, if a hunter needs 2 weeks to hunt 1 wolf, and 2 hours to hunt 1 rabbit. It would be rational and normal that the wolf would cost much more. From this we can conclude that the good value depends on work product. How many effort/time a single man putted into the creating process of a certain good.

The third speculation is , and I believe it's not just a speculation. The price of a certain good depends on the rareness of goods and on the demand for it. If the demand is high, and the good is rare. The price would be an astounding high.
If the demand is low and the goods are plentiful, the price would fall.

What bothering me about this is , why the values are so twisted. Why the people are so irrational? This we cannot explain only with the help of an Economy, but we rather need some Psychological explanations. The best case to understand that is to explain why are the people willing to give 1M $ for a small diamond.


If someone have some other interesting paradoxes post them.
P.S Sorry for some grammar mistakes, English isn't my first neither my second language.

Nice....

Originally Posted by Lynx_Fox

It is not a managerial government that an individual wants

I notice you don't distinquish between federal and state roles. Even if one accepts that perhaps the government should help individuals, why should they expect it to come from 3 and 4 levels of government above them when their town, county and state is so much better understands the needs of their communities? The reality is the federal government doesn't have the resourses you think it does. Federal work force has been going down or flat for the past 70 years and we have an historically high deficit. Lastly why do we dislike our US Constitution so much. It's pretty simple for me. When we look for places to cut, we should look first at things the federal government spends on that aren't in the US Constitution. Big Bird/PBS: Yes as part of supporting arts and science; Interstate infrastructure: Yes; Unemployment benifits: No: social security: No; US military: Yes etc.

Most Americans do not understand the constitution nor the reason for the constitution, and most Politicians and major companies hate the Constitution.

"The natural progress of things is for liberty to yield and government to gain ground." – Thomas Jefferson

"A wise and frugal government which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government." – Thomas Jefferson

"In matters of Power, let no more be heard of confidence in men, but bind him down from mischief by the chains of the Constitution." – Thomas Jefferson

"The care of every man's soul belongs to himself. But what if he neglect the care of it? Well what if he neglect the care of his health or his estate, which would more nearly relate to the state. Will the magistrate make a law that he not be poor or sick? Laws provide against injury from others; but not from ourselves. God himself will not save men against their wills." – Thomas Jefferson

"There are more instances of the abridgement of the freedom of the people by the gradual and silent encroachment of those in power, than by violent and sudden usurpation." – James Madison

"When all government, in little as in great things, shall be drawn to Washington as the Center of all power, it will render powerless the checks provided of one government on another and will become as venal and oppressive as the government from which we separated." – Thomas Jefferson

"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." – Thomas Jefferson

"The course of history shows that as a government grows, liberty decreases." – Thomas Jefferson

" I believe the states can best govern our home concerns and the federal government our foreign ones." – Thomas Jefferson

"The policy of the American government is to leave their citizens free, neither restraining nor aiding them in their pursuits." – Thomas Jefferson

" I am not a friend to a very energetic government. It is always oppressive." – Thomas Jefferson

"The principle of spending money to be paid by posterity, under the name of funding, is but a swindling futurity on a large scale." – Thomas Jefferson

"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." – Thomas Jefferson

"Experience [has] shown that, even under the best forms [of government], those entrusted with power have, in time and by slow operations, perverted it into tyranny." – Thomas Jefferson

" The Constitution only guarantees the American people the right to pursue happiness. You have to catch it yourself." –Benjamin Franklin

"Of all the enemies to public liberty, war is perhaps the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, debts, and taxes are the known instruments for bringing the many under the domination of the few … No nation could preserve its freedom in the midst of continual warfare." – James Madison

" Government ought to be as much open to improvement as anything which appertains to man, instead of which it has been monopolized from age to age, by the most ignorant and vicious of the human race. Need we any other proof of their wretched management, than the excess of debts and taxes with which every nation groans, and the quarrels into which they have precipitated the world?" – Thomas Paine

"To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. .I place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared." – President Thomas Jefferson

"It would be thought a hard government that should tax its people one tenth part." – Benjamin Franklin

"I cannot undertake to lay my finger upon an article of the Constitution which granted a right to Congress of expending, on the objects of benevolence, the money of their constituents." – James Madison

"An elective despotism was not the government we fought for." – Thomas Jefferson

It's not even a paradox is it?

H2O is abundant... diamonds are not.

When a person is rich... paper money is abundant. Diamonds still are not.

The value of a thing is a very personal subjective thing. Buying a diamond with your last one million might be irrational. Buying it with a spare one million make perfect sense (as long as the value of that investment is stable). Diamonds and precious stones will always be revered. They are an amazingly beuatiful and fascinating peice of prehistory and a good way of storing a lot of wealth in a small item. Diamond quantifies are finite, can anymore even be made by the earth? or are they a relic from bygone geological processes? Water is abundant and recyclable.

When water becomes scarse (like if your lost in a desert)... then the price of water goes sky high and unscroupulous men sit by oasis holding bypassers to ransome if they want to drink. Suddenly a drink of water becomes as valuable as anything you have on your person.

The only thing I find paradoxical is that pieces of paper can be exchanged for real valuables like water and diamonds and food.

The paper has no value... and yet it has much value. Most peculiar.

Originally Posted by question for you

The only thing I find paradoxical is that pieces of paper can be exchanged for real valuables like water and diamonds and food.

The paper has no value... and yet it has much value. Most peculiar.

Ruling classes and their friends have it made right now. They call up the federal reserve, the treasury, their politician friends and say, "hey let me get 100 million of those there dollars you all make, I want some goodies," and they get it.

They take 1 cent worth of computer power and time, or 1 small tree, and make millions, billions and/or trillions of fiat dollars out of it. It's a cool trick.

Originally Posted by gonzales56

Originally Posted by question for you

The only thing I find paradoxical is that pieces of paper can be exchanged for real valuables like water and diamonds and food.

The paper has no value... and yet it has much value. Most peculiar.

Ruling classes and their friends have it made right now. They call up the federal reserve, the treasury, their politician friends and say, "hey let me get 100 million of those there dollars you all make, I want some goodies," and they get it.

They take 1 cent worth of computer power and time, or 1 small tree, and make millions, billions and/or trillions of fiat dollars out of it. It's a cool trick.

Aren't we all getting too long in the tooth for tricks and illusions yet?

Originally Posted by question for you

Originally Posted by gonzales56

Originally Posted by question for you

The only thing I find paradoxical is that pieces of paper can be exchanged for real valuables like water and diamonds and food.

The paper has no value... and yet it has much value. Most peculiar.

Ruling classes and their friends have it made right now. They call up the federal reserve, the treasury, their politician friends and say, "hey let me get 100 million of those there dollars you all make, I want some goodies," and they get it.

They take 1 cent worth of computer power and time, or 1 small tree, and make millions, billions and/or trillions of fiat dollars out of it. It's a cool trick.

Aren't we all getting too long in the tooth for tricks and illusions yet?

You would think so but, nope. What most people will get tired of though is their hand outs/government welfare being reduced. They and the government will become more oppressive, more brutal, they will continue to blame freedom and free markets, even though neither really exist today, and the Welfare West will demand greater and greater amounts of blood and suffering from people and peoples so they can continue to get what they want and need from them.

Aren't we all getting too long in the tooth for tricks and illusions yet?[/QUOTE]

You would think so but, nope. What most people will get tired of though is their hand outs/government welfare being reduced. They and the government will become more oppressive, more brutal, they will continue to blame freedom and free markets, even though neither really exist today, and the Welfare West will demand greater and greater amounts of blood and suffering from people and peoples so they can continue to get what they want and need from them.[/QUOTE]

Don't be a pessimist. The is the Age of information. Consciousness is rising, intelligence is rising. Not just in the masses but also in the few who are bred and reared by a machine.
The people of all classes will unite to over throw the corrupt tyranic societal machine, for the good of all.

Double thinking is lessening, people are becoming aware of the true nature of life. Fear is being conquored by love, The next revolution will not end in a state of chaos... will be just as before, but only a lisght bit different.

That differences will be a consciousness in every individual that we are powerful, and we are responsible for our actions, that we understand the nature of things and no amount of misinformation can pull the wool over our eyes.

The quite revolution is upon us, the leaders of the new world will not be currupted in the way that previous leaders have been. Things will be changed so dramatically for the better that we will look back and cringe at the primatives who lived upto the second millenium, and the primative brutal ways that we lived in fear and exploited all we could due to insecurity and fear.

I tell you, even soldiers will start to accept responsibility for their own actions soon enough...

It's all written in the bible... these are the last days of the devil. Which might only be a metaphor, but it's a metaphor for the truth.

If it requires a class war where the people of east and west get together... to teach the leaders where they are going wrong, then thats what will happen.

People just need to see through the illusions and reclaim their power... it's easy.

It's called free will.... somepeople need a little help exercising it, these are the people that need some encouragement, once given they will fly free like the rest of us.

Power to the people? It has always been the case. Just don't let anybody ever convince otherwise.

Originally Posted by question for you

I'm not american... But it seems to me that as 'citizens' or 'civilians' we adhere to a social way of living which imposes a lot of laws and regulations that inhibited our freedom to live freely as we see fit. We don't actually get a choice, we'r born into it, our parents sign us into it on the birth certificate.

There are a lot of sarifices that a healthy strong man is making in order to be part of this society that has an agender of doing 'the greatest good to the greatest number'... Therefor one of the 'benefits' he recieves in return for his abiding by the rules and regulations for the good of all, is that if no work is available Then he is given a minimal amount of trading notes so that he can get enough comodities to stay alive.

Society mostly benefits the weak, unhealthy, and the rich/greedy/pathological types...

What do you think all the taxes people pay should be for? They are for helping people who need it.

Again is't about what level your talking about. At the federal level it was supposed to be mostly about defending the nation, other foreign matters handling things, and interstate issues, and of course putting limitations on government ability to infringe on people's rights.

That states and lower level handle the rest.

I have a question.
Does the central government distribute the money directly, or does it use local government to distribute them? If it use the local government then there's no efficiency drop. When you run a program that is handled by the lower level government it basically run like any local organization with fixed budget, and the efficiency can't be any worser than the local government itself unless they do it for profit (profit = more efficient).

IMO it work like any other budget. The work is done at lower government level must abide to regulation & policy set by central government but doesn't force them to do thing their way. This way we can see multiple government (state) doing the same thing in different way (some state look better than others, but they all is doing what the central government told them to do).

If budget is cut at central government, IMO it should mean state government will receive budget cuts too.

Following on from msa's question....

How much money is printed per year? Let's say in mother england.

How much is taking out of the system as dirty notes and worn coins per year?

What is the money that is printed backed by?

How does the government introduce the newly printed money into the economy?

Where did all the money come from in the first place and how/why does it increase? Is inflation due to the mint printing extra money and putting it into circulation?

Originally Posted by question for you

What is the money that is printed backed by?

Now this is an interesting question that might start you off down the rabbit hole, new money is backed by the value of the rest of that currency that is in circulation, the citizens of the nation of the currency ability and willingness to pay tax, debt's owed to banks such as morgages (the promise by creditors to repay these), the willingness of foreigners and financial institutions to accept this currency as payment or exchange it for other currency and finanally the public perception it has value and there willingness to accept it for payment and spend it.

Why I say rabbit hole though is if you start trying to untangle the all these different strings you will find a whole new level of fanancial reality heavily based on perception and confidence.

Originally Posted by question for you

Following on from msa's question....

How much money is printed per year? Let's say in mother england.

How much is taking out of the system as dirty notes and worn coins per year?

What is the money that is printed backed by?

How does the government introduce the newly printed money into the economy?

Where did all the money come from in the first place and how/why does it increase? Is inflation due to the mint printing extra money and putting it into circulation?

I think you are confusing cash and money - money is a much broader concept than notes and coins. For starters the central bank does not create or destroy money by printing or burning physical paper or melting coinage. The cause and effect chain is a bit iffy but in effect the central bank intervenes into the market by buying and selling (or more correctly repo-ing) short dated government debt.

hmmm still seems a bit complicated.

Where does the first money come from in an 'economy'? whats that backed by?

Does the organisation that prints the money or cash, also spend the money or cash as a way to enter it into the economy?

Originally Posted by question for you

hmmm still seems a bit complicated.

Where does the first money come from in an 'economy'? whats that backed by?

Does the organisation that prints the money or cash, also spend the money or cash as a way to enter it into the economy?

What happens in most cases is money is 'borrowed' that doesn't actually exist, then when that money is repaid it comes into existance. Printed money is just a physical representation of electronic money and is usually printed when it's needed such as for cash machines ect.. or so that it can be traded around and spent, but is always just an extension of those numbers that exist on computers. It means governments can create money to lend to banks without ever actually printing it, this is then lent out to the public, when the money is repaid (plus interest) to the bank the bank can then repay the government, or banks represententing the government who have been given the authority to create money in the first place.

Originally Posted by Chrisgorlitz

What happens in most cases is money is 'borrowed' that doesn't actually exist, then when that money is repaid it comes into existance. Printed money is just a physical representation of electronic money and is usually printed when it's needed such as for cash machines ect.. or so that it can be traded around and spent, but is always just an extension of those numbers that exist on computers. It means governments can create money to lend to banks without ever actually printing it, this is then lent out to the public, when the money is repaid (plus interest) to the bank the bank can then repay the government, or banks represententing the government who have been given the authority to create money in the first place.

Well that's as simple as I always thought the banks which print the moneyenter it into circulation after it is repaid to them by the middle men they lent it to, by spending it on valuable resources and materials.

So they get everything and they never earnt it they printed it?

Originally Posted by question for you

Originally Posted by Chrisgorlitz

What happens in most cases is money is 'borrowed' that doesn't actually exist, then when that money is repaid it comes into existance. Printed money is just a physical representation of electronic money and is usually printed when it's needed such as for cash machines ect.. or so that it can be traded around and spent, but is always just an extension of those numbers that exist on computers. It means governments can create money to lend to banks without ever actually printing it, this is then lent out to the public, when the money is repaid (plus interest) to the bank the bank can then repay the government, or banks represententing the government who have been given the authority to create money in the first place.

Well that's as simple as I always thought the banks which print the moneyenter it into circulation after it is repaid to them by the middle men they lent it to, by spending it on valuable resources and materials.

So they get everything and they never earnt it they printed it?

It's more like they can borrow money that doesn't exist at lower interest rates than you or I then lend it out at higher interest rates, again the printing bit is pretty much irrelevant as it would be like the difference between you or I paying for something with a debit card (electronic money payment) or writing out a cheque (them printing out some money).
The most important points are that of where and how the money is being created (because of a need) and who can create it.

But essentially yes the banks are creating that money and profiting from it.

Originally Posted by Chrisgorlitz

Originally Posted by question for you

Originally Posted by Chrisgorlitz

What happens in most cases is money is 'borrowed' that doesn't actually exist, then when that money is repaid it comes into existance. Printed money is just a physical representation of electronic money and is usually printed when it's needed such as for cash machines ect.. or so that it can be traded around and spent, but is always just an extension of those numbers that exist on computers. It means governments can create money to lend to banks without ever actually printing it, this is then lent out to the public, when the money is repaid (plus interest) to the bank the bank can then repay the government, or banks represententing the government who have been given the authority to create money in the first place.

Well that's as simple as I always thought the banks which print the moneyenter it into circulation after it is repaid to them by the middle men they lent it to, by spending it on valuable resources and materials.

So they get everything and they never earnt it they printed it?

It's more like they can borrow money that doesn't exist at lower interest rates than you or I then lend it out at higher interest rates, again the printing bit is pretty much irrelevant as it would be like the difference between you or I paying for something with a debit card (electronic money payment) or writing out a cheque (them printing out some money).
The most important points are that of where and how the money is being created (because of a need) and who can create it.

But essentially yes the banks are creating that money and profiting from it.

It seems like a farse.

Originally Posted by question for you

It seems like a farse.

What's really a farse is when interest rates are high more and more debt needs to be created to keep expanding the money supply to allow for the paying off of the previous debt created for the last round of money supply expansion, otherwise you start to see increasing rates of bankruptcies as their isn't enough money supply to pay off the original debts plus interest. What this means is you are always going to see times of growth where money increases and we all generally get richer (more money to go around) then periods where the debt (newly created money) cannot be afforded to be paid for and as such we all seem to get poorer as a greater percentage of the money supply is returned back to pay for that last expansion of supply.

Ok this can seem a little complicated but means we end up with cycles of booms and bust, because the ever increasing debt leves that are needed to support the previous debt levels become unsustainable thus the bust, then slowly we start again creating more debt and the whole cycle begins again.

Originally Posted by Chrisgorlitz

This doesn't make sense to me.

The federal bank can create money buy purchasing financial assets? such as gold? with pieces of paper?

Originally Posted by Chrisgorlitz

Originally Posted by question for you

It seems like a farse.

What's really a farse is when interest rates are high more and more debt needs to be created to keep expanding the money supply to allow for the paying off of the previous debt created for the last round of money supply expansion, otherwise you start to see increasing rates of bankruptcies as their isn't enough money supply to pay off the original debts plus interest. What this means is you are always going to see times of growth where money increases and we all generally get richer (more money to go around) then periods where the debt (newly created money) cannot be afforded to be paid for and as such we all seem to get poorer as a greater percentage of the money supply is returned back to pay for that last expansion of supply.

Ok this can seem a little complicated but means we end up with cycles of booms and bust, because the ever increasing debt leves that are needed to support the previous debt levels become unsustainable thus the bust, then slowly we start again creating more debt and the whole cycle begins again.

One thing among many that I don't get is: when they loan to middle men who loan to middle men who loan to the public and each time interest is being paid and profit made and ultimately at the lower teir it's much more expensive to borrow than it is from the source (why bother with the middlemen?), where is all that interest coming from? the profit? Is it based on a principle that money will make a profit for the person who borrows? and so the interest will be paid off?

Originally Posted by question for you

Originally Posted by Chrisgorlitz

Originally Posted by question for you

It seems like a farse.

What's really a farse is when interest rates are high more and more debt needs to be created to keep expanding the money supply to allow for the paying off of the previous debt created for the last round of money supply expansion, otherwise you start to see increasing rates of bankruptcies as their isn't enough money supply to pay off the original debts plus interest. What this means is you are always going to see times of growth where money increases and we all generally get richer (more money to go around) then periods where the debt (newly created money) cannot be afforded to be paid for and as such we all seem to get poorer as a greater percentage of the money supply is returned back to pay for that last expansion of supply.

Ok this can seem a little complicated but means we end up with cycles of booms and bust, because the ever increasing debt leves that are needed to support the previous debt levels become unsustainable thus the bust, then slowly we start again creating more debt and the whole cycle begins again.

One thing among many that I don't get is: when they loan to middle men who loan to middle men who loan to the public and each time interest is being paid and profit made and ultimately at the lower teir it's much more expensive to borrow than it is from the source (why bother with the middlemen?), where is all that interest coming from? the profit? Is it based on a principle that money will make a profit for the person who borrows? and so the interest will be paid off?

Well that's the point all the interest is coming from the end user, the person who is actually repaying the loan, with each teir if you like taking their cut. Now think about this on a wider scale if interest rates are high, which usually starts to happen in a boom then we can get to a stage where if you add all the interest plus the capital of the loans there simply isn't enough available money to repay it, this is where the bust comes in as people can't repay their loans.

Let me put another very simplified way, the more money you have the less it costs you to obtain more money, the less money you have the more it will cost you to get it.

Originally Posted by Chrisgorlitz

Let me put another very simplified way, the more money you have the less it costs you to obtain more money, the less money you have the more it will cost you to get it.

Tell me about it! That's how the system is designed.

When the end user... worker? producer of goods? cannot pay off debt and goes bankrupt... who with or at what stage does the buck stop? Who loses out? becuase it isn't the end user.

IMO, the way I look at money is to look at ancient gold coins and ancient chinese's cheque (the first paper money). The chinese emperor invented the a paper cheque that represent the guarantee that he (an emperor) made to the bearer of the cheque that it can be redeemed with something valueable when returned (the cheque has emperor's stamp), so everyone accept the cheque because they trust that the emperor will backed its value. For this to work, the emperor must be thought as very powerful and can pay the value of its money with real gold or anything if requested.

I guess present money system also work like ^above^ except that the value of money in current system might be susceptible to speculation/confidence just like stock market IMO* and the government is responsible instead of emperor to guarantee the value of the money.

*I heard there was a man who broke/played with this system for profit, he's called George Soros. He is dubbed as "the man who broke the Bank of England"[1]. But I don't know what he really did, just a rumor.

[1] George Soros - Wikipedia, the free encyclopedia (George Soros)

Originally Posted by question for you

Originally Posted by Chrisgorlitz

Let me put another very simplified way, the more money you have the less it costs you to obtain more money, the less money you have the more it will cost you to get it.

Tell me about it! That's how the system is designed.

It is not so much "designed" as the result of market forces. Those with little income and few resources are a higher risk. To balance the risk of lending to them, the lender charges more - so that if, say, 10% of them default they don't lose money. People with money/assets are a lower risk so the banks can lend them money at a lower rate because they are more confident they will get all their money back.

When the end user... worker? producer of goods? cannot pay off debt and goes bankrupt... who with or at what stage does the buck stop? Who loses out? becuase it isn't the end user.

The "end user" (borrower) loses because (a) they are bankrupt (never a good position to be in) and (b) the lender will have taken whatever assets they have as repayment.

Even if the lender doesn't get all their money back, they will have reduced the risk by charging more and also by selling/insuring some of the risk. So even if they lose, it won't be much. (Until things get really bad and no one can repay their loans.)

Originally Posted by Strange

Originally Posted by question for you

Originally Posted by Chrisgorlitz

Let me put another very simplified way, the more money you have the less it costs you to obtain more money, the less money you have the more it will cost you to get it.

Tell me about it! That's how the system is designed.

It is not so much "designed" as the result of market forces.

Look strange I'm not claiming it's been designed by God... I'm not saying it was the creator at work... I'm not saying this is an example of teleology.

I'm saying the finacial system has been designed by man and has followed an evolutional path up to this point... it didn't all happen by mistake, or even by a random proccess of natural selection... It was desinged, and redesigned. Dare I say it? It was Created! It is a creation! It's a grand plan that is adaptable... much like any creation.

Originally Posted by Strange

The "end user" (borrower) loses because (a) they are bankrupt (never a good position to be in) and (b) the lender will have taken whatever assets they have as repayment.

Even if the lender doesn't get all their money back, they will have reduced the risk by charging more and also by selling/insuring some of the risk. So even if they lose, it won't be much. (Until things get really bad and no one can repay their loans.)

Thank you.

When they insure the risk... who underwrites the insurance? People who are borrowing from the first teir of banking? So when it all goes wrong and insurers have to pay out (we all know how good they are at avoiding that!)... where does the money come from? when it all goes wrong... an insurance company will hve to pay out far more than it has 'earnt'.

Originally Posted by question for you

I'm saying the finacial system has been designed by man and has followed an evolutional path up to this point... it didn't all happen by mistake, or even by a random proccess of natural selection... It was desinged, and redesigned. Dare I say it? It was Created! It is a creation! It's a grand plan that is adaptable... much like any creation.

But that is teleological (if that word means what I think it does, which it might not as I have never used it before...)

Design (to me) means people sat down and worked out how it should work and then put it in place. The current economic system isn't like that. It grew and changed and then grew some more. People tried to modify (design?) or control bits of it but then the whole system changed and evolved again. It is an almost organic thing that just adapts to circumstance and whim.

When they insure the risk... who underwrites the insurance?

Many people. One of the reasons insurance works is that you spread the risk out across many people. So when something goes wrong they all stand to lose a little bit (that, hopefully, they can all afford).

Originally Posted by Strange

Originally Posted by question for you

I'm saying the finacial system has been designed by man and has followed an evolutional path up to this point... it didn't all happen by mistake, or even by a random proccess of natural selection... It was desinged, and redesigned. Dare I say it? It was Created! It is a creation! It's a grand plan that is adaptable... much like any creation.

But that is teleological (if that word means what I think it does, which it might not as I have never used it before...)

Are ok, you may well be right... It's one of the first times i have used the word and I don't have a proper understanding. It relates to intelligent design in evolution I beleive. It's all kept a bit hush hush I think.

Originally Posted by Strange

Design (to me) means people sat down and worked out how it should work and then put it in place. The current economic system isn't like that. It grew and changed and then grew some more. People tried to modify (design?) or control bits of it but then the whole system changed and evolved again. It is an almost organic thing that just adapts to circumstance and whim.

Doesn't have to be 'people', could just be a person.

Ofcourse it was designed... and then redisnged.

At everypoint in it's adaption it has been consciously changed as part of a plan, and as a reaction to circumstance... not whim.

Fully compatible with the word 'design' IMO.

It is designed so that the rich stay in control... if they didn't, then who would maintain the plan? nobody, the poor, or new money, would create their own plan.

It's designed to make the ricvh richer and the poor poorer... and thats becuase it was desinged by the rich, in order to get richer.

It's simple and plain to see strange... You could also say it is a law of nature that the rich get richer, but not that the poor get poorer. The poor are not in a natural state. They are subject to a barren habitat which was destroyed... a society that enslaves them... and a disposition which cannot be overcome alone.

Originally Posted by Strange

When they insure the risk... who underwrites the insurance?

Many people. One of the reasons insurance works is that you spread the risk out across many people. So when something goes wrong they all stand to lose a little bit (that, hopefully, they can all afford).

But the point is, in a reccesion, or collapse, or bust... so many people need to claim insurance that the insurance companies don't have the capitol to cover the cost. How does it work in this instance? I suspet it works by insurance companies not paying out, claiming it is an act of god or just going bust and neglecting responsibility.

yes maybe I am presenting the teleological argument... for some reason I had it in my mind that the word teleology relates to a divine designer. I must have been wrong.

"Hegel conceived of the 'totality' of mutually antagonistic world-views and life-forms in history as being 'goal-driven', that is, oriented towards an end-point in history. The 'objective contradiction' of 'subject' and 'object' would eventually 'sublate' into a form of life that leaves violent conflict behind. This goal-oriented, 'teleological' notion of the 'historical process as a whole' is present in a variety of 20th century authors, although its prominence declined drastically after the Second World War."

Originally Posted by question for you

Ofcourse it was designed... and then redisnged.

Who by? And why? And why couldn't they have designed a decent system that works? Why did they have to design a system that appears to have grown by random accretion?

Originally Posted by Strange

Who by?

'The rich'... somebody somewhere in some point of history with enough wealth and power to start a trading system based on trust.

Originally Posted by Strange

And why?

To get richer... to gain control and order... to monopolise peoples efforts, while rewarding them also. As a means to an end.

Originally Posted by Strange

And why couldn't they have designed a decent system that works?

I'm sure it did woork... I'm sure they got richer. The people worked harder (or just worked in a way that can be profited from).

Why would anybody design it for the good of all? (if thats what you mean by 'works')... the rich get richer, it works.

Originally Posted by Strange

Why did they have to design a system that appears to have grown by random accretion?

Becuase everything grows by acretion.

You can't come up with a grand plan an implement it staright away the next day... it takes time to grow into something as big as we see today.

It doesn't appear to me to have grown by random acretion, it appears to be deliberate acretion as part of a design to enlarge the system... there is still growth to be had, amny parts of the world have not yet been exploited.

Though it's also worth noting... that if there is a big long term plan... it's much much better to pretend there is not and make it look as if the end plan that was acheived, was achieved through a 'random' natural process. When in fact it was achieved through a deliberate long term plan with deliberate acretions.

Originally Posted by question for you

Though it's also worth noting... that if there is a big long term plan... it's much much better to pretend there is not and make it look as if the end plan that was acheived, was achieved through a 'random' natural process. When in fact it was achieved through a deliberate long term plan with deliberate acretions.

Ah, the old, "the fact there is no evidence of conspiracy just show how powerful and all-pervasive the conspirators must be to cover their tracks so well".

This is the fallacy of assuming the precedent or begging the question.

Originally Posted by Strange

Originally Posted by question for you

Though it's also worth noting... that if there is a big long term plan... it's much much better to pretend there is not and make it look as if the end plan that was acheived, was achieved through a 'random' natural process. When in fact it was achieved through a deliberate long term plan with deliberate acretions.

Ah, the old, "the fact there is no evidence of conspiracy just show how powerful and all-pervasive the conspirators must be to cover their tracks so well".

This is the fallacy of assuming the precedent or begging the question.

That's rubbish. The evidence is evident.
Noting that it would be more apetisable for people to think of the phenomenom as a natural series of random acretion, than as a covert plan, is just a side point. You see, it was not my argument, it was merely an observation. And yes, that old chessnut is very true indeed. You think criminals leave traces? the ones who get away with it do not.

How can you possibly think or have evidence that the entire way our economy works has never contained any 'design' or whats the word againn...'conspiracy' but is purely random acretion?

You do not and cannot think that... it's beyond the scope of intelligence to come up with such a farsical notion and beleive it, my good man.

Originally Posted by question for you

That's rubbish. The evidence is evident.

The only evidence you seem to have is "it looks like it to me". This is another fallacy (I have forgotten the name but it is akin to pareidolia). This is why your argument is similar to creationism: "the universe looks created therefore there must be a creator". Er, no.

Originally Posted by Strange

Originally Posted by question for you

That's rubbish. The evidence is evident.

The only evidence you seem to have is "it looks like it to me". This is another fallacy (I have forgotten the name but it is akin to pareidolia). This is why your argument is similar to creationism: "the universe looks created therefore there must be a creator". Er, no.

Strange I love you... But your such an annoying hypocrit!

It was you who came along and said 'it seems to me to be a process of random acretion'... this seems to be the only evidenc eyou have!
This is another fallacy, something akin to pareidolia!. This is why your argument is simmilar to creationism 'the economy looks like it was developed by random acretion and therefor it must be a random thing', Errr, DUDE... NO!

How can you possibly think or have evidence that the entire way our economy works has never contained any 'design' or whats the word againn...'conspiracy' but is purely random acretion?

That was the question for you... you choose to ignore it and be hypocritical (again). End of diversion.

Originally Posted by question for you

It was you who came along and said 'it seems to me to be a process of random acretion'... this seems to be the only evidenc eyou have!

Occam's razor - Wikipedia, the free encyclopedia

If you have no specific and definitive evidence for a deliberate design then I will choose the simpler (historical chance and cockup) theory.

Originally Posted by Strange

Originally Posted by question for you

That's rubbish. The evidence is evident.

The only evidence you seem to have is "it looks like it to me".

Strange look around. look at the complexity of the economy. Look at the mechanisms which make it work. Look at the end results and notice who benefits, who doesn't.

The evidence of it's design is in it's complexity, in it's function.

It seems you will deny anything has a cuase? whatever next? you'r going to claim the whole universe came about without a cause? it came from what? from nowhere you say? From nothing?...

but there is a difference between design in economics and design in life... Man did not make life, it came about befor we did, and we have not the answers.
The economy is man made.. by this very definitions it is accepted that it is designed by man.

The evidence is absolutely apparent... Thats what politicians and experts do... they make plans and implement them. This is human nature man, where have you been? why are you wasting my time suggesting it doesn't contain design?

Originally Posted by Strange

Originally Posted by question for you

It was you who came along and said 'it seems to me to be a process of random acretion'... this seems to be the only evidenc eyou have!

Occam's razor - Wikipedia, the free encyclopedia

If you have no specific and definitive evidence for a deliberate design then I will choose the simpler (historical chance and cockup) theory.

We went down this road only last week... I told you that my position is that it's a combination of design and cockup, and that your position that design is not involed is weak...

You had no come back last week and I sincerely hope you don't bother with a come back this week.

Originally Posted by question for you

You had no come back last week and I sincerely hope you don't bother with a come back this week.

It's pantomime season. Your wish is granted.

Let me tell you all about this hypothosis I leant..

It's called economic development by random acretion.

Ok, so there was this random guy who randomly made a brick... and he placed it in london... then purely by coincidence a few hundred thousand others did the same thing, purely by coincidence they manage to build a kind of brick fortress.

Then, some dude was like 'let me just place this man made engineered peice of metal here inside this brick fortress for safe keeping... about a million other people just so happened to do something simmilar.

befor whe know it, we havve the bank of england with machinery inside it that just so happens to print notes... some bright spark, just by random coincidence realised... ' hey we can use this to trade goods with each other'...

And to cut a long story short the economy was formed by a series (10 billion?) of random coincidences.


The only problem with this theory or any like it is that they hold more assumptions... than an insecure wife whose husband photgraphs models for a living... ignores history and observed phenomena, in favour of a something a little more fanciful and palletable.

Originally Posted by Strange

Originally Posted by question for you

You had no come back last week and I sincerely hope you don't bother with a come back this week.

It's pantomime season. Your wish is granted.

Does anybody see where strange's comeback is?

Whats that you say??? It's behind me? What as in.. in the past? as in... we've moved on?

You know full well it's a combination of design and cockup so why you argue it's purely cockup is beyond me.
P.s there can be no cockup without a design going wrong.

Originally Posted by question for you

Ok, so there was this random guy who randomly made a brick... and he placed it in london...

Compare London and New York. One was designed, the other wasn't. We know this both from appearance and from corroborating evidence: the historical record.

Originally Posted by Strange

Originally Posted by question for you

Ok, so there was this random guy who randomly made a brick... and he placed it in london...

Compare London and New York. One was designed, the other wasn't. We know this both from appearance and from corroborating evidence: the historical record.

So why did the london fire happen? It was so that the area could be rebuilt according to the new design. Why was the tower of london built? it was a design. Who is christopher wren? he was an architect.. what do architects do? they desing buildings.

They were both designed man.

It's almost as if your suggesting london doesn't have planning departments?

Originally Posted by question for you

So why did the london fire happen? It was so that the area could be rebuilt according to the new design.

It was an accident. Where do you get your history from? And there was a nice design drawn up for the city (by Wren) but it was ignored and people just wen back to putting buildings and streets up at random.

Why was the tower of london built? it was a design. Who is christopher wren? he was an architect.. what do architects do? they desing buildings.

Buildings, obviously, are [usually] designed. But the city wasn't.

Originally Posted by Strange

Originally Posted by question for you

So why did the london fire happen? It was so that the area could be rebuilt according to the new design.

It was an accident. Where do you get your history from? And there was a nice design drawn up for the city (by Wren) but it was ignored and people just wen back to putting buildings and streets up at random.

My history comes from Him... The one who shares his story.
people have long thought the fire was to kill the plague... but the plague was apparently only a problem in the poorer suburbs rather than the city which burnt.
It was him in the bakers who set it alight right? He left his loaves in the oven too long? And heres me thinking that official history was that the government had the place burnt in order for it to rebuilt... becuase that's exactly the type of honesty and transparency that we find all throughout our historical records isn't it!

In 100 years the history books will read that we invaded iraq and afgahnistan becuase the attacked New york and terrorised our livelyhoods... it won't mention cia funding Al queda.. or teaching how to do terrorism... it might not even mention that bin laden was close to the bush family. It' probably wont mention oil.

That's history... I grew out of beleiving in stories when they told me fairy tales where not real. When it comes to beleiving fairy tales or making up my own version... I choose my own fantasy everytime.

Londinium is a roman design that has evolved through design and through random acretion... mostly design. Ultimately it is designed as a place of high density population, a centre of civilisation... a city. I don't presently have any evidence to show 'design' in it's creation.

What is the attraction which made everybody decide to hang around london?

Originally Posted by question for you

What is the attraction which made everybody decide to hang around london?

Don't ask me. I don't live there any more. And it is only my third or fourth favourite city.

Originally Posted by Strange

Originally Posted by question for you

What is the attraction which made everybody decide to hang around london?

Don't ask me. I don't live there any more. And it is only my third or fourth favourite city.

hahaa... I thought you knew the history! what part are you from?

I mean it's got a big river good for trading... it probably has some natural shelter from the landscape... it's a good distance away from the coast which is a point of attack in old days.

I expect it was chosen as a place to 'civilise' rather than evolved through random acretion from a bunch of forest hunter gatherers.

I expect it was chosen as a place to 'civilise'

I strongly recommend Dr Iain Stewart's "How Earth Made Us" series. Strongly. How Earth Made Us | Watch Free Documentary Online

I think it's the second episode that focuses on water. This series opened my eyes on why people live where they do. The stuff on water was very interesting - but not entirely unexpected. But I've always been astonished when I'm not appalled about people living on or near volcanoes. His description of how and why that has always happened makes complete sense to me now. (That's in the 'Fire' episode.)

I'm going to ignore the conspiracy theory nonsense for now and try my best to answer the actual questions posted.

Originally Posted by question for you

hmmm still seems a bit complicated.

That is because it is - the joys of finance. You should try price some of these beasts sometimes, it can make your eyes bleed.

Where does the first money come from in an 'economy'? whats that backed by?

What do you mean by "first money"? Money at the end of the day is backed by the government promising that you can pay your taxes with those pieces of paper. In countries with legal tender laws this is further strengthened by the fact that you can also use money to pay any other debt.

Does the organisation that prints the money or cash, also spend the money or cash as a way to enter it into the economy?

This question doesn't really make sense. In the textbook version of this: Central bank buys short dated government debt, creates money in the reserve accounts of the primary dealer banks. Banks do not want to hold excess reserves in a normal economy as they earn no interest on that money so they try to loan it out - either to other banks with a reserve deficit or to business, governments, private citizens, etc which go out and try do something in the economy to earn a return greater than the interest the bank charged for the money.

The federal bank can create money buy purchasing financial assets? such as gold? with pieces of paper?

In short yes, the primary dealers are obliged to take part in the open market operations as a part of there access to the other niceties the central bank provides (such as the discount window). The main financial asset though is short dated government debt (or with QE long dated government debt).

One thing among many that I don't get is: when they loan to middle men who loan to middle men who loan to the public and each time interest is being paid and profit made and ultimately at the lower teir it's much more expensive to borrow than it is from the source (why bother with the middlemen?), where is all that interest coming from?

If you go to Citi bank for example, there are no middle men as Citi is a primary dealer with the Fed. You can get the list of primary dealers here - Primary Dealers List - Federal Reserve Bank of New York The interest is coming from people doing productive things with the loan or in some cases moving future payments forward in time. For example, I know that my Christmas bonus will be $1000 but I will only get it at the end of December which is not very helpful as I am going away before that and need the cash. So I can go to the bank and loan $998 and spend it now knowing that when I receive my bonus I can pay off the loan.

This shows an important function of banks btw (probably the most important function). A banks primary job is to do maturity transformations. By that I mean allowing people to move consumption through time by either depositing capital we do not wish to consume now for use later or allowing us to consume future capital right now.

When the end user... worker? producer of goods? cannot pay off debt and goes bankrupt... who with or at what stage does the buck stop? Who loses out? becuase it isn't the end user.

I'm confused again - what exactly are you asking? If a person who owes a bank money defaults than the bank loses money. Too many people default and confidence in the bank is shaking enough for there to be a run and the bank is shut down.

Originally Posted by river_rat

When the end user... worker? producer of goods? cannot pay off debt and goes bankrupt... who with or at what stage does the buck stop? Who loses out? becuase it isn't the end user.

I'm confused again - what exactly are you asking? If a person who owes a bank money defaults than the bank loses money. Too many people default and confidence in the bank is shaking enough for there to be a run and the bank is shut down.

I think what he's trying to ask is if the money was created out of tin air in the first place who is actually losing out/responsible for the debt etc..
The simple answer is everybody in the chain except for the top, (probarbly a bank or central bank), where it was actually created, they don't really lose out because remember the money didn't really exist until they created it, so they can't lose what they never had. But everybody else in the chain is responsible for their part in the debt.

Originally Posted by Chrisgorlitz

Originally Posted by river_rat

When the end user... worker? producer of goods? cannot pay off debt and goes bankrupt... who with or at what stage does the buck stop? Who loses out? becuase it isn't the end user.

I'm confused again - what exactly are you asking? If a person who owes a bank money defaults than the bank loses money. Too many people default and confidence in the bank is shaking enough for there to be a run and the bank is shut down.

I think what he's trying to ask is if the money was created out of tin air in the first place who is actually losing out/responsible for the debt etc..
The simple answer is everybody in the chain except for the top, (probarbly a bank or central bank), where it was actually created, they don't really lose out because remember the money didn't really exist until they created it, so they can't lose what they never had. But everybody else in the chain is responsible for their part in the debt.

Exactly chris... Thats the answer I was fishing for.

I actually think finance is extremely simple and the economy is transparent like a freshly washed windscreen.

It all makes perfect sense to me.

What doesn't make sense to me because I don't have years to understand... is the way the economic system is presented.

It's simple for me... money is printed for nothing, then spent on gold and diamonds and labour and all sorts of real wealth. Then when need be... more money is printed.

It's such a simple monopoly.

the only thing that confuses me is how people fail to realise this.

Originally Posted by question for you

Originally Posted by Chrisgorlitz

Originally Posted by river_rat

When the end user... worker? producer of goods? cannot pay off debt and goes bankrupt... who with or at what stage does the buck stop? Who loses out? becuase it isn't the end user.

I'm confused again - what exactly are you asking? If a person who owes a bank money defaults than the bank loses money. Too many people default and confidence in the bank is shaking enough for there to be a run and the bank is shut down.

I think what he's trying to ask is if the money was created out of tin air in the first place who is actually losing out/responsible for the debt etc..
The simple answer is everybody in the chain except for the top, (probarbly a bank or central bank), where it was actually created, they don't really lose out because remember the money didn't really exist until they created it, so they can't lose what they never had. But everybody else in the chain is responsible for their part in the debt.

Exactly chris... Thats the answer I was fishing for.

I actually think finance is extremely simple and the economy is transparent like a freshly washed windscreen.

It all makes perfect sense to me.

What doesn't make sense to me because I don't have years to understand... is the way the economic system is presented.

It's simple for me... money is printed for nothing, then spent on gold and diamonds and labour and all sorts of real wealth. Then when need be... more money is printed.

It's such a simple monopoly.

the only thing that confuses me is how people fail to realise this.

The smart purchase real assets, products and goods with the intrinsically worthless paper, and the middle class and poor are rarely smart. It is a duck, duck, goose game for the smart, and they only tend to hold fiat currency during the time it takes them to get it from someone else to the time it takes them to purchase something else with it, and they tend to do this fast because they do not want to be the fool, or goose.

Same applies to all paper markets, wall street included. You would be better off holding and having something as simple as instant coffee and cups than you would be if you got caught holding paper from governments and/or wall street.

Ultimately, those that have nothing of real value will pay the price, and those that do have things of real value, will be fine. Unfortunately for the middle class and poor, whom are least culpable, they will pay the most for the issuance of loans done so in fiat paper currencies regardless if they are "paid back" or not (blood sweat and tears in exchange for borrowing fiat currency from people who do not earn it and get to create it is a crime IMO.).

and those that do have things of real value,

And we'll be trading salt and bread fruit again.......

Originally Posted by Lynx_Fox

and those that do have things of real value,

And we'll be trading salt and bread fruit again.......

God forbid that those that like trading paper they print and numbers they type on a computer for commodities, assets, products, goods and services ever have to go back to such barbaric practices like trading things of value and/or using medium of exchanges that are valuable. It would be the worst.

Indeed it would be the worst. Many of us are familiar with the trade triangles such as sugar, rum and slaves but imagine the hundred factored arrangement of "really value things" necessary just to coordinate getting the parts to build a computer mouse. Or five hundred factored trade of banana, grapefruit and count Chocola cereal plus 447 other things just to build the dash of a car.

Abstract monitory values such as recognizing paper are the only reason we got past individual making of things centuries ago--it's intrinsically tied to the very advancement of society.

Years ago the paper might have had some real relevance, these days though it's numbers on computer screens that really matter. Just how much of our actual wealth does any of us really have in cash any more?

Originally Posted by Lynx_Fox

Indeed it would be the worst. Many of us are familiar with the trade triangles such as sugar, rum and slaves but imagine the hundred factored arrangement of "really value things" necessary just to coordinate getting the parts to build a computer mouse. Or five hundred factored trade of banana, grapefruit and count Chocola cereal plus 447 other things just to build the dash of a car.

Abstract monitory values such as recognizing paper are the only reason we got past individual making of things centuries ago--it's intrinsically tied to the very advancement of society.

Paper money has been around for thousands and thousand of years, and it is not what has advanced humanity or civilizations. 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.

From Sumeria to Egypt, from Rome to the United States, all were built, grew and were sustained by intrinsically valuable currencies, not fiat currencies nor the debasing of currencies.

intrinsically valuable currencies

And there's your problem. There's nothing intrinsically valuable about anything other than what we eat, cloth and shelter ourselves with--non of which work for modern societies.

Originally Posted by Chrisgorlitz

Years ago the paper might have had some real relevance, these days though it's numbers on computer screens that really matter. Just how much of our actual wealth does any of us really have in cash any more?

Not much difference between a number on a screen and a number in a ledger.

Originally Posted by river_rat

Originally Posted by Chrisgorlitz

Years ago the paper might have had some real relevance, these days though it's numbers on computer screens that really matter. Just how much of our actual wealth does any of us really have in cash any more?

Not much difference between a number on a screen and a number in a ledger.

I guess you could say that for the numbers on computer screens (virtual money) there isn't any major requirement to actually have anything physical to represent it, it can be used, spent or moved around quite easily in electronic form. Numbers in a ledger have traditionally been used to keep a record of money, with these numbers themselves not being the actual money rather just a count of actual money, therefore without something physical to back them up such as bank notes the numbers themselves were pretty meaningless.

Originally Posted by Chrisgorlitz

Originally Posted by river_rat

Originally Posted by Chrisgorlitz

Years ago the paper might have had some real relevance, these days though it's numbers on computer screens that really matter. Just how much of our actual wealth does any of us really have in cash any more?

Not much difference between a number on a screen and a number in a ledger.

I guess you could say that for the numbers on computer screens (virtual money) there isn't any major requirement to actually have anything physical to represent it, it can be used, spent or moved around quite easily in electronic form. Numbers in a ledger have traditionally been used to keep a record of money, with these numbers themselves not being the actual money rather just a count of actual money, therefore without something physical to back them up such as bank notes the numbers themselves were pretty meaningless.

Assets, land, goods, products, contracts, services promised, commodities, etc., used to be what drove the economy and backed the issuing of paper but, not anymore. It is so corrupt that the ruling classes and their friends have flipped every sound economic principle on its head by way of creating currency backed by nothing, representing nothing, and then use that currency to buy up everything and anything they want.

Originally Posted by Lynx_Fox

intrinsically valuable currencies

And there's your problem. There's nothing intrinsically valuable about anything other than what we eat, cloth and shelter ourselves with--non of which work for modern societies.

What we protect ourselves with, both individually and as a whole, is intrinsically valuable as well, and all these things will work for modern societies. In fact, those that have to put up land, labor/work, assets, products and goods to obtain currency/money, even with the trillions and trillions of ruling class fiat currency/dollars buying up and inflating everything around, still manage to make intrinsically valuable transactions work for them, albeit barely due to the crooks and fraud. However, If the crooks were removed, if the fiat fraud was stopped, contrary to your stance, then the working classes, as well as America, would be in a much better place financially.

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.

Originally Posted by river_rat

Originally Posted by Chrisgorlitz

Years ago the paper might have had some real relevance, these days though it's numbers on computer screens that really matter. Just how much of our actual wealth does any of us really have in cash any more?

Not much difference between a number on a screen and a number in a ledger.

Maybe this perspective may help you balance this affirmation. It is A TED talk about the mathematical/computing approach to 'economy'.