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Thread: The Global recession - What caused it? How can it be?

  1. #1 The Global recession - What caused it? How can it be? 
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    Hi all.

    We in this reccession where jobs are low, confidence is low etc etc.

    My question is 'what in hell is going on?'

    Ok the only wealth on this planet we call 'natural resouces'. That is, all the resources this planet holds and has always held, which we can 'exploit' or benefit from.

    Nobody owns natural resources as such, they belong to the earth and are here for the purposes of sustaining life. Some insecure people feel the need to accumalate as much of the earths resources as possible so they can pass it on to their own lineage and give there own lineage a percieved 'head start' in the evolutionary battle. Our whole 'economy' is based around a command chain running from the very wealthy at the top, who seek to gain more wealth, down to the very poorest do the most degrading jobs for the least amount of money. All pretty well understood so far I would hope.

    Heres the bit I don't understand: In 2007 the earth had a certain amount of resources available for living organisms to benefit from.

    Farming land, forests, gold, precious metals, animals to farm, even people to work count as a resource.

    What happened to these natural resources between the year 2007 and 2008?

    If nothing happened and these resources stayed the same... How can we have a recession? what does it mean? Who is responsible?

    The natural resources havent changed... So why has our standard of living changed?


    Any input on any area of reccession/economy more than welcomed.


    Thanks for reading


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    If nothing happened and these resources stayed the same... How can we have a recession? what does it mean? Who is responsible?
    The irresponsible, that's who. The reason for this recession is much the same as the reasons for the Great Depression of last century.

    People who claimed to know what they were doing also claimed that they should be unrestricted by fussy regulators in going about it. Which OECD country had the least problems? Australia. Why? Because our financial sector was and still is strongly regulated.

    Modern societies need regulations to ensure that unscrupulous operators don't sell contaminated or unhygienic food, or unsafe toys, or dangerous cars. They also need regulators to ensure that people peddling financial 'products' are selling something reliable, predictably if not entirely stable. There's nothing special about financial markets that exempts them from the normal kind of oversight we expect in other essential areas like water quality or laws about real estate or inheritance. We know that people will do dishonest or stupid or risky things if left to their own devices. That can be counterbalanced by sensible constraints that apply to everyone.


    westwind and question for you like this.
    "Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen." Winston Churchill
    "nature is like a game of Jenga; you never know which brick you pull out will cause the whole stack to collapse" Lucy Cooke
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  4. #3  
    Forum Radioactive Isotope skeptic's Avatar
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    There are two things that make people wealthy.

    1. Production. People have to be working to manufacture goods and services, which form the basis of wealth.
    2. Good distribution. If too much of those goods and services wind up in the hands of a few, then the many will remain poor.

    In a recession, normally for various reasons production drops. If too few people are working, then there are not enough goods and services to provide for the wealth of everyone, and the poverty of recession begins. Our society is very complex, and there are many ways to interrupt the flow of goods and services production.

    If, for example, too much of that commodity we call money evaporates by virtue of giving out a whole lot of loans to people who cannot repay it, which happened in 2007, then those who lose the money cannot use it to invest in factories, farms and so on which produce those goods and services. Also lack of money means they cannot pay the workers. This leads to people losing their jobs, and money being needed by government to pay welfare and so on.

    The whole thing becomes a real mess, and only a super-computer could follow the twists and turns of cause and effect in a complex economy, when money becomes tight.
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    The Enchanter westwind's Avatar
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    When the Banks play Father Xmas for Speculators and Investors using the savings of others to create Disneyland in Antartica, then watch out.

    Or if a son persuares his Parents to hand over their Life Savings for a little scheme he has going that can't fail, and will treble their money in 5 minutes, then this might be a worry.

    But you will gather something is up with the Economy when Wall St and the Bank of England ( the old lady of threadneedle street ), closes for a few years due to extended stocktaking.

    My advise? Use second hand building material from the hard rubbishcollection days and keep a few chooks. westwind.
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  6. #5  
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    Quote Originally Posted by adelady View Post
    If nothing happened and these resources stayed the same... How can we have a recession? what does it mean? Who is responsible?
    The irresponsible, that's who. The reason for this recession is much the same as the reasons for the Great Depression of last century.

    People who claimed to know what they were doing also claimed that they should be unrestricted by fussy regulators in going about it.
    Hahahaaa... Hahaaahaahha. I like that. They are responsible and yet irresponsible, an unfathomable paradox. Am I confusing irresponsible with unresponsible? I don't know, my mind has been short circuited by the whole those responsible not being responsible dynamic.

    Quote Originally Posted by skeptic View Post
    If, for example, too much of that commodity we call money evaporates by virtue of giving out a whole lot of loans to people who cannot repay it, which happened in 2007, then those who lose the money cannot use it to invest in factories, farms and so on which produce those goods and services. Also lack of money means they cannot pay the workers. This leads to people losing their jobs, and money being needed by government to pay welfare and so on.

    The whole thing becomes a real mess, and only a super-computer could follow the twists and turns of cause and effect in a complex economy, when money becomes tight.
    It does look a real mess, but it's easily over complicated.

    Money isn't a commodity... its a peice of paper with a print on it that you can use to trade commodities.

    Money doesn't evaporate, it's printed by the mint pretty cheaply then put into circulation. Each time it passes hands ligitimately tax is paid, the more times it passes hands the more tax is paid. It's all contained within the economy. Even if people were loaned money they couldn't repay, those people spend that money, tax is paid and it stays in the economy. The companies that loaned irresponsibly are probably compensated aren't they? Ultimately the money comes from the government mint and returns through taxes. I would have thought that money makes money simply by being in circulation.

    But thats money, it's just trading notes used for trading comodities. Comodities are made from natural resources. So, if comodity production is slowing due to less money being available through loans, then the only thing thats changed in the economy is that less notes are being printed and loaned out from the source. Natural resources are becoming scarse also though.

    Really the whole recession seems to simply be a lack of confidence and belief that the markets were over inflated.
    People who deliberately inflate markets and then get out before the bottom falls out should be investigated. That kind of practice seems a bit sinister and unecesary. You can't have banks using customers money to invest and profit and create whole new markets that are based on loans, as soon as confidence drops everybody grabs what they can and if you didn't get your money back you're stuffed.

    It does seem like we need to regulate the way money is earned and used and the way 'the markets' work. I think money should be invested heavily in sustainable science and technology to create a responsible economy that turns natural resources into recyclable commodoties, doesn't pollute the earth and doesn't allow such massive advantages to those in goverment and wealthy private individuals who are willing to be unscrupulous.

    Why do we have to have inflation? Why can't I keep my money in a safe and know that it'll be worth as much when I spend it as it is today? I don't want to give it to banks so they can lend it out and make a profit, and build an economy built on middle men and loans and confidence. Didn't they used to call those sorts of people confidence men in the old days? Irresponsible confidence men...
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  7. #6  
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    What caused it?
    (wild guess du jour)

    $100/bbl oil was the trigger that started the collapse(the gun was already loaded bu loose fiscal policy, both private and public). Suddenly prices for certain oil related products increased, with little increase in profits. So, people and companies began to cut back on "discretionary" spending, which began to dry up the available(for common people) money supply. Add in the borrowing by the U.S. government for the "wars" and even less "free cash" was roaming the streets, and slowly, the euphoria driven expansion, and excalating property "value" began to falter, fade, and finally fall ------as people saw housing prices(the bulk of savings in this country was in "home equity") fall, confidence was eroded, and those who could, like banks and the "health care" establishment began grabbing every last dime they could get their grubby little hands on. Which led to even less available money-----------and the thing began to collapse even more. Then the government, realizing that loose regulation was (partly) to blame, tightened up the regulations, and banks simply quit lending as they fought to build up their reserves, while their housing based equity was eroding.
    Really, predatory lenders who preyed on the dreams of the unwise, loaning them money to buy houses and cars, and nights on the town that they couldn't afford, with payments lower than the interest rates, followed by increases in interest rates which made repayment impossible, created a "grab your cash fast mentality". Credit card companies were commonly raising interest rates on credit card debt to 29% after one late, or missed payment. Some, went so far as to not open the mail from their cardholders until after the due date, then slapping on the extra charges for late payment penalties, then increasing the interest rates.
    When people who are already in debt are faced with rediculiously high interest rates, and no more ability to borrow their way out of current crises.
    They have to quit buying.
    And, the thing just kept snowballing.

    "Full recovery" could easily take the greater part of a generation.
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  8. #7  
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    Quote Originally Posted by sculptor View Post
    "Full recovery" could easily take the greater part of a generation.
    So is that the plan? to recover it all to it's former glory? But wasn't it all doomed to collapse anyway? isnt that what it always does? haven't we found that the hard work of our ancestors has done little to make life easier for us?

    Surely we would never want to recover such a fragile economy that exploits the earth's resources, pollutes and endangers health and benefits some far more than many? It's a perfect time to plan fairer more stable economic system i'd have thought.
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  9. #8  
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    Ok the only wealth on this planet we call 'natural resouces'.
    Natural resources certainly are potential wealth, like the millions of tons of mineral X drifting in the earths core, but until it is transformed and made accessible its not actual wealth (from my point of view, its potential wealth). To me an important aspect of wealth is "access" to "production".


    If there are people on the streets without a house, standing in front of an empty house falling into disrepair because its not occupied, the system is crap.
    If theres potential to make food for all humans, but children die each day because they cant access food, the sytem is crap.
    If there are no people in a factory because no one has money to buy what the factory would produce because they arent working in the factory to make the stuff they cant afford because they are not making it, the system it complete CRAP.
    If an automated factory could produce abundant items useful for people but the people cant accesss this production because they are not paid to toil to make the items that the machines were made for to reduce their toiling in the first place, the system is crap.
    If people cant have free access to the information and training that would allow them to contribute in a wider array of participation, the system is crap.




    "If nothing happened and these resources stayed the same... How can we have a recession? what does it mean? Who is responsible?"
    It means the monetary system is crap.
    You can fix the symptoms, like you can remove water from a sinking ship, you can have regulations to prevent monetary and financial ponzi schemes, you can have local currency like Worgl, and other measures that would make "more" people prosper quite rapidly, but this would not fix the systemic problems that would sooner or later cause corruption, conflicts of interest, influence peddling, and you would be back in the crap. Because of the great depression, the Banking Act of 1933(or something close) was introduced, FDR made a speech about how Wall Street stood accused by public opinion, but eventually, people(bankers) with influence started influencing the government and bribed/financed those who were suppose to look after public interest, and soon enough the Foxes were put in charge of watching the hen house, and the Banking Act was side stepped, tip toed around, then it was chipped, diluted, then axed, and chopped off, until the Foxes had a blank check in watching the Hen House. Unlike the great depression however, the Foxes are still now in control, Obama (and certainly not Romney) has not reinstated the Banking Act of 1933 and Wall Street is secure in its control of watching the hen house.


    I also recommend watching the video "Money as Debt" it will display another angle or perspective on the problem (It fails to grasp that money it itself a source of conflicts of interest and unwarented influence, but shows the current incarnation of problem in a way that is not mrevealed in MSM).


    Another angle is that corporations are like libertarian fishermen in a lake, that each want to maximise how much fish they catch, but if all are greedy then everyone suffers the consequences of a collapse in the fish stock. All corporation want to minimize their costs, and pay as little for human labor, suppressing wages if they can or replacing/outsourcing to where theres lower wages, or automating if that costs less. In an insane system, this makes sense, but only on an individual perspective, because its ok if you pay pennies to your own employees since you dont care if they are deprived of other producers output, as long as others dont do the same, but once everyone does that then theres less people able to buy the products and services. If people dont have money, you can always use Usury and loan them the money you are not paying them to buy the products thy are producing, hence credit cards, but once everyone is in debt, they can no longer consume and the crap hits the fan.








    "Modern societies need regulations to ensure that unscrupulous operators don't sell contaminated or unhygienic food, or unsafe toys, or dangerous cars. "
    Good point. The operators can make money however, and eventually can bribe the people in charge of regulation. As I mentiened this occured with the Banking Act in the US which was undermined by the bankers. Those that make a killing have more money to influence plutocracies. The monetary system itself creates the conflicts of interest that causes operators to become less scrupulous and creates the incentive for the most unscrupulous ones to sell unhygienic food, or unsafe toys, or dangerous cars.




    " then those who lose the money cannot use it to invest in factories, farms and so on which produce those goods and services"
    I do not beleive its a lack of production "capacity" that requires investments thats at the heart of the problem, thought this as occured and is a problem, its mostly the lack of purchasing power erode by decades of neoliberal policies(reganomics) that favor the 1% at the expense of the working class. I saw a very old interview with Alan Greenspan in which he says he wants the income of workers in the Us to be suppressed and of course the quality of life which doesnt matter anymore than the quality of life of sweat shop workers that are more profitable(so that the 1% he represents can make more profits, which is the Libertarian fisherman syndrome)




    "Money doesn't evaporate, it's printed by the mint pretty cheaply then put into circulation."
    No. It does evaporate. And its important to understand that. Contrary to the right-wingish narrative of the printing press, most of the money in a "Fractional Reserve" system, is made out of thin air by Private BANKS laoning money that "Already" belongs to a depositor. You could have money backed by gold or anything you want, it doesnt matter, if the shit hits the fan and the ponzi scheme is called, 90% of people that THINK they have 1000$ because a number in an account "says so" will find there is no money and will wonder "Where" did the money go? The money did not exists, everyone thinks they have that same 10% of paper/solid-gold/super-sound-hard-currency-backed-by-titanium, its the oldest trick in history, but made legal, and sure as hell not explained in a way that people would understand, even if its quite simple when you stop and really think about it
    Last edited by icewendigo; November 12th, 2012 at 01:17 PM.
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  10. #9  
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    The economy ain't dead and is loath to change

    Plan?
    What, exactly, makes you think that there is(or might be) a single integrated operational plan
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    But wasn't it all doomed to collapse anyway?

    Yes, since the 50s people have been working more for less (dont forget that most 50s famillies were relatively well off on *ONE* income), wall street doesnt care, if people are lay off and the company outsources jobs to China but makes more profits all is great, and even while the situation of workers have deteriorated many companies are making record profits, but the lack of purchasing power was CLOAKED by debt, which can be seen as a moral bad thing (tisk tisk, you should not borrow to live) but whose meaning is not understood, if people stop spending to enjoy a certain quality of life, its not just ~too bad so sad just live like a derelect I dont care just live according to your means~, its also less economic activity and less jobs (and spiral). So the economy was proped up by debt, and that cannot be sustained, so indeed it was doomed to collapse imo too.

    It's a perfect time to plan fairer more stable economic system i'd have thought.

    Yes its up to us to rethink the system (the people who benefit the most from the current system, like barons benefiting from feudal system, will not be stepping first to change it, like plantation owners benefiting from slavery were not at the forefront of the emancipation of slaves). Imo a Resource Based Economy is a good place to start, though I dont agree with some of it, and it as yet to be tested, its worth considering some of its ideas.

    I dont think its possible to change the economy in a monolithic way, but that if a better system can be designed, this system can be applied partially and expand, potentially very rapidly once a working prototype is functional and other groups can duplicate it. Like plants that both grow by rearranging molecules around them in a different way AND also multiply.
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  12. #11  
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    Quote Originally Posted by sculptor View Post
    What, exactly, makes you think that there is(or might be) a single integrated operational plan
    Must have been a fundamental oporational plan to begin with, which has evolved.
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  13. #12  
    Forum Radioactive Isotope skeptic's Avatar
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    People in the 1950's were not well off. Myth. Economic indicators show that the cost of food was a much higher percentage of the family budget, for example. The family car cost a lot more as a percentage of the annual wage. The only thing, really, that was cheaper as a percentage of income was land. So the family home was reasonably affordable. Everything else was more expensive.

    I remember the cost of our first tiny black and white television set. Today, you can buy a 50 inch LCD flat screen colour and 3D set for less money, as a percentage of the average annual income, than our tiny B & W set.

    I would also point out to those who see simplistic 'cures' to economic problems that Carl Marx saw simplistic cures, too, which were implemented by Lenin, and later by Stalin. Guess what happened?

    Economies are complicated beasts. We know that tight money was the trigger that launched the recession. Curing it is something else. Simply printing more money may not help. In fact, increasing the money supply too much simply launches rampant inflation, which can be a total killer to those on fixed or low incomes. In other words, it causes extreme poverty.
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    Economics problems and their solutions - whether Hayek or Marx - always finish up in H L Mencken territory.

    For every complex problem there is an answer that is clear, simple, and wrong.


    "Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen." Winston Churchill
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    Nice quote, Adelady. I like it.
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    People in the 1950's were not well off. Myth.
    Sure, people in the medieval age were not well off either, heck they didnt even have black and white TV, but thats not because Feudalism was so great, but in part because they didnt have the same level of technology as we do now.




    Economic indicators show that the cost of food was a much higher percentage of the family budget, for example.
    Yes, they didnt have 3D flat screen TV in the 50s, and their internet bills was much lower, and their cellular phone bill was lower, and before the 20s they didnt even have toilet paper so their toilet paper expenditure was lower because they didnt have any, and you can switch % around and say this was more expensive than that, etc, but at the end of the day the family was working 50% less for a home and to live. Im not saying they were better off, Im saying they could support a family on half the income (generaly speaking).
    also note that there is a hell of lot more automation than there were, production has actually risen in many sectors while human labor has gone down (generally speaking of course).
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    For skeptic, Poste 12. Marx and Lenin. Their Ideas. For a strong people and a fair Economy. How Fair is Fair? I don't know. But I believe this--they believed they understood the principles of the production of Goods and Services and the mitagation conditions of Supply and Demand. They also believed that Directional Control would be necessary in the organisational requirements of the Pooling of Labour to achieve the most efficient results.

    As do other Constitutions and heirarchial Movements. ( Catholic Church. and to a lessor extent The Church of England ( read Monarchy--Landed Gentry - Sirs and Dukes).

    So now what do we have.?

    For all intents and purposes, opposing points of view. ( meaning vested interests ).

    But for mine skeptic, and other interested Members and Administrators, the Soviet System was never allowed to operate on a level playing field.

    Any sanction that could be brought to bear by those with opposing isms was put into play.

    Short of accusing all Socialists of being Mother Fxxxxxx and Baby EXXXXX they were quite rightious about their absolute right to destroy any new found System that threatened the annihation of their long held fields of play.

    And that is the simplified truth of it.

    I myself was a good Socialist until along came Stalin. westwind.
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    People got it in their head that they could get free labor from a simple (and short sighted) financial trick. Well, not free labor. More like they got it in their head that they could trade 1 hour of unskilled labor in the USA to get 5 hours of unskilled labor in a foreign country (like China) and that somehow that system would be perpetually sustainable.

    Trouble is, the market corrects. It always corrects to physical reality. It may stray briefly sometimes, but it always finds its way back. The physical reality is that 1 hour of unskilled labor is always going to be equal in physical value to one hour of unskilled labor. There's no way around that. We can borrow and borrow ad infinitum trying to sustain our present system of unequal unskilled wages..... but all that will accomplish is get us further in debt while delaying the inevitable.

    Meanwhile, as the market corrects, wages in the USA are going to be falling. (Real wages. Nominal wages may hold or increase slightly as inflation gradually wears them away.)

    Falling wages is deflation. Even if it's local deflation, deflation is deflation. Gold may go up, making it appear the currency is holding its value overall (because the total price of all goods including gold is still on the rise - just not if you remove gold.)

    Deflation stops investment in infrastructure and in manufacturing. And... what do you know? That's what's been doing the worst in this recession.
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    The economic system tha is set up today is very simple, it is not complex.

    As Question For You points out, all economies are based, or should be based, on resources. It should also be the supply and demand of these resources that dictates inflation or deflation, growth or recession, price discovery, however, this is not how the West/Global System operates today.

    Today, the supply and demand of Commodities/Materials does not discover then dictate price. A fractional government created and regulated paper market, which is highly over-leveraged, controls/dictates/manipulates the price of goods/materials. For instance, the amount of actual silver being produced in the world is about 600-700 million troy ounces a years, while the amount of silver (fake paper silver) people actually sell and buy each year is about 100 times more that what is actually produced. Every commodity and raw material is manipulated this way. Just like the banking schemes and the runs on them in the past, minus the fact that governments can print real commodities to cover their manipulation, if there is a run on or disturbance in any commodity (a demand for physical and real possession) then demand would outstrip supply, recession would occur.

    Contrary to the rantings of communist, socialist and a lot of democrats, it is governments who control the economic system, 100%, by way of rules and regulations. Everything is set up, controlled and ran by governments. The system, the rules, the game, what can and cannot be done, and it is governments who dictate fractional banking, fractional paper commodities and manipulate all prices by creating and setting up false markets to manipulate prices that lead to false price points/discoveries, and this is why and how bubbles and recessions occur today.

    Free/sound markets not only find/discover true prices based on supply and demand, they have a way of stopping the over consumption and abuse of commodities and materials by pricing them appropriately. In a free market, unlike a government regulated/manipulated market, you just cant sell/flood the market with 1 trillion barrels of oil that does not exist in order to keep the price of oil down so people can keep consuming a dwindling real supply at a catastrophic pace. This is just how governments do it.

    Need currency, print it.
    Need consumption of commodities and need them to be cheap, sell a trillion pieces of paper commodities to manipulate prices.

    And the regulation governments have in place to stop people from actually demanding or taking their paper commodities and trading them in for real commodities? Governments have it set up to were real commodities do not have to be given for these pieces of paper, fiat currency can be given for the commodity papers and their is nothing people can do about it.
    Last edited by gonzales56; November 12th, 2012 at 08:55 PM.
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    Forum Radioactive Isotope skeptic's Avatar
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    The problem with an unregulated, totally free market, is that people cheat, steal, and swindle. Rules are needed to keep the transactions as clean as possible.
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    Trouble is, the market corrects. It always corrects to physical reality. It may stray briefly sometimes, but it always finds its way back. The physical reality is that 1 hour of unskilled labor is always going to be equal in physical value to one hour of unskilled labor.
    Free/sound markets not only find/discover true prices based on supply and demand, they have a way of stopping the over consumption and abuse of commodities and materials by pricing them appropriately. In a free market, unlike a government regulated/manipulated market, you just cant sell/flood the market
    Societies and their governments have interests above and beyond the 'value' of labour and 'consumption' of goods and services. One hour of unskilled labour may not be "worth" as much as that of skilled labour. Community standards saying that unskilled labour involved in producing wholesome milk should be promoted and that of 'skilled' labour identifying ways to adulterate milk with cheap substances in order to fool the standard testing for commercially sold milk should be punished severely - and - that people who pay 'skilled' workers to do such things should be stopped and that the milk in question should never be available for sale in the first place.

    The idea of 'free' markets falls down as soon as there is unequal information on the two sides of a transaction. It works a treat in a vegetable market in a village square where everybody knows how to grow vegetables and what is and isn't a good product or a good price. As soon as a snake oil salesman turns up in that same market square and deliberately deceives people about what he's selling, the whole concept falls apart. Particularly when the product or service is dangerous or poisonous. We don't see free traders going from town to town in advanced industrial economies claiming, say, to cure blindness - by piercing cataracts which does actually clear a person's vision for a few days before irrevocable total blindness sets in - because we don't allow such deceptive and dangerous practices. And we have standards, enforced by regulation, for all manner of foods and other products.

    For the time being we do allow homeopathy because it's seen as merely wasteful rather than actively dangerous. But we don't allow sub-standard child safety seats for cars - because we know enough about the dangers to insist on proper standards.

    Over consumption and wasteful practices are primarily cultural issues. Even those are being tackled by imposing more realistic costs on waste disposal and providing easier venues for recycling.

    And for finance? There are good ways to regulate and bad ways. One of the best is to insist on simplicity and transparency - and to impose controls, regulations and penalties that make it easy for consumers to understand what they're getting into and, just as important, provide simple ways to report undesirable practices.

    Who says private businesses can't flood a market? How else do large supermarket chains drive out competitors? Just instal your own over-supply at artificially reduced prices until your competitors go broke and then take advantage of your newly acquired market domination in a town or a region. They do it all the time. They even do it within their stores by undercutting name brands with 'own' brands. Same with dumping over-production in one region or country destroying competitors in an unrelated region or country. That also happens all the time - otherwise there wouldn't be WTO rules about it.
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    Consumer protection and safety laws are not what we are talking about.

    Time and time again those that support the complete control and regulation of economic markets, which we have now, will try and confuse people into thinking that consumer protection and safety laws are the same thing when they are not. They are two separate issues even though consumer advocacy has always been the main excuse/sword/pathway/doorway used to get to taking economic freedom from people.

    Governments completely control every market, they have designed the game, set it up, control it and nothing about a single market under the law is free. All failures of all western markets are due to and are the product of government control. Free Markets, as well as all markets, produce criminals but, it is only free markets that are self regulating, are anti-corrupt, demand swift and quick actions to correct wrong acts, deeds and prices and keep markets in the realm and realms of reality (sustainable markets/resources).

    Free Markets have not existed in the united states for decades and they will not come back until the current system is gone.


    Free Markets also cannot flood a market with anything but real commodities, materials and goods. Any price swings in a free market based on real goods is just. Free Markets, and rightfully so, cannot, like today's government corrupt markets, flood markets with fake paper commodities in order to boost or crash (manipulate) markets. The Housing market crash? All the United States governments fault. This could not and would not have been allowed or able to happen in a free market.
    Last edited by gonzales56; November 12th, 2012 at 11:10 PM.
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    swift and quick actions to correct wrong acts
    Free Markets also cannot flood a market with anything but real commodities, materials and goods.
    Milk is a classic example of how this is not so. How can individuals identify a 'wrong' and what kind of 'swift' action would correct it?

    The state Food and Dairy Commission was notoriously corrupt, and Lovejoy had campaigned hard for local inspections of dairies selling milk in Portland. ...
    Lovejoy remembered how powerless she felt in a 1916 letter to a colleague, "(for) several years the women of this city were unable to secure any protection, for the reason that the commercial forces (dairymen), with sovereign power, were arrayed against the home forces (unenfranchised mothers), who at that time depended solely upon the beautiful, sentimental influence that we read about in the literature".
    This particular woman had lost a child to an infection probably caused by contaminated or otherwise unsafe milk. Oregon Suffrage Movement Coalesced Around Milk Safety Issue » News » OPB

    The only effective action is legislative action. Which can only be enforced by public servants with real power to impose real penalties to protect the public. Calling a market 'free' gives crooks and shysters and dyed in the wool criminals carte blanche to make money at a community cost of illness, injury, bankruptcy and death.

    The issue is not whether markets, financial or any other kind, should be free. They should not be 'free' of community standards of decency, honesty and fairness. Communities and their political representatives have every right to set boundaries around what does and doesn't constitute fair dealing, in finance or any other kind of transaction.

    The real issue is not whether to have a boundary, it's where to draw it. Too loose, and the gamblers and cheats can bring down the greatest economies the world has ever seen. Too tight, and you finish up with criminals having untrammelled sway over black markets in desirable goods, as in many former communist countries, and public officials as corrupt as those seen during Prohibition in the USA.
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    Again, what does bad, contaminated or spoiled products have to do with free markets or government ran and controlled markets?

    You are actually trying to claim that politicians and governments are upstanding good guys who protect people while farmers are the scum of the earth that try to kill everyone. Granted this argument works with and moves the uneducated to pitch forks and fire but, it is the furthest thing from reality.

    I have said it before and I will say it again.. Consumer safety and protection is a completely different issue/topic than that of economic systems.

    People have every right to set boundaries around what does and doesn't constitute fair dealing, in finance or any other kind of transaction. They have this and these rights by the power of their wallets and if need be, the courts and/or the exercise of their other rights, however, what is wrong and where america went wrong was in giving the peoples rights within an to a free market over to the government and politicians.

    I will play your game a little though and "show how brutal, uncaring and barbaric government regulated and controlled systems are."
    "In all, 52 people were transported to a nearby hospital directly from the shelter, and eight more were transported to a hospital from Samaritan House, another local shelter, said Meghan Hughes, the city Department of Environmental Health spokeswoman. The food poisoning victims had all eaten at the Denver Rescue Mission, she said."
    Look at how government control and regulations abuse and harm the poor.. How about babies? Surely we can find a million examples.. Now this is how you are trying to make a case against free markets, and it does and will work with the uneducated but, and again, these type of stories and "examples" have nothing what so ever to do with economic markets.
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    The financial system requires regulation for the simple reason that left to its own devices it is inherently unstable - the key ingredient that leads to this instability is credit and almost every financial crisis can be attributed to it in some form or function. Blame Minsky
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    The financial system requires regulation for the simple reason that left to its own devices it is inherently unstable - the key ingredient that leads to this instability is credit and almost every financial crisis can be attributed to it in some form or function. Blame Minsky
    Unfortunately, you just could not be more wrong unless you are only and specifically referring to fractional financial systems and/or unlimited fiat creation systems, both of which are part of the current western/global economy.

    When and where currency is a relatively stable commodity or currency cannot be created without two products, goods or services giving it life, stability is the norm. It is only when fiat paper is allowed to over represent a store of wealth or when fiat currency is created without representing a product, good or service on both sides of a single transaction that an imbalance, or instability, occurs.

    Sound money and sound financial systems stabilize/ground economies in reality because they are based on actual trade/transactions and real resources, not fake supply and demand of resources or false and unreal/incomplete transactions.

    It is government regulation/control that has set up and runs the current finical system. Not free markets.
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    Quote Originally Posted by gonzales56 View Post
    Unfortunately, you just could not be more wrong unless you are only and specifically referring to fractional financial systems and/or unlimited fiat creation systems, both of which are part of the current western/global economy.

    When and where currency is a relatively stable commodity or currency cannot be created without two products, goods or services giving it life, stability is the norm. It is only when fiat paper is allowed to over represent a store of wealth or when fiat currency is created without representing a product, good or service on both sides of a single transaction that an imbalance, or instability, occurs.

    Sound money and sound financial systems stabilize/ground economies in reality because they are based on actual trade/transactions and real resources, not fake supply and demand of resources or false and unreal/incomplete transactions.

    It is government regulation/control that has set up and runs the current finical system. Not free markets.
    Um no on so many levels - can I point you to Minsky's paper before we start this debate?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Again, what does bad, contaminated or spoiled products have to do with free markets or government ran and controlled markets?

    You are actually trying to claim that politicians and governments are upstanding good guys who protect people while farmers are the scum of the earth that try to kill everyone. Granted this argument works with and moves the uneducated to pitch forks and fire but, it is the furthest thing from reality.
    Governments are upstanding good guys? I thought I said that tightly "controlled" systems were an invitation to corruption - government officials are people like anyone else. You structure your economic system and finance/product/service availability so that even the best person is forced to deal outside the rules, pretty soon everyone is willing to bend or break rules (like prohibition in US or jeans, soap and toilet paper in the sillier parts/times in the old communist bloc). When cops and public servants are obliged to violate regulations or pay bribes to other cops or public servants just to get a house or a decent basket of ordinary groceries or needed medications, the system corrupts itself from the inside out.

    Farmers are not scum of the earth, they're people trying to make a living. If they're selling into a market where shoddy processing, dilution, contamination, substitution and unsafe practices are common practice of other sellers, they'll be unable to make money if they produce a better product. The operation of a local or regional cartel (producers' association or whatever they call themselves) will prevent them from advertising that their milk is a better or safer or more nutritious product than the rest and make money that way. Such cartels routinely bribe politicians into (not) passing legislation that would entrench their advantages and prevent changes in whatever the dominant group is used to.

    I simply do not understand what you're getting at when you say that goods, services and finance are separate concepts or processes from "economic systems". (I remember similar frustrations 40+ years ago in Economics 1.) If 'economic systems' are not about trade in goods and services and the financing of trade and individual activities, then what are we talking about?
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    Quote Originally Posted by adelady View Post
    I simply do not understand what you're getting at when you say that goods, services and finance are separate concepts or processes from "economic systems". (I remember similar frustrations 40+ years ago in Economics 1.) If 'economic systems' are not about trade in goods and services and the financing of trade and individual activities, then what are we talking about?
    Today's western/global "economic system" is not based on commodities, goods, products or services, nor are the worlds currencies required to be "earned" by the wealthy and/or insiders, it is created out of thin air and handed/given to them so that they may rule and work over people like you and I.

    Supply and demand, in the market, used to discover price and prices, and currency used to represent value itself and/or represent a good, product or service on both sides of a single transaction but, this is not the case today. Currencies today do not represent the creation of a product, good or service, they only represent the taking of a product, good or service and not a single price is discovered in the real world based on the supply and demand of real products, goods and services.
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    I'm confused, what exactly are you against in the modern economy gonzales56? fiat money? That has been around for 400 years so that's hardly modern. Are you a gold-bug and want a return to the gold / silver / shell / large stone standard?

    Also, did you take some time to read Minsky's financial instability paper?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    I read somewhere that: the Free-market concept require the participants (the consumers) to have an unrestricted access to the market information (such as food price at location A,B,C, ect and information about the alternative, and information about the quality of product) so that the participant can use them to make rational choice and to choose the only product which further improve the society they live in. Unfortunately physicist ("Econophysic") says that their computer-simulation shows that economy will become unstable when people are less rational (which is when people couldn't get full information on product and can't make choices).

    There's also a rumor[1] (that I read) that fuel price is high because of such failure *above* (in other word: there are no conspiracy involving middle east company or any oil company that conspire to increase fuel price, it happens because consumer failed to play their role as consumers or is unable to do soo for some reason).

    What government could do is to promote free-market concept thru regulation/legislation. For example: free access to information, transparency, make showing price tag mandatory., and make company liable for their advertisement. So that they can fix stuff like the fuel price issue *above*.

    [1]http://phys.org/news/2012-06-high-ga...ed-cartel.html
    ----
    Also lying is like hiding information. So if I trust Econophysics conclusion, then lying will definitely destroy the economy. :P
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    The Control of the Market Place. Big Corporations know there is wealth and Profit in the Growing, Processing, and Marketing of Food and its allied Dependentcies( Infrastructure, Pesticides, Transport etc. Leeches appear from everywhere and fasten on the Gravy Train. Suck it dry.

    The Life Blood of a healthy distribution system is easily exploitable by greedy and self seeking people. The ones with the means to exploit and cream the cream off the top of Supply system are the cause of inefficiency and breakdown in what should be a well managed and greed proof economy.

    During the Second World War what happened to Food Production and Distribution? Ration Books. Were the Greedy People there with their snouts in the trough? westwind.
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    Quote Originally Posted by river_rat View Post
    I'm confused, what exactly are you against in the modern economy gonzales56? fiat money? That has been around for 400 years so that's hardly modern. Are you a gold-bug and want a return to the gold / silver / shell / large stone standard?

    Also, did you take some time to read Minsky's financial instability paper?
    I have read some of it and he is entitled to his opinion or job.

    I also have no problem with fiat currencies as long as they come into existence by representing both sides of a trade/transaction. Where fiat currency fails, is when it is create for the sole purpose of taking products, goods and services from people.

    You are spending time not learning how theft/fractional banking/fiat paper creation for the purpose of theft caused the run on banks in the early 1900's. Instead, you are learning from Minsky how to manipulate and more effectively steal, lie, practice fractional banking and create more fiat currency in order to steal and control without getting ones hand caught in the cookie jar.

    If one does not and cannot understand how it is that bubbles form and then how it is those bubbles burst in economies, then they will, like Minsky, preach about how they think they can keep the bubbles going forever..

    If there is 1 million dollars in a small community that was created representing the trades and transactions based on goods, products and services within that community, and the government of that community printed/prints 100 million dollars, hands it out to themselves and their friends, directly and indirectly, they invest it in their community, home prices rise, their stock market rises, everything looks good on paper but, it is a false economy... It is going to blow up, it is going to crash. Now get this.. The crash is not the problem. The problem is and was the crooks who tried to fatten their pockets and consumption by abusing the currency and printing as much as they wanted too. The correction, the crash, again, is the right thing, the right correction.
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    "If there is 1 million dollars in a small community"
    Who created it and who received this money initially?

    "and the government of that community printed/prints 100 million dollars, hands it out to themselves and their friends"
    That's not what I consider a democratic form of government, that is a problem in and of itself one way or another.

    Imo, I think local Fiat currencies, like Worgl, are a good way to move forward (better than gold because you dont have to waste energy or get in debt to use it), but any money will create sooner or later conflicts of interests and concentration of influence, which sooner or later will recreate the conditions where corruption and all problems related to the monetary system will reemerge. Money (or a moneyless economy as eventual solution in the future), is only one of the pilars that need to change, another is hierarchies (corporate, government) including governments that do not represent the people, just like the monetary system is inherently corrupt(conflicts of interest), the government requires fundamental changes.

    If crooks run the government, you're going to get screwed, the only uncertainty is how, if its not one way it will be another. If a given system is likely to end up with crooks in charge(our political system), the system needs to be changed. Open participatory democratic government is a required change for our civilization to move forward (and as much open organization as possible to replace corporate hierarchies), and the influence of money should be obliterated and minimized as much as possible as we develop alternate means to manage the economy without relying on money.
    westwind and question for you like this.
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    Quote Originally Posted by gonzales56 View Post
    Consumer protection and safety laws are not what we are talking about.

    Time and time again those that support the complete control and regulation of economic markets, which we have now, will try and confuse people into thinking that consumer protection and safety laws are the same thing when they are not. They are two separate issues even though consumer advocacy has always been the main excuse/sword/pathway/doorway used to get to taking economic freedom from people.

    Governments completely control every market, they have designed the game, set it up, control it and nothing about a single market under the law is free. All failures of all western markets are due to and are the product of government control. Free Markets, as well as all markets, produce criminals but, it is only free markets that are self regulating, are anti-corrupt, demand swift and quick actions to correct wrong acts, deeds and prices and keep markets in the realm and realms of reality (sustainable markets/resources).

    Free Markets have not existed in the united states for decades and they will not come back until the current system is gone.


    Free Markets also cannot flood a market with anything but real commodities, materials and goods. Any price swings in a free market based on real goods is just. Free Markets, and rightfully so, cannot, like today's government corrupt markets, flood markets with fake paper commodities in order to boost or crash (manipulate) markets. The Housing market crash? All the United States governments fault. This could not and would not have been allowed or able to happen in a free market.
    The problem is defining what is "free"? Suppose the government plays no role at all. What's to stop a private citizen from bottlenecking? Maybe he/she buys up all the oil fields on Earth and decides to trickle out a few drops a year, selling each drop for $200.00 Is that a "free" market? Or is it being controlled (just not by a government) ?

    In more general terms we could discuss whether anarchy is freedom. Clearly in an anarchy your government is not oppressing you on any level. According to your government leaders, you are free to do as you please absolutely without restriction. However gangs of thugs are going to gather, and according to them you have no freedoms at all except the freedom to serve them.

    You see how it is that you can't ever get totally out from under oppression? All you can do is choose your oppressor carefully.
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    Quote Originally Posted by icewendigo View Post
    "If there is 1 million dollars in a small community"
    Who created it and who received this money initially?

    "and the government of that community printed/prints 100 million dollars, hands it out to themselves and their friends"
    That's not what I consider a democratic form of government, that is a problem in and of itself one way or another.

    Imo, I think local Fiat currencies, like Worgl, are a good way to move forward (better than gold because you dont have to waste energy or get in debt to use it), but any money will create sooner or later conflicts of interests and concentration of influence, which sooner or later will recreate the conditions where corruption and all problems related to the monetary system will reemerge. Money (or a moneyless economy as eventual solution in the future), is only one of the pilars that need to change, another is hierarchies (corporate, government) including governments that do not represent the people, just like the monetary system is inherently corrupt(conflicts of interest), the government requires fundamental changes.

    If crooks run the government, you're going to get screwed, the only uncertainty is how, if its not one way it will be another. If a given system is likely to end up with crooks in charge(our political system), the system needs to be changed. Open participatory democratic government is a required change for our civilization to move forward (and as much open organization as possible to replace corporate hierarchies), and the influence of money should be obliterated and minimized as much as possible as we develop alternate means to manage the economy without relying on money.

    If we use the United States as an example, the US dollar was defined by the american founding fathers and it was created, came into existence, by the people taking their gold and silver into the US mints, then the US mints would stamp them into dollars and give them back to the people. Fiat currency would work as well, that is if, and only if, each dollar in existence was only created representing both sides of a trade/transaction.

    Debt is also not a bad thing, it is a good thing if it is an honest agreement based on real products, goods or services. What the United States government has now, is not real debt... What they have is a promise to print well over 16 trillion more fiat dollars with pretty pictures and numbers on them. That's is not hard to do.. Those dollars represent nothing of much value and they are easy to create. It does not matter if it is 100 gazillion or 16 trillion, it takes very little resources to create that amount of fiat dollars, and the american government buys those few resources with just a few fiat bill they create from those resources, and so the American government will continue to create/print US fiat dollars.

    Look, if you can go into your basement and print off money, how can you be in debt? What can you possibly owe? You need a printer? A computer? Paper? Write 1 billion dollars on a napkin and buy everything you need to make all the fiat money you want. Buy everything and anything you want, just print your own money. Sell bonds, notes and securities, toil in the stock market, buy businesses, and if you "owe" anyone anything, its no problem, print/create the money and give it to them.

    If people wont take your fiat money then threaten them, harm them, hire goons to get them, have a military to attack them... It is that simple. They will take it, they will give you whatever you want for your basement money or they will suffer. This is the current economic system.

    You remove fractional reserves and fractional banking, make a currency either silver and gold or a fiat currency that cannot be created unless it represents both sides of a trade/transaction, and you will not have booms and busts in a normal operating market. If you do not or cannot support these ideas, then instability or war, brutality and suffering will continue to be the norm.
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    Quote Originally Posted by gonzales56 View Post
    I also have no problem with fiat currencies as long as they come into existence by representing both sides of a trade/transaction. Where fiat currency fails, is when it is create for the sole purpose of taking products, goods and services from people.
    So you against gross inflation of the money supply and the inflation that can cause?

    You are spending time not learning how theft/fractional banking/fiat paper creation for the purpose of theft caused the run on banks in the early 1900's. Instead, you are learning from Minsky how to manipulate and more effectively steal, lie, practice fractional banking and create more fiat currency in order to steal and control without getting ones hand caught in the cookie jar.
    But it was the tightening of the money supply that caused a financial shock to turn into a depression? We had massive deflation, not inflation?

    If one does not and cannot understand how it is that bubbles form and then how it is those bubbles burst in economies, then they will, like Minsky, preach about how they think they can keep the bubbles going forever..
    Um bubbles come from debt though - the cause and effect argument here is quote tight. I'm confused to how you are refuting this beyond just your assertion that it is false?

    If there is 1 million dollars in a small community that was created representing the trades and transactions based on goods, products and services within that community, and the government of that community printed/prints 100 million dollars, hands it out to themselves and their friends, directly and indirectly, they invest it in their community, home prices rise, their stock market rises, everything looks good on paper but, it is a false economy... It is going to blow up, it is going to crash. Now get this.. The crash is not the problem. The problem is and was the crooks who tried to fatten their pockets and consumption by abusing the currency and printing as much as they wanted too. The correction, the crash, again, is the right thing, the right correction.
    Um no, you would introduce massive inflation with such a bump in the money supply and that extra cash would be worthless. So nothing would look good on paper as you would have too much paper chasing too few goods.

    Quote Originally Posted by gonzales56 View Post
    If people wont take your fiat money then threaten them, harm them, hire goons to get them, have a military to attack them... It is that simple. They will take it, they will give you whatever you want for your basement money or they will suffer. This is the current economic system.
    You always have to pay tax - the state has the power to create laws and raise tax revenue when you boil it all down. Fiat currency is merely a promise by the state that you can pay those taxes with this paper. So no threat of violence (other than the one that is imposed first by tax) is required.

    You remove fractional reserves and fractional banking, make a currency either silver and gold or a fiat currency that cannot be created unless it represents both sides of a trade/transaction, and you will not have booms and busts in a normal operating market. If you do not or cannot support these ideas, then instability or war, brutality and suffering will continue to be the norm.
    Ok, now a new hate - what do you have against fractional reserve? You do realise that the maturity transform that is pretty much the sole purpose of banking is very difficult to do without fractional reserve?
    Last edited by river_rat; November 16th, 2012 at 03:29 AM. Reason: Consolidated responses
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    Quote Originally Posted by river_rat View Post
    So you against gross inflation of the money supply and the inflation that can cause?

    But it was the tightening of the money supply that caused a financial shock to turn into a depression? We had massive deflation, not inflation?

    Um bubbles come from debt though - the cause and effect argument here is quote tight. I'm confused to how you are refuting this beyond just your assertion that it is false?

    Um no, you would introduce massive inflation with such a bump in the money supply and that extra cash would be worthless. So nothing would look good on paper as you would have too much paper chasing too few goods.

    You always have to pay tax - the state has the power to create laws and raise tax revenue when you boil it all down. Fiat currency is merely a promise by the state that you can pay those taxes with this paper. So no threat of violence (other than the one that is imposed first by tax) is required.

    Ok, now a new hate - what do you have against fractional reserve? You do realise that the maturity transform that is pretty much the sole purpose of banking is very difficult to do without fractional reserve?
    I tightening of the money supply did not cause the great depression. The money supply did not tighten, it actual increased.. What happened was that the fiat counterfeit bank notes and credits (fractional banking system) collapsed. Those that had real constitutional money, and business who had costumers who had real constitutional money, were fine. Those that had a majority of fiat counterfeit bank notes and credits, and those businesses that grew and boomed based on customers who spent those fiat counterfeit bank notes and credits with them, were not OK.

    Introducing counterfeit fiat currency inflates prices, but it only initially inflates the prices on products, goods and investments the counterfeiters and beneficiaries spend it on. Introduce 100 million dollars into a 1 million dollar economy and all that will happen initially is that the rich will get richer and the poor get poorer.

    The powerful and rich will continue the counterfeit scheme and the rich will continue to get richer and the poor will continue to get poorer. The powerful and rich will attempt to counterfeit over all the issues and problems their theft causes... They will ultimately fail but, in the mean time, the schemes will create many random booms and busts. They will not suffer though, they can print and create all the "wealth" they want and need, and before it all comes crashing down on them, they will have bought (with their counterfeit money) and own massive amounts of real assets, products and goods.

    Fractional reserve and fractional banking are both two thing I have discussed in detail time and time again concerning these type of topics. Supply and demand, not fractional reserves (fake paper markets), should discover prices (This is how they mainly continue and protect the creation/printing of fiat counterfeit currencies). Likewise, fiat currency should only be created/introduced when it represents a product, good and/or service on both sides of a trade/transaction.
    Last edited by gonzales56; November 17th, 2012 at 07:34 AM.
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    Um, M2 (Red) and Monetary Base (Blue)

    money-depression.jpg

    Do we have very different definitions of money?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by gonzales56 View Post
    . Introduce 100 million dollars into a 1 million dollar economy and all that will happen initially is that the rich will get richer and the poor get poorer.


    That does not sound correct at all. In fact, I think it is garbage thinking.

    If you introduce $100 million of funny money into an economy of $ 1 million, what will happen is that the value of the dollar will collapse. The one to get richer is the entity that introduces the extra money - probably the government. Everyone else gets poorer, including the rich. Printing money is a driver of inflation which hurts everyone.

    This happened in Zimbabwe, where so much extra money was printed that bank notes had to be issued for trillions of Zimbabwean dollars, and that amount was needed to pay for a loaf of bread. Saving money became the worst possible thing to do, because your money became almost worthless overnight. People would spend their money as soon as they got it. No one could accumulate enough real value to invest in new ventures. An economy like that quickly moves to barter rather than cash transactions.

    Having said all that, printing money can still be done, and is done successfully, if it is done wisely and carefully. In an economy which grows, extra currency is required to compensate for that which is in use, and if the economy is growing, more is needed. There is actually nothing harmful about fiat currency, if it is produced carefully and wisely.
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    Quote Originally Posted by river_rat View Post
    Um, M2 (Red) and Monetary Base (Blue)

    money-depression.jpg

    Do we have very different definitions of money?
    Yes we do, as well as very different definitions of money supply.

    The fed and government where running and distributing counterfeit fiat currency and counting on not getting caught due to fractional banking/holdings of real constitutional money.

    The counterfeit currency did not dwindle in its supply. What you, and many like you do, is allow the government and their hacks to tell you that the banks held less counterfeit currency and so the "money supply dwindled" but, that is just not the case. The people took this counterfeit currency out of their banks believing they could turn it into the fed or treasury for real money. The supply did not dwindle, it was handed out in large amounts to the people and so a larger percentage of the supply shifted to the people... And while this was happening, more of the fake currency was being created and given to banks.
    Last edited by gonzales56; November 23rd, 2012 at 07:02 AM.
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    Quote Originally Posted by skeptic View Post
    Quote Originally Posted by gonzales56 View Post
    . Introduce 100 million dollars into a 1 million dollar economy and all that will happen initially is that the rich will get richer and the poor get poorer.


    That does not sound correct at all. In fact, I think it is garbage thinking.

    If you introduce $100 million of funny money into an economy of $ 1 million, what will happen is that the value of the dollar will collapse. The one to get richer is the entity that introduces the extra money - probably the government. Everyone else gets poorer, including the rich. Printing money is a driver of inflation which hurts everyone.

    This happened in Zimbabwe, where so much extra money was printed that bank notes had to be issued for trillions of Zimbabwean dollars, and that amount was needed to pay for a loaf of bread. Saving money became the worst possible thing to do, because your money became almost worthless overnight. People would spend their money as soon as they got it. No one could accumulate enough real value to invest in new ventures. An economy like that quickly moves to barter rather than cash transactions.

    Having said all that, printing money can still be done, and is done successfully, if it is done wisely and carefully. In an economy which grows, extra currency is required to compensate for that which is in use, and if the economy is growing, more is needed. There is actually nothing harmful about fiat currency, if it is produced carefully and wisely.
    I do not have the time, nor the space on this thread, to explain everything concerning inflation or the US economy but, I can give you a quick and simple understanding of how it really works.

    The American rich, better thought of as government welfare recipients, tend not to buy, shop, have or seek to own and play where the poor do. They have, for the most part, different markets which they play and live in. Because of this, inflation trickles down and across markets, and it can take decades for this to happen.

    Most people are not in the ferrari market, and so the middle class and poor will never be hit by the inflating cost of a ferrari. The stock market, Same deal.. Realestate, same deal. It goes on and on but, most the inflation hits the middle class and poor after the counterfeit fiat currency is passed to the middle class and poor workers, then those workers play and toil in the markets of the middle class and poor. This is the slow but painful death/process.

    Inflation is also seen in the markets states and government play in as well. What makes this inflation so bad, and will make it much worse, is that the government often plays in / inflates markets that the middle class and poor are in or need to be in in-order to receive and obtain basic things and needs. It is this type of financial meddling and interference that will and does hurt the middle class and poor directly.
    Last edited by gonzales56; November 23rd, 2012 at 06:56 AM.
    westwind and question for you like this.
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    Quote Originally Posted by gonzales56 View Post
    Yes we do, as well as very different definitions of money supply.
    Than please share yours as they seem to be very non-standard. Two short sentences should suffice, something along the line of "Money is defined by these four criteria: medium of exchange, unit of account, store of value and standard of deferred payment. Anything that satisfies these four criteria is called money".

    The fed and government where running and distributing counterfeit fiat currency and counting on not getting caught due to fractional banking/holdings of real constitutional money.
    This is all meaningless without your definition of money.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    It sounds like the main problem is not that we rely on currency, but that we put bankers in charge of our system. The trouble is that bankers think like bankers. In their world, new money can be created out of thin air by the stroke of a pen.

    We get so caught up in these fiscal theories we forget that they have to actually map to a physical reality in order to be valid. Many theories are self consistent and use a lot of math, and therefore appear to be beyond question. That's why science doesn't rely on logical consistency. It relies on rigorous testing against physical measurements and observations.

    The field of economics has abandoned this practice and ceased to be a science. A recession is the natural consequence of discarding the scientific method.
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    Quote Originally Posted by kojax View Post
    The field of economics has abandoned this practice and ceased to be a science. A recession is the natural consequence of discarding the scientific method.
    That's a little harsh. For example, recessions are the prime testing ground for economic theories - the entire austrian school has been left a bit wanting during the current one. Also, general view is that recessions are part of the economic cycle and no matter how you try structure your economy you will experience them to some extent.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    A Recession, meaning when wage earners suffer when the Job Market Tightens due to insufficient demand for Goods and Services, comes about through Speculation and a kind of insatable greed allied to egoism to stand tall by the manipulators of Capital. They give little thought to the possible consequences of their actions as related to others, or to the Economy in general.

    The mad scramble to grab anything of value when the bottom falls out of the Market further damages the Middle Class and, of course, the Factory Workers.

    Governments then become sober. Their heady days are over, Their sitting on their hands and do nothing in the way of Regulations and Restrictions to steer and plan the Economy into the Future becomes transperant to the Voters.

    The Voters, in desperation, elect a new Government. The Class with all the tangible assetts withdraw into their Estates or travel overseas while Austerity measures are put in place. The struggle begins all over again.

    The Nature off Capitalism. westwind.
    Words words words, were it better I caught your tears, and washed my face in them, and felt their sting. - westwind
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    Originally Posted by westwind
    A Recession, meaning when wage earners suffer when the Job Market Tightens due to insufficient demand for Goods and Services



    Where does the insufficient demand come from? If the wage earners were making a decent wage, wouldn't they themselves be a source of demand?

    Clearly the cycle starts with lowering their wages.

    The workers consent to it because initially their own wages are remaining high while someone else's wages are going down. They get the benefit of cheaply affording someone else's labor without the liability of having their own wage drop..... initially.

    After it progresses a while, their own wage drops in order to make them competitive with the wages of those other workers who's labor they have been affording so cheaply.

    And that begins a cycle of deflation. Each time wages go down, demand goes down. Goods that were manufactured at the previously higher wage level must now be sold at the current lower demand level. That's bad for business. (Usually you want to buy low and sell high, not buy high and sell low.)

    Investors start to realize it's a no-win situation and withdraw their investment money from the manufacturing sector, making it even harder for anyone to open a new manufacturing business to replace the jobs being lost. Existing businesses find themselves unable to borrow enough money to weather the storm and shut down.

    How is it not obvious to everyone that 100% of our problem rests only in our greed after third world wages? If we would forsake that greed, we could restore everything back to where it was in no time.
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    Quote Originally Posted by kojax View Post
    Where does the insufficient demand come from? If the wage earners were making a decent wage, wouldn't they themselves be a source of demand?


    You have forgotten about an important part of economics - shocks. Lets create a simple model to explain. Suppose we have two countries each producing one good: lets say country A makes horse buggies while country B makes horse buggy whips. Things are good as country A can sell its products to country B and use the proceeds of those sales to buy what country B is making. Life is grand, trees grow tall and happy days plays insistently on the TV.

    Now something happens that upsets the whole arrangement - someone invents a horseless buggy in country A and suddenly the demand for buggy whips drops to zero rather quickly in that country. Now country B is in a right pickle, as the one thing they where making and selling is no longer needed outside of their borders. But here is the problem, lets say country B also has a small internal combustion engine business which it now needs to retool to turn into its primary industry, this involves retraining and re-skilling of workers, changes in production etc. People lose their jobs, demand falls temporarily in country B and it goes through a recession.

    The problem here was that the change in supply and demand was a shock, it is not something that either country could have prepared for.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    Yes we do, as well as very different definitions of money supply.
    Than please share yours as they seem to be very non-standard. Two short sentences should suffice, something along the line of "Money is defined by these four criteria: medium of exchange, unit of account, store of value and standard of deferred payment. Anything that satisfies these four criteria is called money".

    The fed and government where running and distributing counterfeit fiat currency and counting on not getting caught due to fractional banking/holdings of real constitutional money.
    This is all meaningless without your definition of money.
    It is very clear what constitutional money is and was in the United States before, during and after the great depression. It is and was gold, silver and copper coin.

    Counterfeit fiat currency is also well known and understood..

    "if in the pursuit of the means we should unfortunately stumble again on unfunded paper money or any similar species of fraud, we shall assuredly give a fatal stab to our national credit in its infancy. Paper money will invariably operate in the body of politics as spirit liquors on the human body. They prey on the vitals and ultimately destroy them." "Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” - George Washington

    "Paper is poverty,… it is only the ghost of money, and not money itself.” - Thomas Jefferson

    "The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals… it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.” - Thomas Jefferson
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    Quote Originally Posted by kojax View Post
    Originally Posted by westwind
    A Recession, meaning when wage earners suffer when the Job Market Tightens due to insufficient demand for Goods and Services



    Where does the insufficient demand come from?
    Insufficient demand comes from over production, it is that simple.

    Governments and their speculators drive markets into bubbles but, these markets are not real. They are manipulated and they will all eventually pop.

    They can push houses, they can push cars, they can push and manipulate any product or good they wish but, they have to do it by creating money out of thin air and by issuing, granting and backing unsustainable private and public "debt".
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    "A compu-what?" -Thomas Jefferson
    "What's an airplane?" -George Washington

    ~Our ship is sinking in the river delta, "fresh" water is rising in the hull, the problem is "fresh" water, head for the open sea full steam ahead helmsman, we wont have any of that "fresh" water business, "salt" water is the "sound" water this ship needed all along, "salt" water is the solution to our sinking problem~ -Captain McFish

    ~If you are alone in an alley facing an hostile bandit, it doesnt matter "who" has the gun, whats really important is what "type" of gun is involved, dont mind if its the crook instead of you thats armed, what really count is that "someone" doesnt have a Revolver but has a Pistol instead, the last thing you want is for "someone" to have a Revolver, (dont you think that it would be better for you to have a Pistol and for the Bandit to have none), whats important is that there is no "Revolver", repeat after me, "no revolver", "no revolver", "Pistol" is the Solution, you want there to be a Pistol, repeat after me we want a pistol in the alley.~ George McQuotes

    Just made these up


    Money is itself an underlying problem we need to move beyond, but thats very difficult to see, I sure as hell didnt see it as a problem in itself even after reading about it, even if you are told there's a hole in the ship's hull, you cant see it with a casual observation, you just see the water, and feel the water, the symptom is blatant but the cause cannot be seen(below the water). The Type of money is a Red Herring(fresh water vs salt water), whats more important at first look is Who controls the money(that there is water no matter the type), and this governance problem is a symptom we see, but its reoccuring because its a symptom of the systemic failure(hole in the hull) that is inherent to money. You can chuck water out of the boat, do as FDR did an say Wall Street is accused in the court of Public Opinion and implement various policies that offset inequality and keep chucking buckets of water out, but sooner or later, people with influence will systematically recreate the same mess we are in, not because they are bad individuals, since had they been born in Ethiopia they might as well have died before knowing what the name of the country was they had been born in, but because thats what the monetary system fosters.

    Right now we have no working prototype for a (modern industrial automating urbanized) money-less society, this is a fair and factual criticism. We have sci-fi ideas like Star Trek, which like Jules Verne's "20000 Leagues under the sea" provides the much needed idea such a progress is possible, with a number of useful concepts to eventually build one, but Jules Verne didnt (afaik) provide the blueprints of a functional submarine. And just like you need stone tools to make the Bronze age infrastructure possible, that in turn will make the use of stone tools obsolete, odds are we will need a monetary system as a means to develop the infrastructure/basis to create a society where the use of money is obsolete.

    Gold and silver coins, require you to buy (or borrow) the right to use it as a currency, thats a racket, a fraud, its like "buying" and paying for your community to have an official Font for letters and documents. Worgl was able to prosper with its own local "paper" currency.
    Last edited by icewendigo; November 26th, 2012 at 01:56 PM.
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    I do not think you can blame fiat currency for the recession.
    The USA had fiat currency since 1972. There have been several recessions in that time, coming at about the same rate as recessions came in the decades before fiat currency.

    The present recession is the second worst in 100 years, but the 1929 recession was a lot worse. Do you want to blame the 1929 recession on fiat currency?
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    Quote Originally Posted by skeptic View Post
    I do not think you can blame fiat currency for the recession.
    The USA had fiat currency since 1972. There have been several recessions in that time, coming at about the same rate as recessions came in the decades before fiat currency.

    The present recession is the second worst in 100 years, but the 1929 recession was a lot worse. Do you want to blame the 1929 recession on fiat currency?
    That's exactly what caused the great depression, and instead of the US government admitting their wrong and readjusting the value of the paper currency to bring it in line and backed by gold, they confiscated all the peoples gold and made it illegal for them to own, gave them fiat 20 dollar bills for each ounce, then turned right around and declared that an ounce of gold was worth 35 us fiat dollars in order to account and bring in line just a fraction of their counterfeit fiat currency overseas because they allowed foreigners to keep turning in their US bills for gold ( up to the 1970s).

    When one thinks about the total amount of counterfeit fiat currency the US government had to have had created, they only have to understand that they had to take all the gold from all the american people but still needed to raise the value of gold from 20 dollars to 35 just to cover a fraction of the fiat dollars circulating in foreign nations alone... The total counterfeit fiat currency circulating in the US had to be an amazingly high and outrageous amount.. The crime, fraud and manipulation was surely epic... And so was the explosion of fake markets and fake banks when the people tried to take out their fake currency in order to turn it in for real US money at some point.
    Last edited by gonzales56; November 26th, 2012 at 06:27 PM.
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    Quote Originally Posted by gonzales56 View Post
    It is very clear what constitutional money is and was in the United States before, during and after the great depression. It is and was gold, silver and copper coin.
    So this is your definition of money? Very dungeons and dragons of you... More seriously though, so you are even against the gold standard?

    Insufficient demand comes from over production, it is that simple.


    Did you miss my little story above?

    That's exactly what caused the great depression, and instead of the US government admitting their wrong and readjusting the value of the paper currency to bring it in line and backed by gold, they confiscated all the peoples gold and made it illegal for them to own, gave them fiat 20 dollar bills for each ounce, then turned right around and declared that an ounce of gold was worth 35


    How much of that happened from 1929-1931 when the actual depression took hold? The gold reserve act was only passed in 1934 for example?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by gonzales56 View Post
    It is very clear what constitutional money is and was in the United States before, during and after the great depression. It is and was gold, silver and copper coin.
    So this is your definition of money? Very dungeons and dragons of you... More seriously though, so you are even against the gold standard?

    Insufficient demand comes from over production, it is that simple.


    Did you miss my little story above?

    That's exactly what caused the great depression, and instead of the US government admitting their wrong and readjusting the value of the paper currency to bring it in line and backed by gold, they confiscated all the peoples gold and made it illegal for them to own, gave them fiat 20 dollar bills for each ounce, then turned right around and declared that an ounce of gold was worth 35


    How much of that happened from 1929-1931 when the actual depression took hold? The gold reserve act was only passed in 1934 for example?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    It is very clear what constitutional money is and was in the United States before, during and after the great depression. It is and was gold, silver and copper coin.
    So this is your definition of money? Very dungeons and dragons of you... More seriously though, so you are even against the gold standard?

    Insufficient demand comes from over production, it is that simple.

    Did you miss my little story above?

    That's exactly what caused the great depression, and instead of the US government admitting their wrong and readjusting the value of the paper currency to bring it in line and backed by gold, they confiscated all the peoples gold and made it illegal for them to own, gave them fiat 20 dollar bills for each ounce, then turned right around and declared that an ounce of gold was worth 35


    How much of that happened from 1929-1931 when the actual depression took hold? The gold reserve act was only passed in 1934 for example?
    40% of all banks in the US failed between 1929 and 1933. The bank runs, people trying to take out fed notes in order to exchange for gold (real constitutional money), started in 1929.

    Simple process.

    1. 1913 Fed Reserve created - Fractional banking... Printing notes un-backed / representing nothing / this fiat currency was sold and issued to the people as notes representing an equal amount of constitutional money (gold) and fully redeemable in gold when it was not.. The theft and scheme got so bad that the government and banks began, and where, fractionally splitting and claiming they had even more counterfeit notes that what they had. Banks bubbled up everywhere, the economy bubbled and a lot of it was based on the amount of these easy and counterfeit notes and the fractional practice of these counterfeit notes. It was fake, It was theft.

    2. 1929 The people. They still had no idea that the notes were counterfeit and so they wanted their notes so they would not get robbed of them. They understood that the banks were lying about the amount of notes they said they had and a run started. Soon after, they realized the note themselves were a fraud and they started dumping them for real constitutional money (gold).

    3. 1934 The Government. Having no way what-so-ever to pay the American people what they and their banks stole from them, and absolutely no desire to do so, and with a crisis in faith looming internationally if the US Fed notes were to not pay other governments and foreign people the gold the US notes promised to pay them, they declared that all constitutional money (gold) was illegal for the american people to own, they confiscated it from the American people, estimated how many counterfeit notes they had in foreign lands and then attempted to back those notes, and only those notes, with the newly acquired/confiscated constitutional money (gold) they took from the american people.
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    I am not so sure that the gold standard is superior.

    Here is a hypothetical for you.
    We know that micro-crystalline gold in quartz rock is much more abundant than gold in traditional ores, perhaps 100 times as much. Engineers to date have not managed to find an economic way to extract it.

    Now imagine you are on the gold standard, and engineers find a way to extract all that gold quite cheaply. This is a real possibility. Suddenly masses of gold invades the market place. What will that do to your gold standard?
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    But Why would you even PAY to have the option of using a monetary system????

    Hey, Im launching a campaign to have IceWendigoGoldenArial Font be the official Font, and want everyone to pay and pay dearly and to give me half your income for the right to use letters of the alphabet in documents you or your government creates. While Im lobbying, you can purchase shares, well call the company "TheGoldenFontRacket" and the more shares you have the more you will also lobby for the IceWendigoGoldenArial, heck if you buy a sufficient amount of these shares you will be singing just how sound that font is, you will praise its fluid lines and avant-garde design, and warn people about how SilverScript, TitaniumTahoma, CopperCentury, DiamondGaramond, or measly PaperPalatino are inadequate fonts. If people arent paying the price of a house to use letters, clearly good scam money is being left on the table!
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    Quote Originally Posted by gonzales56 View Post
    1. 1913 Fed Reserve created - Fractional banking... Printing notes un-backed / representing nothing / this fiat currency was sold and issued to the people as notes representing an equal amount of constitutional money (gold) and fully redeemable in gold when it was not.. The theft and scheme got so bad that the government and banks began, and where, fractionally splitting and claiming they had even more counterfeit notes that what they had. Banks bubbled up everywhere, the economy bubbled and a lot of it was based on the amount of these easy and counterfeit notes and the fractional practice of these counterfeit notes. It was fake, It was theft.
    How was the dollar not convertible to gold at 1.5g per dollar at that time? Are you against the idea that the Fed only held around half of the value of the cash money in circulation in gold?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by skeptic View Post
    I am not so sure that the gold standard is superior.

    Here is a hypothetical for you.
    We know that micro-crystalline gold in quartz rock is much more abundant than gold in traditional ores, perhaps 100 times as much. Engineers to date have not managed to find an economic way to extract it.

    Now imagine you are on the gold standard, and engineers find a way to extract all that gold quite cheaply. This is a real possibility. Suddenly masses of gold invades the market place. What will that do to your gold standard?
    Hyperinflation skeptic, classic hyperinflation. Though historically deflation was your biggest problem in gold / silver standard regimes - as growth of the gold supply could not keep up with growth of the general economy. Now hyperinflation is ugly but deflation is the real killer IMHO (though I still have some crazy zimbabwian notes lying around here somewhere)
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by skeptic View Post
    I am not so sure that the gold standard is superior.

    Here is a hypothetical for you.
    We know that micro-crystalline gold in quartz rock is much more abundant than gold in traditional ores, perhaps 100 times as much. Engineers to date have not managed to find an economic way to extract it.

    Now imagine you are on the gold standard, and engineers find a way to extract all that gold quite cheaply. This is a real possibility. Suddenly masses of gold invades the market place. What will that do to your gold standard?
    Depends on where the gold goes. A percentage of it will go to savings, a percentage of it would go into products and a percentage of it would be stamped into coin. Initially some markets will see it, some wont but ultimately, the gold stamped into coins will circulate throughout markets and be absorbed in those markets two ways, increased prices and increased quality.

    It is good to know that increases and decreases in prices and quality due to people spending is actually very stable. It does not lead to booms or busts. Booms and busts, harsh shift up and down in markets, occur when governments and speculators over invest easy money (easy money is the only way they will do it) in markets.
    Last edited by gonzales56; November 29th, 2012 at 09:11 AM.
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    Quote Originally Posted by river_rat View Post
    Hyperinflation skeptic, classic hyperinflation. Though historically deflation was your biggest problem in gold / silver standard regimes - as growth of the gold supply could not keep up with growth of the general economy. Now hyperinflation is ugly but deflation is the real killer IMHO
    All Deflation is, is the market place correcting over saturation of wasteful and/or unneeded production. Contrary to what Politician's, Banker's and Corporation's, along with their talking heads say and state, deflation is the friend of common people and resources, and the enemy of Governments, Bankers and Corporations that rely on fiat currency.

    Economies do not and cannot out grow gold/silver/nickel/copper or any other form of currency for that matter. It is impossible. The strengthening of ones currency/medium of exchange, the strengthening of ones purchasing power, an increase in ones wealth, is a good thing for the people and a bad thing for Government, Banks and Corporate thieves.

    Inflation is the tool and means by which governments, banks and corporations steal peoples wealth. Their greed knows no bounds, their consumption and pushing of products knows no limit, and they themselves are the creators of over production and over consumption, and they do this by printing/creating outrageous amounts of fiat currency to fund the over production and over consumption of products and goods.



    Right now these crooks are having a hard time getting real people to consume as much as they want them to and need them to in order to keep their schemes and theft going.. They are pumping trillions and trillions of dollars each year into banks and corporations in an attempt to "save" them (continue'd inflation of their profits) from decreases in consumption from real consumers.... However, it is not going to work because american consumers are broke and the only way the government is going to keep increasing their consumption at the rates they need is to get trillions and trillions of more dollars a year directly to the common people but, they cant just do that because interest rates will rise and inflation can and likely will go hyper.
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    Quote Originally Posted by gonzales56 View Post
    All Deflation is, is the market place correcting over saturation of wasteful and/or unneeded production. Contrary to what Politician's, Banker's and Corporation's, along with their talking heads say and state, deflation is the friend of common people and resources, and the enemy of Governments, Bankers and Corporations that rely on fiat currency.
    I'm not sure if you are trying to be a parody here gonzales or to treat this as a serious claim. This is a strong case of Poe's law right now.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    All Deflation is, is the market place correcting over saturation of wasteful and/or unneeded production. Contrary to what Politician's, Banker's and Corporation's, along with their talking heads say and state, deflation is the friend of common people and resources, and the enemy of Governments, Bankers and Corporations that rely on fiat currency.
    I'm not sure if you are trying to be a parody here gonzales or to treat this as a serious claim. This is a strong case of Poe's law right now.
    That's all deflation is (concerning prices).. Unwanted and/or unneeded production supersedes actual demand and the pushers of those products end up taking a loss on the margins between the cost of production and the sale of those products/items. Again though, those that participate in these practices are doing so due to cheap easy money creation and they have nothing to fear for doing so because the government will bail them out directly or indirectly.

    What the government is doing now, after stockpiling banks and corporations will trillions of dollars, is trying to artificially boost consumption in the market places that the middle class and poor participate in. The inflation, the theft, for governments, banks and corporations must continue at all cost.

    The increases in the supply of the currency must be combined with an inflation in production and consumption or the theft/scheme does not work. The government thinks they can increase production and consumption by simply creating more US dollars, and they cant. It is not going to last much longer, relatively, and ultimately what people actually consume, on their own merits, will rule the day in the end.
    Last edited by gonzales56; November 30th, 2012 at 08:13 AM.
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    Quote Originally Posted by gonzales56 View Post
    That's all deflation is (concerning prices).. Unwanted and/or unneeded production supersedes actual demand and the pushers of those products end up taking a loss on the margins between the cost of production and the sale of those products/items.
    You do realise that aggregate demand decrease begats more aggregate demand decrease - which is why deflation is so destructive to an economy. Why invest today if I know the cost of investing tomorrow would be less?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    The housing bubble began in 1983 with Reaganomics. We had just had a second oil crisis in 1979 and a subsequent recession. Energy costs were going up faster than ever before. Cheap credit was the only way to keep the party going. This all worked great for a while. Then, starting about 2003 or so, oil prices began to rise really fast due to the approach of peak oil. The economy began to slow because discretionary spending fell as energy costs rose. In 2005, light sweet crude, the best kind of oil, peaked. By 2007, the recession officially began. 2008 saw a record oil price spike and stock market crash. Every recession since 1972 has been proceeded by an oil spike.

    Most people are afraid to acknowledge how important energy resources are and how sensitive the economy is to high energy prices, since that has some very scary implications for the future. People don't like to acknowledge resource depletion generally because there just aren't any easy solutions.

    Our economic system is not just dependent on oil, it is dependent on cheap oil. The economy is a giant thermodynamic system which requires continuous growth to account for a constantly rising population. Anything under 3% or so is not enough for a healthy economy. If the system experiences shrinkage for a prolonged period, it will eventually collapse, due to failing maintenance of essential systems. In system dynamics terms, cheap oil is required for the system to stay within it's operational range. Without cheap oil, and cheap credit, by the way, the system will eventually cross a boundary and experience a rapid state change, driven by positive feedbacks to a new lower equilibrium level. Very unpleasant.

    The current "recovery" is an illusion supported by government bailouts and practically free credit. This is all now coming to an end. The world economy will fall back into recession very soon. The recession will only get worse from there, leading, eventually to a rapid and total collapse. Projections are for a 90% or so die off of the species over a period of less than 20 years, beginning anywhere from next year to a decade or so from now.

    The human species has vastly overshot it's resource base on Earth. The economic decline really began around 1978 or 1979 with peak energy/capita, but it has been slow enough so far to ignore. Besides, we've been really busy lately making iPhones, playing video games, and doing social networking. Who has time to notice boring stuff like this anyway?

    This all might sound a bit extreme if you are hearing this for the first time, but it is true, nonetheless. Sorry. If anyone here is interested in understanding all of this, I started a thread called "apocalypse soon" in the environment section. Lots of detail and cool charts and graphs! Here is a link:

    http://www.thescienceforum.com/envir...ypse-soon.html

    I look forward to seeing some brave souls.


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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    That's all deflation is (concerning prices).. Unwanted and/or unneeded production supersedes actual demand and the pushers of those products end up taking a loss on the margins between the cost of production and the sale of those products/items.
    You do realise that aggregate demand decrease begats more aggregate demand decrease - which is why deflation is so destructive to an economy. Why invest today if I know the cost of investing tomorrow would be less?
    No it does not. Demand can and does go up and down depending on many factors.

    if there are 100 million home computers made in one year, and only 50 million consumers, you do not invest in home computers, you invest in something else or you invest in the companies that actually sell to the 50 million real people demanding the product.

    Deflation, stability and inflation all exist throughout the market place at the same time. In other words, not all products, goods and services decline in price, are stable in price or inflate in price. What the western economic systems do is print/create outrageous amounts of fiat currency to push production and consumption but, both are false economies. They are economies not based on the demand of common people or their consumption, they are based on government fueled production and government fueled consumption. It is false.

    What governments do is give companies the means and money to produce the 100 million computers, and they find a way to also purchase, directly and indirectly (bail outs, garanteed loans, low interest to no interest loans, free money right from the banks, purchasing the products, etc..), the other 50 million that would not or could not be sold to the people .... In the US, the government/s account for at least 60% of the american GDP.

    Deflation in prices only occur when production exceeds demand. A reduction in currency does not reduce prices, because there are other means and ways to exchange or obtain products, goods and services besides the larger over all currency being used. If products are in demand, and the number of those products do not supersede that demand, then deflation in price will not occur.
    Last edited by gonzales56; November 30th, 2012 at 11:49 AM.
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    Just skimming, so this comment is not necessarily aimed at any particular posters here; just a general observation:

    How can we possibly understand what is going on with the global recession when the most basic assumptions of economic theory are simply false?

    “Economists enamored of pure markets begin with the theory, and hang models on assumptions that cannot themselves be challenged. The characteristic grammatical usage is an unusual subjunctive—the verb form ‘must be.’ For example, if wages for manual workers are declining, it must be that their economic value is declining. If a corporate raider walks away from a deal with half a billion dollars, it must be that he added that much value to the economy. If Japan can produce better autos than Detroit, there must be some inherent locational logic, else the market would not dictate that result. If commercial advertising leads consumers to buy shoddy or harmful products, they must be ‘maximizing their utility’—because we know by assumption that consumers always maximize their utility. How do we know that? Because to do anything else would be irrational. And how do we know that individuals always behave rationally? Because that is the premise from which we begin. The truly interesting institutional questions—the disjunctures between what free-market assumptions would predict and the actual outcomes—are dismissed by the tautological and deductive form of reasoning. The fact that the real world is already far from a perfect market is ignored for the sake of theoretic convenience. The dissenter cannot challenge the theory; he can only describe the real world.”
    Robert Kuttner, EVERYTHING FOR SALE

    “The vocabulary of physics is amoral—not antimoral, but amoral. Mass, force, and velocity have no moral implications because the laws describing them have no alternatives. The vocabulary of economics, in contrast, abounds in ethical terms. It is impossible to define ‘good,’ ‘service,’ or even ‘utility’ without making ethical judgments. Every object has mass, but not every object has utility. Moreover, some people may consider a certain object a good while others do not, but there can be no disagreement about the equivalence and direction of action and reaction. There is no other or better way for a body to fall in a vacuum than v(t)=-gt+vo y(t)=-1/2gt^2+vot+yo; this is not because physicists don’t happen to be interested in making this a better world. There is no unchanging price for a bushel of wheat; and this is not because economists don’t happen to be interested in a stable universe. The price of wheat depends upon what people do, but bodies fall as they do regardless of what people do or think... Economics is not value free, and no amount of abstraction can make it value free. The econometricians’ search for equations that will explain the economy is forever doomed to frustration. It is often said that their models don’t work, because, on the one hand, the variables are too many and, on the other, the statistical data are too sparse. But the physical universe is as various as the economic universe (they are, to repeat, both infinite), and Newton had fewer data and less powerful means of calculation than are at the disposal of Jan Tinbergen and his econometrician followers. The difference is fundamental, and the failure to understand it reduces much of modern economics to a game that unfortunately has serious consequences.”
    —George Brockway, 1995

    “The problem is, of course, that not only is economics bankrupt but it has always been nothing more than politics in disguise … economics is a form of brain damage.”
    —Hazel Henderson




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    1000 people wanted to be rich at the expense of millions of others. I believe the proper term is greed.
    A lie is a lie even if everyone believes it. The truth is the truth even if nobody believes it. - David Stevens
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    Quote Originally Posted by Raziell View Post
    1000 people wanted to be rich at the expense of millions of others. I believe the proper term is greed.
    I believe the proper term is human nature. Greed implies some sort of negative value judgement of normal behavior. Evolution is value neutral. It's the real results that count, not the supposed intentions. We are all competing for relative advantage in the game of life. The sum total of all that competition creates the world in which we live.

    The fact that "greedy psychopaths run the world" should not come as a shock, since it is the natural outcome of the evolution of our species.

    Please keep in mind that I am not a capitalist saying that greed is good. I am an evolutionist saying that greed is natural.

    I don't like the way it turns out either, but our collective woes are just not the fault of the "greedy". That is just a convenient explanation for an inconvenient truth.

    The more things change, the more they stay the same.

    I like the quote at the bottom of your post.

    A lie is a lie even if everyone believes it. The truth is the truth even if nobody believes it. - David Stevens

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    Quote Originally Posted by question for you View Post
    Hi all.

    We in this reccession where jobs are low, confidence is low etc etc.

    My question is 'what in hell is going on?'

    Ok the only wealth on this planet we call 'natural resouces'. That is, all the resources this planet holds and has always held, which we can 'exploit' or benefit from.

    Nobody owns natural resources as such, they belong to the earth and are here for the purposes of sustaining life. Some insecure people feel the need to accumalate as much of the earths resources as possible so they can pass it on to their own lineage and give there own lineage a percieved 'head start' in the evolutionary battle. Our whole 'economy' is based around a command chain running from the very wealthy at the top, who seek to gain more wealth, down to the very poorest do the most degrading jobs for the least amount of money. All pretty well understood so far I would hope.

    Heres the bit I don't understand: In 2007 the earth had a certain amount of resources available for living organisms to benefit from.

    Farming land, forests, gold, precious metals, animals to farm, even people to work count as a resource.

    What happened to these natural resources between the year 2007 and 2008?

    If nothing happened and these resources stayed the same... How can we have a recession? what does it mean? Who is responsible?

    The natural resources havent changed... So why has our standard of living changed?


    Any input on any area of reccession/economy more than welcomed.

    Thanks for reading
    The answer to this question is simple but lies in the field of business and economics rather than philosophy. In a capitalist system there are major recessions roughly every ten years, and minor recessions roughly every five years. The cause of most recessions is the speculation and excessive business optimism that appears in between such recession periods and is directly related the the stock, bond, and Real Estate markets, which is related to over-optimistic group psychology. Systems like socialism and communism that have tried to avoid such cycles by laws and controls, have not equally competed concerning production per capita levels. Since such systems trade with capital systems they are in the same way vulnerable to the regular business cycles of recession and boom periods, generally during the same time periods.

    List of recessions in the United States - Wikipedia, the free encyclopedia
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    Quote Originally Posted by gonzales56 View Post
    No it does not. Demand can and does go up and down depending on many factors.
    That is true - but deflation implies a broad based decrease in aggregate demand. Suppose 25% of workers suddenly find themselves with a massive debt overhang because of some external shock. For example, lets say a depressed property market. These people have to continue paying down debt so they have to cut back rather dramatically on the spending. The problem is that the economy is a closed system - my investment is someone else's debt and if no one is prepared to take on extra debt there is no where to invest. Ditto for income and expense, someones income is another's expense and so if a large percentage of the population cuts back on expenditure it implies that there is also a large cut in income. This is a vicious circle, as more people find themselves balance sheet constrained and thus cut back etc

    Deflation in prices only occur when production exceeds demand. A reduction in currency does not reduce prices, because there are other means and ways to exchange or obtain products, goods and services besides the larger over all currency being used. If products are in demand, and the number of those products do not supersede that demand, then deflation in price will not occur.
    Or when demand dries up - see above.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by forrest noble View Post
    Quote Originally Posted by question for you View Post
    Hi all.

    We in this reccession where jobs are low, confidence is low etc etc.

    My question is 'what in hell is going on?'

    Ok the only wealth on this planet we call 'natural resouces'. That is, all the resources this planet holds and has always held, which we can 'exploit' or benefit from.

    Nobody owns natural resources as such, they belong to the earth and are here for the purposes of sustaining life. Some insecure people feel the need to accumalate as much of the earths resources as possible so they can pass it on to their own lineage and give there own lineage a percieved 'head start' in the evolutionary battle. Our whole 'economy' is based around a command chain running from the very wealthy at the top, who seek to gain more wealth, down to the very poorest do the most degrading jobs for the least amount of money. All pretty well understood so far I would hope.

    Heres the bit I don't understand: In 2007 the earth had a certain amount of resources available for living organisms to benefit from.

    Farming land, forests, gold, precious metals, animals to farm, even people to work count as a resource.

    What happened to these natural resources between the year 2007 and 2008?

    If nothing happened and these resources stayed the same... How can we have a recession? what does it mean? Who is responsible?

    The natural resources havent changed... So why has our standard of living changed?


    Any input on any area of reccession/economy more than welcomed.

    Thanks for reading
    The answer to this question is simple but lies in the field of business and economics rather than philosophy. In a capitalist system there are major recessions roughly every ten years, and minor recessions roughly every five years. The cause of most recessions is the speculation and excessive business optimism that appears in between such recession periods and is directly related the the stock, bond, and Real Estate markets, which is related to over-optimistic group psychology. Systems like socialism and communism that have tried to avoid such cycles by laws and controls, have not equally competed concerning production per capita levels. Since such systems trade with capital systems they are in the same way vulnerable to the regular business cycles of recession and boom periods, generally during the same time periods.

    List of recessions in the United States - Wikipedia, the free encyclopedia
    This is just not the case.

    Free market capitalist love the safe bet, the sure bet, they tend not to sway far from it, and as a whole, they do not sway far from it at all. Everything you just tried to blame on free market capitalism is truly and really the doing and fault of western and western type governments that push fiat and/or counterfeit currencies (mainly the US and Europe).

    Proper growth and proper recessions are healthy, they are required. Economies must breath in and out... When they breath in (grow) they are riding waves of innovation and new ideas, and when they breath out (recessions) new innovations and ideas are created/born.
    Last edited by gonzales56; December 3rd, 2012 at 04:46 AM.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    No it does not. Demand can and does go up and down depending on many factors.
    That is true - but deflation implies a broad based decrease in aggregate demand. Suppose 25% of workers suddenly find themselves with a massive debt overhang because of some external shock. For example, lets say a depressed property market. These people have to continue paying down debt so they have to cut back rather dramatically on the spending. The problem is that the economy is a closed system - my investment is someone else's debt and if no one is prepared to take on extra debt there is no where to invest. Ditto for income and expense, someones income is another's expense and so if a large percentage of the population cuts back on expenditure it implies that there is also a large cut in income. This is a vicious circle, as more people find themselves balance sheet constrained and thus cut back etc

    Deflation in prices only occur when production exceeds demand. A reduction in currency does not reduce prices, because there are other means and ways to exchange or obtain products, goods and services besides the larger over all currency being used. If products are in demand, and the number of those products do not supersede that demand, then deflation in price will not occur.
    Or when demand dries up - see above.
    Actually inflation and deflation tend to refer to the "money" supply.

    The "money" supply in the US has constantly been growing for almost 150 years now but, more so since the 1970s due to the US going off their foreign gold standard which removed the one restricting factor left to prevent the US government from printing/creating all the "dollars" they wish and want to.

    If China held 1 trillion dollars in US debt and the US was still on their foreign gold standard (35 dollars an OZ), china would be the wealthiest nation in the world right now and the US would be the poorest most violent robbers of other nations wealth (gold).

    It is only through robbing the american people, foreigners and foreign nations like china through inflation that the american government can and has been staying alive economically. They cant keep it up though. Prices just cannot keep increasing and dollar creation cannot keep driving production and consumption. At some point people and other governments are going to get tired of the US devaluing the dollar and what is owed to them, and at some point what people can make and buy, on their own merits, will rule markets.
    Last edited by gonzales56; December 3rd, 2012 at 05:03 AM.
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    Quote Originally Posted by gonzales56 View Post
    Actually inflation and deflation tend to refer to the "money" supply.
    It is a hypothesis that inflation is always a monetary phenomena but inflation and deflation have to do with the general change of prices.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    Actually inflation and deflation tend to refer to the "money" supply.
    It is a hypothesis that inflation is always a monetary phenomena but inflation and deflation have to do with the general change of prices.
    There is no doubt that individual products, goods and services can and do go up and down, in the short term, regardless of over all money supply. However, the west has proven, without a doubt, and despite automation and cheap 3rd world labor, inflation of the money supply increases the prices of all products, goods and services.

    Oil could go up or down tomorrow in relation to the dollar but, it will go up over the long haul... One of the most interesting things though, is that a gallon of gas in the early 1900s was between .10 and .25 cents.. A dime and a quarter.. That same dime, that same exact quarter ( lets say a 1920 dime or quarter), would and did buy a gallon of gas in the 2000s as well. No inflation, and today, in 2012, a 1920 us quarter will buy you a gallon of gas and a burger. That is actually deflation, an increase in purchasing power.

    When you look at the prices of just about everything in relation/comparison to gold and silver, the prices have not changed much at all. They are basically the same or gone down due to automation and cheap labor or risen some do to taxes and regulations.
    Last edited by gonzales56; December 3rd, 2012 at 05:31 AM.
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    Quote Originally Posted by gonzales56 View Post
    There is no doubt that individual products, goods and services can and do go up and down, in the short term, regardless of over all money supply. However, the west has proven, without a doubt, and despite automation and cheap 3rd world labor, inflation of the money supply increases the prices of all products, goods and services.
    Yes, but inflation now a days refers to the increase in price level. It is a market behavior that you can link the increase on money supply with the increase in price levels and the erosion of purchasing power. But they are not the same thing (as the global economy right now shows, almost 0% inflation with a huge increase in money supply).

    Oil could go up or down tomorrow in relation to the dollar but, it will go up over the long haul... One of the most interesting things though, is that a gallon of gas in the early 1900s was between .10 and .25 cents.. A dime and a quarter.. That same dime, that same exact quarter ( lets say a 1920 dime or quarter), would and did buy a gallon of gas in the 2000s as well. No inflation, and today, in 2012, a 1920 us quarter will buy you a gallon of gas and a burger. That is actually deflation, an increase in purchasing power.
    That is to do with the fact that a 1920's dime and quarter is not the same as a 2012 dime and quarter, you are not comparing like and like. They are not fungible.

    When you look at the prices of just about everything in relation/comparison to gold and silver, the prices have not changed much at all. They are basically the same or gone down due to automation and cheap labor or risen some do to taxes and regulations.
    This is a patent falsehood - just look at the relative price of gold vs silver.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    1920 dimes and quarters are exactly the same 1/10th dollar and 1/4th dollar the 2012 dimes and quarters are today. The devaluing of the currency is what has changed, not the denomination.

    The devaluation of the dollar, the theft of wealth, is still going on. Those that are ignorant to it, believe the government ran/controlled economy is stable but, the only thing stable and consistent about government controlled/ran economies is the theft of the peoples wealth.

    Like it or not, governments and their friends will not be happy or content with their theft until the working classes are getting paid 3rd world wages, living in 3rd world conditions and they have stripped as much wealth as they can get away with.
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  80. #79  
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    Quote Originally Posted by gonzales56 View Post
    1920 dimes and quarters are exactly the same 1/10th dollar and 1/4th dollar the 2012 dimes and quarters are today. The devaluing of the currency is what has changed, not the denomination.
    Um no, because the value of a 1920's coin is due to its collectors value and not due to its ability to settle debt. This is similar to saying that comic books in 1938 are the same as comic books now and so it is some loss of intrinsic value that causes the first edition Action comic to be worth so much more then the DC new 52 comics. A person buying an old coin is not planning to use it to buy sweets at the corner store.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    1920 dimes and quarters are exactly the same 1/10th dollar and 1/4th dollar the 2012 dimes and quarters are today. The devaluing of the currency is what has changed, not the denomination.
    Um no, because the value of a 1920's coin is due to its collectors value and not due to its ability to settle debt. This is similar to saying that comic books in 1938 are the same as comic books now and so it is some loss of intrinsic value that causes the first edition Action comic to be worth so much more then the DC new 52 comics. A person buying an old coin is not planning to use it to buy sweets at the corner store.
    Pre-1965 silver coins are no different than current coins concerning collector values. Those that have a higher value than their face value or metal content are extremely rare, just like today's coins.

    The new dimes and quarters, compared to older ones, have been devalued by the US Government.
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    gonzales56,

    Proper growth and proper recessions are healthy, they are required. Economies must breath in and out... When they breath in (grow) they are riding waves of innovation and new ideas, and when they breath out (recessions) new innovations and ideas are created/born.
    I think there is a general validity to what you are saying but I think also that you have idealized the mechanics of it
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    Does debt grow during a recession?
    if so
    Who benefits from that debt?
    How?
    and
    Why?
    ........
    (just a vague thought about orchestrated recessions)
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    Quote Originally Posted by forrest noble View Post
    gonzales56,

    Proper growth and proper recessions are healthy, they are required. Economies must breath in and out... When they breath in (grow) they are riding waves of innovation and new ideas, and when they breath out (recessions) new innovations and ideas are created/born.
    I think there is a general validity to what you are saying but I think also that you have idealized the mechanics of it
    They can be very pleasant on the high side and very brutal on the down side for certain people. However, nothing like fiat paper markets are.
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    Quote Originally Posted by sculptor View Post
    Does debt grow during a recession?
    if so
    Who benefits from that debt?
    How?
    and
    Why?
    ........
    (just a vague thought about orchestrated recessions)
    It today's current western economic system, debt will increase regardless of economic conditions. You have to understand that those who can create dollars, euros, pounds, etc., out of thin air will continue to do so. Why wouldn't they? They do not have to work for them, they can give them to people to obtain anything and everything they want and they will never have to pay the piper for doing so.

    Governments and corporations make and take the money and then call it debt, put it on the working public, and the working public ignorantly accepts it. Outside of a few crumbs the theves give to the public to appease them (which amazingly it does), how is what they make and take the debt of common people? How is it even debt when governments, banks and and corporations make and take the "money" out of thin air?

    Governments, banks, insiders, the wealthy, corporations, they all benefit by stealing working class and common class wealth and labor while also getting them to believe they owe governments, banks, insiders, the wealthy and corporations the trillions and trillions of dollars they are making and taking. The Devil is truly beautiful.
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    When governments create money, it is a form of tax, because the value of that money comes at a cost to the people, in that their money becomes worth less. In that sense, I see it as no more evil, no more theft, than normal tax.

    I sometimes wonder what would happen if governments used that for 100% of their financial needs. A government would stop levying taxes, and instead create enough money for its needs. That would probably mean that, over a 12 month period, $2 would become worth what $1 was at the beginning of that period.

    OK, so we have rampant inflation and the value of your money dropping. But people can adapt. There would be a period of pain at first before society adapted completely. All goods and services would have to double in price each year, and all salaries and wages would have to double every 12 months also. People would have to get into the habit of converting their earnings into goods ASAP. Interest payments would be at a rate of over 100% per year.

    On the plus side, though, tax evasion and avoidance would be a thing of the past. Everyone, including multi-billionaires who can afford high powered tax lawyers and accountants, would pay their share.

    Would the final result be a gain or a loss?
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    Quote Originally Posted by gonzales56 View Post
    Pre-1965 silver coins are no different than current coins concerning collector values. Those that have a higher value than their face value or metal content are extremely rare, just like today's coins.
    The silver content of those coins puts a lower bound on the value of the coins yes - but that value has changed dramatically over time. For example, if you melted down a mercury dime in 1980 you would have got around $1.2 from the silver while in 1990 you would have got 30 cents. Today you would get $2.40 (which is much higher than the actual price of these coins, around 30 cents for ones in a bad nick.)

    I'm still not sure what this has to do with inflation.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by skeptic View Post
    OK, so we have rampant inflation and the value of your money dropping. But people can adapt. There would be a period of pain at first before society adapted completely. All goods and services would have to double in price each year, and all salaries and wages would have to double every 12 months also. People would have to get into the habit of converting their earnings into goods ASAP. Interest payments would be at a rate of over 100% per year.
    You are describing hyperinflation here. Money is the main lubricant of trade and when no one wants to hold cash trade becomes near impossible to do.
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by river_rat View Post
    Quote Originally Posted by gonzales56 View Post
    Pre-1965 silver coins are no different than current coins concerning collector values. Those that have a higher value than their face value or metal content are extremely rare, just like today's coins.
    The silver content of those coins puts a lower bound on the value of the coins yes - but that value has changed dramatically over time. For example, if you melted down a mercury dime in 1980 you would have got around $1.2 from the silver while in 1990 you would have got 30 cents. Today you would get $2.40 (which is much higher than the actual price of these coins, around 30 cents for ones in a bad nick.)

    I'm still not sure what this has to do with inflation.
    If you would realize that you are talking about gold and silver compared to the fiat dollars purchasing power, you would understand the inflation of that fiat dollar.

    the rising prices of gold and silver is not the value of gold and silver going up, it is the purchasing power of the fiat dollar going down.

    The fiat dollar does produce ripples up and down through commodity markets but, they are all in a long term bull market due to the devaluation of the fiat dollar.

    1980 was also about the hunt brothers buying up as much silver as they could.... With that said though, the price of silver will get to that point again and go even higher.
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    Quote Originally Posted by gonzales56 View Post
    The fiat dollar does produce ripples up and down through commodity markets but, they are all in a long term bull market due to the devaluation of the fiat dollar.
    Gold dollars will also devaluate/fluctuate because growing economy would logically lead to a lessening of prices because the total amount of dollar would be fixed.

    Can you understand that money has no intrinsic value ? Nor backed by gold, nor backed by debt ?

    What if someone physicist discover the way to cheaply turn the energy content of a pile of shit into a pile of gold ? What if some other lunatics rocket-send all the gold he stole into the sun ?
    Nothing. People will keep exchanging, using whatever they want to.

    If I found a pile of gold, I'll send it to you. It probably will make you very happy. For whatever reason...
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