First, of-course the free market has nothing to do with this, this is pure manipulation by the government, money printing, wars, subsidies, bail outs, stimulus money, monopolies created by governments, regulations, etc. Stop blaming something that has nothing to do with this problem.
Secondly, you are being much too generous.
Unless you are blind, you should have noticed that the QE2 6 or 7 hundred billion dollars that's going to be printed by the Fed in the next 6-7 months is about equal to the amount that the federal gov't of USA is going to borrow in the same amount of time.
This means that the Fed has become the lender of last resort to the US government by buying US bonds and funding US gov't debt.
This means that the teaser/variable rate mortgage that the US gov't is holding is quickly changing its terms, the long term interest on bonds is going up and that's why US can't finance its borrowing on the normal market and is using the Fed instead.
This also means that at the time of the next rollover, the US bonds just may have to be bought back by US gov't, because the interest rates will be too high, and since those bonds are all short term, this is very near future, less than a year, not 5 or 10.
I am sorry to say, but what is coming is getting here much sooner than you think and it's going to be also much worse than most understand because US gov't WILL monetize all of its debt and that means 'goodbye' to the USD, 'goodbye' to the credit US is getting from abroad and 'goodbye' to all those cheap Chinese (and other) imports.
You I miss in your statement is that the society does not hate the business man for making money, he/she angers the populous when greed is applied to the model.
- a bit hard to decipher the meaning from the sentence there, but I assure you that most people actually hate those, who have more money, regardless of how the money was acquired.
For the USA, in the late 50 and 60s there was one of the highest tax rates on the rich, yet the country prospered.
- first of all the rich never paid the outrageous taxes in 50s-60s, everything was written off against expenses and also there is a little thing called 'the dividend', and taxing the dividends is double taxation, because that very income was already taxed at corporate level, so dividends are mostly tax exempt. I argue that the effective taxes in those times were lower than taxes today, that's why so much capital left the US.
AFAIC there should be no income taxes at all obviously.
Raising taxes on the rich is not meant as a punishment, it is meant to stabilize their own growth, even as it helps stabilize a society
- really? What a stupid thing to say. The society is stabilized by having a working economy, and having excessive taxes and thus leaving capital and causing lack of jobs is hardly a recipe for a stable economy.
see, you should be moderated troll on the simple basis that I have actually never watched a fox program. This is probably because I never really lived in US for too long and am not a republican.
You shouldn't waste your moderation points on me, my comments on economics normally go through a number of cycles up and down and mostly end up in the '-1 Troll' territory. I am not sure who exactly thinks here that I am trolling rather than simply stating my opinion, but that's OK.
Yes and no, without the war, the U.S. would never have built out its manufacturing capacity.
- sure. However had the gov't reduced its spending in 1929-1930 the same way it did in 1920, when the recession ended in 1 year, after the gov't reduced its spending by over 70%, all that manufacturing capacity could have been created privately in a year as well.
I actually think the Great Depression inflationary war was partly responsible for the start of WWII (well, that and of-course France's resolve to continue the draconian embargo on Germany, post WWI).
The point is that gov't must stop spending for the private sector to pick up pace by restructuring the capital and labor. That's what happened after the WWII, but again, it didn't have to be that long. None of the recessions of 19 century nor the one of 1920 lasted as long as G.D. did and the one that's currently in progress, which will eventually be turned by the Keynesian gov't into a hyper-inflationary depression, after the gov't inflated US bond asset bubble explodes and US starts buying out its debt by printing USD. They won't go down quietly, they'll destroy the currency.
US started exporting inflation immediately once US dollar became the reserve due to the Bretton Woods system. All of the US spending, the military bases across the globe, all of that relied on inflation and Nixon took the cap off of it with getting off the gold standard entirely in 1972
say "citation needed" to your entire post, but you'd probably just provide some Fox News links and leave it at that.
- first of all I don't care about the ad-hominem implication there.
Secondly, you may want to look at the banks in countries that do not have an FDIC equivalent - New Zealand and Germany as simple examples. Yes, Germany controls the banks behavior somewhat, but it does not have FDIC equivalent, neither does N.Z.
Both of those countries bank systems dealt with the crisis much better because they had very little gambling with deposits, if they had it at all.
Regarding Mr Krugman, he is absolutely correct that hiring people to dig and fill ditches would do wonders for the economy
- wow.
Insane in the brain much?
What, does digging ditches make you happy? Why just not give out free money WITHOUT forcing people to do useless labor, that even ends up being a net negative on the economy even from simple view of traffic jam creation. That's just so stupid, I can't help you. For somebody who implies I am a 'fox viewing Republican/Creationist', you are displaying the intelligence of one.
It's how we got out of our last Depression.
- the one that gov't created.
But you are so wrong on this. The way USA got out of the Great Depression (G.D. from now on) is by STOPPING the government spending!
That's right. Gov't stopped spending on the war effort, and the capital that was diverted to that was then reapplied to the private sector and the cheap labor in form of the soldier, who returned from the war was then hired to produce the goods that the entire world needed.
US was in a unique position of having the infrastructure intact after the WWII, unlike most other countries and there was a huge demand by all those countries for all the consumer goods US could produce with its intact infrastructure and cheap post-war labor, all while having the USD being reserve currency, which allowed US to print and spend so much money by exporting the inflation to all other nations.
How wonderful to know, that that very system provided you with all this valuable education you are displaying here.
I always get a kick out of it when some computer support specialist first class in a comments section thinks a Nobel Prize winner has it all wrong.
- I get a kick out of the fact that Krugman still didn't give the Nobel Prize back even though he doesn't even understand what inflation is.
And I am not talking about the gov't created financial monopolies, that are subsidized and stimulated and maintained and bailed out by the gov't, the monopolies protected by the gov't, gov't who kills the competition by everything in their arsenal, including the regulations such as the 'Patriot Act' (many don't understand what this means, but that regulation is killing a lot of competition to the financials, it forces the hedge funds/banks/insurance companies to be CIA/IRS spies, it costs a lot of money to do that.)
I said in my comment, I consider the businesses to be legitimate only if they are not sponsored/protected by gov'ts, who make monopolies out of preferred businesses.
PS. I usually comment on stories where economics are discussed and usually people take it the wrong way by moderating my comments as 'troll', that's unfortunate.
Well yes, there should be no debt in gov't, that's my position. My point is that if you are going to run debt, then finance it with your own population.
As to Japan, it's problem was not the debt. Japan had huge savings compared to US. Japan's problem and and was that it was and is still following advices of people like Bernanke, and inflating their money to prop up US consumers by making their exports cheaper in USD. What they should have done instead is allow their markets to restructure to start selling the goods to others, who can legitimately afford it, including their own population, rather than following US inflation and printing and stealing purchasing power from their own people.
Debt is intrinsically bad when it's gov't debt, because gov't is not supposed to be a business.
A business can invest money to generate some positive cash flow and then maybe even some revenue, gov't does not and shouldn't be expected to.
When gov't borrows to finance its programs, it means the same thing as taxes, only this is taxes + interest forwarded to the future generations of voters, which is theft, because those future generations didn't agree to any of it, and it would be best for those future generations to get their belongings and leave the country, rather than stay repaying the debts of their parents/grandparents.
Taxing consumption is the only true and honest way to fund a gov't, and gov't shouldn't be spending much on anything beyond basic protection against military invasion and a justice system *(and probably cops/prisons, to give teeth to the justice system.)
Gov't IS consumption, any citizens benefits from gov't only as much, as he benefits from any other consumption. Gov't is consumption, and thus its income (taxes) should be proportional to other consumption that people are willing to spend on.
When gov't taxes production, it cannot be controlled, the only feedback mechanism, by which a growing gov't system can be stopped (if it's taxing production) is basically loss of jobs and of productivity, which implies reduction in production and wealth and destruction of economy. In that case the gov't usually switches to acquiring debts, which shouldn't be allowed.
Gov't with a debt, is a gov't that cannot be afforded by its country current and especially future.
Consumption based taxes would provide gov't with enough money to finance the minimum required spending, while also creating a feed-back mechanism, necessary to control the size (budget) of gov't, because if people spend less on everything, they end up spending less on gov't, and this basically reduces gov't consumption just like all other consumption, and it is a good thing, needed to restructure a slowing economy.
Obviously all Keynesian shamans' brains explode at this very moment, but that's also a positive thing, we need their brains to explode, they have done enough damage.
The only way to get out of a recession is the way it was always done: stop spending, save money, rebuild savings, have a deflation by reduction of money supply, see prices for products and labor fall, use the saved capital to start new businesses, rehire people, start production.
The gov't wants to do it like so: print/borrow money, prop up spending on consumer goods produced in different economies, OK, so support economies of other countries while destroying the currency itself, and robbing everybody who holds it of purchasing power, do not allow the savings to be rebuild by low interest rates. Somehow hope that this will inflate another bubble that economy will somehow use to float on, but this new bubble obviously needs to be bigger than the previous one, that caused the last recession.
Every new bubble is bigger and will cause a bigger explosion, until the very bubble that will end up taking out the currency itself, as well as bankrupting the country and sending interest rates into the skies. Good luck with restructuring then, the pain will be enormous.
Oh, the next bubble to blow - US bonds. Then it's probably hyper-inflationary depression, because the gov't still relies on Keynesians like Krugman.
This of-course would require your own population to trust the gov't and it would require your own population to have money to buy the bonds, which just may require the gov't to stop collecting the income taxes.
Seriously, if you can't fund gov't programs by even getting the very population, who the gov't supposedly belongs to, to finance this debt, then how can you expect anybody in the world to finance it?
This is Krugman we are talking about here, right? Krugman, the guy who believes that the gov't should hire people to dig ditches and then fill them back up just to 'create jobs' during recessions, just another Keynesian shaman, who believes that printing and borrowing money is the answer to everything, even to the problems that were caused by the printing and borrowing and low interest rates in the first place.
However he IS right for the wrong reasons, I think this is normal for him - to be right for the wrong reasons, though he is mostly wrong.
In this case it is true, there should be no moral hazard introduced into economy by any government. But that's the problem - moral hazard that gov't introduces for example by insuring bank deposits. FDIC is such a moral hazard, which was created to fight an imaginary problem (actual percentage of lost deposits during the gov't created Great Depression did not exceed 3%).
FDIC though is a terrible moral hazard (and countries with no gov't deposit insurance do much better during the recessions, because their banks are less likely to gamble with deposits by defaults, since their customers, who are lending the banks their deposit money, do not automatically assume that the banks are always solvent, that their deposits are gov't ensured, so banks have to earn trust of their customers by not fooling around with the money.)
The correct thing to do is to have gov't stay out of economic decisions, to never have gov't interfere with economy and price discovery and interest rates and money creation and not to let gov't to modify economic outcomes for anybody in the market, be it a corporation or a union or any particular individual.
Gov'ts should not be in business, especially not in insurance, they are terrible, they think they are always solvent, they don't understand risks, they limit damage to some artificial numbers (like the BP liability cap). The FDIC, the Freddie/Fannie, the health insurance, the student loans, the minimum wage, the price controls, the subsidies and bail outs, the stimulus packages, the money printing and borrowing, etc.etc.etc. All of this is gov't interfering with economy.
I am not even suggesting that gov't is evil (well, we shouldn't 'question their motives', right?)
But imagine a small planet orbiting its Sun, and then imagine a gigantic asteroid that is about to hit that planet and push it off the normal orbit.
Is the asteroid evil? Is the planet good?
But what about the ecosystem on the planet, that supports some form of life, that evolved to live there based on the planet's orbit, the climate, the specific amounts/limits of energy that the Sun is providing? Various factors we can't even think of yet. All of that is disturbed and even destroyed once the asteroid hits that planet and it goes off its normal orbit.
Same with economy. The rules of economy are quite simple - market trading based price discovery sets everything, from interest rates to the price of your doughnut, to the labor cost, to the amount of real money and wealth, to the competition between all market players, everything.
Then the gov't decides it's going to force interest rates to 0%, it will print money to cover all borrowing and private bets of preferred players, it will create various moral hazards and it will negate the rules of market price discovery, etc.etc.
The orbit is no longer what it should be, the ecosystem is screwed. All of this is because the gov't has the power to compel you to do what you do not want to do by the threat of violence.
It's similar violence that the asteroid exerts upon an unsuspecting planet, the results is similar.
Without capital there are no jobs, people with capital are the ones that do in fact provide jobs by using the capital to organize tools/land/labor into a system that adds value to the society in total.
Saying something to the tune of "importing cheap junk" is completely blind to the fact of how difficult it actually is to set up a working business, to meet the payroll every month, to keep the business afloat by somehow ensuring that business stays cash flow positive.
If you are not a gov't created/maintained/subsidized/bailed out monopoly, you are actually competing against such monopolies as well as you are competing against other legitimate businesses (and when I say 'legitimate', I do mean businesses that are not subsidized by the gov't.)
If it was a trivial matter - to "import cheap junk", to make it all work, to have a business that doesn't just run out of saved/borrowed money and die, something that actually works and employs people, while at the same time benefiting the society by providing it with wealth (and wealth IS the 'cheap junk', it's not money. People want 'cheap junk' and they are ready to part with their money to get it, because they it's this 'cheap junk' that gives them the quality of life they enjoy), it takes very hard work, very stressful hard work, very time consuming hard work, the kind of work that you do not do when you are on the clock, the kind of work, where you either really compete by innovating, by constantly working.
If it was as trivial as you make it out to be, then obviously there would have been many more companies doing it and there would have been much fewer people looking for just a 9-5 job.
Most people prefer not to work that hard, most people prefer the stability of a paycheck, most people do not in fact create wealth for their societies (and I mean wealth, as opposed to money.)
It's always easy to diss somebody who is taking this work and making it big while doing it, but this completely disregards the fact that most who try to do this - they fail. They lose money as opposed to making money. They end up losing time and capital and a calm sort of life, which most people have when they are working on a salary. Working for yourself, taking a risk, building a business, hiring people and ensuring they do get their paycheck at the end of the month, getting the business into the cash positive territory, growing a business, generating a profit and all of this, while providing the society with the wealth it is demanding, this is truly amazing anybody can even do it.
I put the regular businessmen much higher on the ladder of achievers than most other people, probably save for the most prominent scientists, who are at least at the same level if sometimes not more in terms of wealth generation for the society in total.
Indeed the highest ranking people AFAIC (and I really mean it) are those, who first invent/build something, some new idea, some new invention and then are even successful at bringing the idea to life in form of some useful product.
It's much harder to do that, than to be a pure scientist, but of-course we need pure scientists as well, it's not a or-or proposition.
Dissing businessmen who are there, making the society wealthy, that's easy. To understand what many of them actually do and how this increases the overall quality of life for all people, while HOPEFULLY making them rich, that's different.
AFAIC again, these people deserve much more respect than they actually get from the general public, but they are mostly hated I'd say due to the fact that SOME of them do end up much wealthier than any normal 9-5 worker and thus people are jealous of them and end up hating them, while not realizing even that they are benefiting from the dedicated and hard work of these very people through everything, from job creation, to wealth acquisition, to generally a basically working economy and stable and improving society, which depends on a working economy.
What they really want is for every house to have a scanner like that on the entrance, so you are scanned and/or patted down every time you enter and exit your house and every other building (and of-course every mode of transportation as well, including the buses, planes, trains and automobiles, yachts and ships and dirigibles and even you bikes.)
This is actually very amusing to me, as I was born in the USSR and one of our best satirists ever (Zhvanetsky) had a few monologues, where he described the soviet experiences in a half-imaginary way
Here is one of the monologues (my translation):
As usually, you are going somewhere, the face as usually is facing forward; The back of the head has no clue. All of a sudden from behind:
- Continue moving!
- I am continuing.
- So go as you are going.
- I am going as I am going.
- Take a little to the right.
- Will take... taking.
- Don't talk!
- I am silent.
- Stand there, don't look back!
- Standing. Not looking. Letting something pass on the left. What is that behind me?
- DO NOT LOOK BACK!
- Not looking.
- OK, you are free to go!
- Yes, I am free!
here is another one, please don't get on my case for the translation style, it's difficult to translate something well anyway, and to make it even remotely funny while doing so is just... very hard and I was trying to keep to the way the monologue was read, which was with leaving many of the necessary verbs out of the text on purpose, to create an 'air' of the idea that not every word needs to be spelled out for the listener.
Turnstiles.
At the end of every street need to set up turnstiles. Obviously, you can walk this and that way, as much as you want, but this is pure lack of responsibility - going wherever you want. So at the end of each street set up the turnstiles. Nothing special. They should let everybody through for now without any questions. Don't be afraid. Only the ricketting noise lets you know... And the security guards with sleeve insignia. Let them stand there and let everybody through. For now. Just their presense, just the steel stare... You are coming towards them - the face is burning up, you pass them - you back is burning up. And they are not asking anything... yet. This is the entire effect. And it's increasing the discipling. And at any moment you can lock everything up. Those with special commands have access to any house, etc.
By the perimeter of the plaza - until the security checkpoint. A man is walking along the fence, with the hands moving over the fence. Let's suppose three, four times he moves the hands over the fence - and into the security checkpoint, where NOBODY is stopping him, though the security guards are standing there of-course. Special paint on the fence, easy to check the fingerprints, this and that, etc. My god, nobody REALLY will be taking the fingerprints off the fence, don't worry about it. But in case there is some emergency... the fingerprints are right there and what are you going to do? For now of-course, let them go through without showing any papers. Though to have the papers on your person, that's for sure, just in case they mustc check, some emergency, etc. So obviously as you are coming closer towards the guard there, you already want to show something. To come through without showing - that's only to be suffering in doubt. In time you won't mind any of the checks. It will be a shame to walk around unchecked. All the more so - to come of a sudden and somewhere, as you do now. Or to yell - "my house is my castle" - that's just from internal immorality.
But IN the corridors you don't need to put security guards. For now. You have to start at the entrance, of-co
Yes, I speculated during the housing bubble because buying houses was clearly not an investment.
Yes, shorting muni bonds is a speculation, it's not an investment, but a little money allocated to it can be an interesting experience, more importantly I am certain that US bonds will fail for the same reason I expect gold prices to continue going up AT LEAST until they are 1:1 to Dow, that's just history repeating itself
As to 'gold market crash'... gold is money.
Gold to me is actual money, while fiat is only a way of exchange between gold and goods (and an unnecessary exchange system at that.)
USD has been falling steadily since the Fed was introduced. It devalued by a factor of 20 since that time, it devalued by 30% against other currencies in the last 10 years and it devalued by hundreds of percent against commodities.
It devalued by about 300% against money (gold) in this time and other currencies have devalued against commodities and gold.
The point is that while the governments of the world are running a scam of printing fiat cash and not letting the market to set interest rates, the gold will go up in price, that's my assessment of it, I am certain of it.
Once the interest rates are let to be set by the market, THEN the gold will start falling in terms of DOW (or whatever stocks) but until then I expect gold to rise.
But in terms of fiat currencies that are being printed the gold cannot crash unless somebody collects all those money and burns them, to make them scarce and unless the bond debts are repaid.
Good luck waiting for that moment to happen.
As to gold company stocks, you don't even understand that the HUI index is still lower today than it was during the market crash in 2008, it's definitely not going up at any rate equal to the gold prices rising. That should be a clue for anybody with 2 bits worth of sense that there is no bubble in the gold market because the speculative money didn't even come into the game yet.
Yeah, there maybe a bubble in all of these things, and when the rising prices hit something like 10-20%/day, then I'll know it's a bubble and will get ready to jump off that ship and get into stocks.
Gold standard != 100% reserved currency. This seems to be a fundamental misunderstanding you have. The 19th cenury banking system was based on fractional reserves as was any serious attempt at banking in modern times.
- you give me no benefit of doubt of any kind, do you? Do you really think I am this dense, that I do not KNOW that gold standard does not preclude banks from lending out deposits and only holding fractions? Seriously? For real?
The only single reason why there were SOME bank runs and some people lost money due to them during the 19 century was that the banks engaged in this activity.
But fractional banking is a net NEGATIVE on the economy, which creates inflation and instability in banking, when too many people lose confidence in any particular bank and decide to pull their money out.
Why is it that people do that sometimes? That's exactly because they FIND OUT that the bank is engaged in this activity, so this means the public in general is against the fractional reserve, when it's their own money on the line and it's because they don't get any benefit from it.
MOST of the banks in 19 century did not engage in this activity to such an extent that it would collapse them due to a bank run. So that means that most banks either understood not to do this, and to have most of the gold/silver at hand or at least they would clue their customers on the scheme and allow their customers to PROFIT from it by giving them percentage points.
That means that the money that was lent out was actually directly lent out by the clients, so those were direct loans out of earnings, and then, if the loan was lost, it was a write off for the lender - deposit holder and some for the bank.
So that didn't end up actually creating inflation, because the money existed only as long, as it could be paid back. That's not fractional reserve, that's direct lending.
If you (person A) lend money to the bank (your deposit), and then bank and you loan that money to person B, and then person B buys something with that money, uses it to start a business, that money changes hands and goes to person C.
Person C may put it in the bank and may decide with the bank to loan it again to person D.
But if person B cannot return the money to person A and defaults, then the money only exists ONCE, person C has it. Person B doesn't, person A (you) do not either. The money is with C.
That's normal lending, though the money was used in a production cycle.
I can't begin to conceive what naive thinking makes you believe that constantly falling prices are a macroeconomic benefit.
- yet you are the one who doesn't understand that it is good for economy to have falling prices rather than rising prices.
The fact is that in the 19 century the US dollar has appreciated in value by a factor of 2. That's right, the dollar started off at half the value in the beginning of 19 century and by the end of it its value was doubled.
The Fed was introduced in 1913 and its mandate was PRICE STABILITY! It's amazing how terrible of a failure the Fed was at this one single goal, because since the 1913 the dollar has depreciated (or the prices rose) by the factor of 20.
So now the value o f dollar is 10 times less than it was in 1800.
Yet during the 19 century the quality of life was increasing at amazing pace, especially after the 1850, yet in 20th century the quality of life started falling down dramatically, especially after Nixon.
I believe that you are not simply naive, but you are purposefully ignoring all of these facts just to continue a fruitless discussion.
You also seem to be drastically misinformed about the nature of gold mining shares. While one might naively assume the price of a mining company to rise as gold prices rise, the company doesn't actually represent any metal beyond it's current inventory.
I don't know who you are writing this to, but if it's about the US of A, that country is no longer the wealthiest, no longer the most productive, no longer even competitive. It lost jobs, productivity, meaningful government. It spends everything and it borrows to do so, thus it's putting its future generations into debt, and the future generations, if they are not stupid will just run away into other countries, where there are opportunities and actual Freedoms, because in US there are no economic Freedoms anymore and other ones are also disappearing fast.
The tax rate right now is high and it's getting higher. If we are talking about income tax, then there is only ONE correct rate for that: 0%.
0% is the only acceptable income tax rate.
Before 1913 the US gov't was funded by sales/import/alcohol taxes. The 19 century has show more in terms of improvement of quality of life than the 20 century has shown, and it was done with Free Market, by Industrialization and Capitalism and it was done with sound money, backed by gold/silver.
The social systems of today shouldn't even exist, they are destroying the country with debt. But of-course wars are destroying the country with even more debt - all that military spending.
The government is broke. The SS is broke, it's 'funded' with BONDS, which means that if money is actually needed, bonds have to be sold, and that means DEBT, the SS is 'funded' with debt. Saying SS is solvent is a huge FAIL in basic accounting.
The system is broke in many more ways than one, but basically it is the Federal government ran amok, completely destroying the free market with gov't monopolies, subsidies, bailouts, 'insurances', regulations, rules, taxes. Complete destruction of even idea of free enterprise, complete devaluation of the currency, total destruction of economy - it's all on gov'ts conscience, but it doesn't have conscience, so it's just on gov't record.
Gov't places those bonds into the fund when it steals the money from the trust and spends it.
SUPPOSEDLY the bonds can be converted into money. However when gov't sells bonds, what it means is that government is BORROWING MONEY.
So SS is solvent why? Because more money can be borrowed based on the bonds that are in the fund so that payments can be made?
That's basic accounting FAIL right there. It means that SS is NOT solvent.
Gov't must get into more debt to pay, it's like writing yourself a check from your own empty account and saying: I have money to pay my bills, because I have this check.
It's nonsense. SS is insolvent, US gov't is bankrupt, Fed is killing USD with inflation. The standard of living is falling, the productivity if falling, the jobs are gone, the prices SHOULD be falling, but the fed inflates dollars instead of allowing prices to fall, and eventually it'll be a hyper-inflationary depression with no productive jobs and there will be no credit, interest rates will soar into high double digits and US as a country will be completely broke.
Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ooooo he heh eheheheheh hohoh ohohoho hohoh hahahahah hoahoehah aaaaa
u, you make me laugh so hard.
A US president? You don't have a Churchill, you don't even have a Truman, you definitely have no Lincoln or Washington or Jefferson.
Those are all gone, all you have now is a machine, you only have a machine and people are little tiny insignificant screws and smallish parts of it and they just don't do anything based on any actual principles anymore.
Sure, if you had Ron Paul as the president or Rand Paul or Piter Schiff for that matter. But those people will never become US presidents, that's ensured by the way the machine works.
- are you certain about that? There were about 100 Billion people on this planet, when they are all added up, but today there are about 7Billion who are still alive.
I'd say that certainty of mortality can be calculated to somewhere near 93%.
1. Fractional reserve banking inflates money and it creates undue risk on the deposits in the bank. I don't personally have cash in the banks, I have gold and gold mining stocks. Whenever I actually need cash, I exchange some of the gold for cash and try to get rid of that cash ASAP. There is a reason for that - I do not want my purchasing power to be stolen by the government printing money, by the fractional reserve banking, by anybody.
2. Again, you are saying that there is no ability to loan money without fractional reserve banking, and THAT is bat shit crazy. That's the only honest and correct way to loan money, otherwise nothing stops anybody from just coming up with completely imaginary money to loan (as the banks are actually doing, and that's why they end up owning everything while you own nothing.)
3. The industrial revolution was the most prosperous time, when the wealth grew the most, and the system was based on commodity backed money, whether it's silver or gold.
The result of this is that the prices for goods were falling and that is a GREAT thing, it's the best thing ever. Falling prices is what we want, we don't want prices to rise just because somebody is printing money all the time.
Inflation is theft and it's criminal AFAIC and I will not be part of it, as I said, I only see commodities and productive land/business as something of value, you for some bizarre reason think that FIAT is of some value. It's pure nonsense, fiat currency has no value at all. Give me gold backed loan, give me gold backed note, give me business backed note (stock), I can use that, that's valuable stuff.
Give me dollars? What happens to the dollars? 10 years ago the value of the USD was 30% HIGHER than what it is today in other currencies.
However in commodities USD is HUNDREDS of percent lower today, than it was 10 years ago.
Money is worthless in itself and it's constantly losing value. You can have the dollars, I'll have what I think has value. Bye.
I argue that there should be no insurance of any sort issued by the government because government:
1. cannot asses risk, and I can prove it, example is Bernanke sitting there saying in 2006: there is no housing bubble, while he was creating it, another example: Barney Frank, sitting there saying "Freddie and Fannie are alright, they won't cause any trouble", etc. FDIC, Freddie/Fannie, medical insurance of any kind, any financial insurance any sort of insurance at all by gov't should be stopped.
2. all that gov't 'insurance' ends up doing is introduction of moral hazard and rising prices.
--
As to saying that without fractional reserve there can be no banking system and no loans, now THAT is bullshit.
Of-course there can be and were and STILL ARE TODAY loans without any fractional reserve.
Do you not understand the principle of loaning your money to somebody - that's a real loan.
That's when you EARNED money and then you loaned it to somebody else. You don't even understand a simple concept of loaning real money, rather than imaginary money.
Banks, when they loan YOUR DEPOSIT to somebody, if they are telling you that they do that and you agree to do that, then you should be making ALL of the interest on that loan and the bank should only be able to make a transaction (management) fee, but there should not be any FDIC or any federal involvement into the risk that you are taking.
You can have a real private insurance on the loaned money, but the best insurance is for you not to loan the entire amount of your money to just one individual/company.
What the heck are you talking about that there can be no real growth of economy without fractional reserve? That's nonsense.
What FDIC and gov't did, now THAT is very dangerous, as it creates a huge moral hazard for the entire economy, because now the bank owns your deposit, the gov't 'guarantees it', so bank can take any risk it wants with YOUR money and you are not getting any benefit from it at all, while your money is being risked, but again, the gov't 'guarantees' it. So if there is real systemic risk that crashes the economy, it is again: YOU, who takes the fall in a way of your economy dying, of your currency dying.
I don't know how I can help you to understand this, but it is the gov't that is killing the economy in the first place.
Slashdot Mirror
First, of-course the free market has nothing to do with this, this is pure manipulation by the government, money printing, wars, subsidies, bail outs, stimulus money, monopolies created by governments, regulations, etc. Stop blaming something that has nothing to do with this problem.
Secondly, you are being much too generous.
Unless you are blind, you should have noticed that the QE2 6 or 7 hundred billion dollars that's going to be printed by the Fed in the next 6-7 months is about equal to the amount that the federal gov't of USA is going to borrow in the same amount of time.
This means that the Fed has become the lender of last resort to the US government by buying US bonds and funding US gov't debt.
This means that the teaser/variable rate mortgage that the US gov't is holding is quickly changing its terms, the long term interest on bonds is going up and that's why US can't finance its borrowing on the normal market and is using the Fed instead.
This also means that at the time of the next rollover, the US bonds just may have to be bought back by US gov't, because the interest rates will be too high, and since those bonds are all short term, this is very near future, less than a year, not 5 or 10.
I am sorry to say, but what is coming is getting here much sooner than you think and it's going to be also much worse than most understand because US gov't WILL monetize all of its debt and that means 'goodbye' to the USD, 'goodbye' to the credit US is getting from abroad and 'goodbye' to all those cheap Chinese (and other) imports.
You I miss in your statement is that the society does not hate the business man for making money, he/she angers the populous when greed is applied to the model.
- a bit hard to decipher the meaning from the sentence there, but I assure you that most people actually hate those, who have more money, regardless of how the money was acquired.
For the USA, in the late 50 and 60s there was one of the highest tax rates on the rich, yet the country prospered.
- first of all the rich never paid the outrageous taxes in 50s-60s, everything was written off against expenses and also there is a little thing called 'the dividend', and taxing the dividends is double taxation, because that very income was already taxed at corporate level, so dividends are mostly tax exempt. I argue that the effective taxes in those times were lower than taxes today, that's why so much capital left the US.
AFAIC there should be no income taxes at all obviously.
Raising taxes on the rich is not meant as a punishment, it is meant to stabilize their own growth, even as it helps stabilize a society
- really? What a stupid thing to say. The society is stabilized by having a working economy, and having excessive taxes and thus leaving capital and causing lack of jobs is hardly a recipe for a stable economy.
As far as Warren Buffet goes, the guy has profited from the gov't bail outs, his very company would have gone under was it not for bail outs and he does not deserve to be called a free market capitalist anyway.
You may very well be correct, but your argument would be just as convincing to me if
and who are you, anonymous coward, and why should I care to reply to somebody who says "ME, I", while not even having a user account?
see, you should be moderated troll on the simple basis that I have actually never watched a fox program. This is probably because I never really lived in US for too long and am not a republican.
You shouldn't waste your moderation points on me, my comments on economics normally go through a number of cycles up and down and mostly end up in the '-1 Troll' territory. I am not sure who exactly thinks here that I am trolling rather than simply stating my opinion, but that's OK.
Yes and no, without the war, the U.S. would never have built out its manufacturing capacity.
- sure. However had the gov't reduced its spending in 1929-1930 the same way it did in 1920, when the recession ended in 1 year, after the gov't reduced its spending by over 70%, all that manufacturing capacity could have been created privately in a year as well.
I actually think the Great Depression inflationary war was partly responsible for the start of WWII (well, that and of-course France's resolve to continue the draconian embargo on Germany, post WWI).
The point is that gov't must stop spending for the private sector to pick up pace by restructuring the capital and labor. That's what happened after the WWII, but again, it didn't have to be that long. None of the recessions of 19 century nor the one of 1920 lasted as long as G.D. did and the one that's currently in progress, which will eventually be turned by the Keynesian gov't into a hyper-inflationary depression, after the gov't inflated US bond asset bubble explodes and US starts buying out its debt by printing USD. They won't go down quietly, they'll destroy the currency.
US started exporting inflation immediately once US dollar became the reserve due to the Bretton Woods system. All of the US spending, the military bases across the globe, all of that relied on inflation and Nixon took the cap off of it with getting off the gold standard entirely in 1972
say "citation needed" to your entire post, but you'd probably just provide some Fox News links and leave it at that.
- first of all I don't care about the ad-hominem implication there.
Secondly, you may want to look at the banks in countries that do not have an FDIC equivalent - New Zealand and Germany as simple examples. Yes, Germany controls the banks behavior somewhat, but it does not have FDIC equivalent, neither does N.Z.
Both of those countries bank systems dealt with the crisis much better because they had very little gambling with deposits, if they had it at all.
Regarding Mr Krugman, he is absolutely correct that hiring people to dig and fill ditches would do wonders for the economy
- wow.
Insane in the brain much?
What, does digging ditches make you happy? Why just not give out free money WITHOUT forcing people to do useless labor, that even ends up being a net negative on the economy even from simple view of traffic jam creation. That's just so stupid, I can't help you. For somebody who implies I am a 'fox viewing Republican/Creationist', you are displaying the intelligence of one.
It's how we got out of our last Depression.
- the one that gov't created.
But you are so wrong on this. The way USA got out of the Great Depression (G.D. from now on) is by STOPPING the government spending!
That's right. Gov't stopped spending on the war effort, and the capital that was diverted to that was then reapplied to the private sector and the cheap labor in form of the soldier, who returned from the war was then hired to produce the goods that the entire world needed.
US was in a unique position of having the infrastructure intact after the WWII, unlike most other countries and there was a huge demand by all those countries for all the consumer goods US could produce with its intact infrastructure and cheap post-war labor, all while having the USD being reserve currency, which allowed US to print and spend so much money by exporting the inflation to all other nations.
How wonderful to know, that that very system provided you with all this valuable education you are displaying here.
I always get a kick out of it when some computer support specialist first class in a comments section thinks a Nobel Prize winner has it all wrong.
- I get a kick out of the fact that Krugman still didn't give the Nobel Prize back even though he doesn't even understand what inflation is.
Cheers.
And I am not talking about the gov't created financial monopolies, that are subsidized and stimulated and maintained and bailed out by the gov't, the monopolies protected by the gov't, gov't who kills the competition by everything in their arsenal, including the regulations such as the 'Patriot Act' (many don't understand what this means, but that regulation is killing a lot of competition to the financials, it forces the hedge funds/banks/insurance companies to be CIA/IRS spies, it costs a lot of money to do that.)
I said in my comment, I consider the businesses to be legitimate only if they are not sponsored/protected by gov'ts, who make monopolies out of preferred businesses.
PS.
I usually comment on stories where economics are discussed and usually people take it the wrong way by moderating my comments as 'troll', that's unfortunate.
Well yes, there should be no debt in gov't, that's my position. My point is that if you are going to run debt, then finance it with your own population.
As to Japan, it's problem was not the debt. Japan had huge savings compared to US. Japan's problem and and was that it was and is still following advices of people like Bernanke, and inflating their money to prop up US consumers by making their exports cheaper in USD. What they should have done instead is allow their markets to restructure to start selling the goods to others, who can legitimately afford it, including their own population, rather than following US inflation and printing and stealing purchasing power from their own people.
Debt is intrinsically bad when it's gov't debt, because gov't is not supposed to be a business.
A business can invest money to generate some positive cash flow and then maybe even some revenue, gov't does not and shouldn't be expected to.
When gov't borrows to finance its programs, it means the same thing as taxes, only this is taxes + interest forwarded to the future generations of voters, which is theft, because those future generations didn't agree to any of it, and it would be best for those future generations to get their belongings and leave the country, rather than stay repaying the debts of their parents/grandparents.
Taxing consumption is the only true and honest way to fund a gov't, and gov't shouldn't be spending much on anything beyond basic protection against military invasion and a justice system *(and probably cops/prisons, to give teeth to the justice system.)
Gov't IS consumption, any citizens benefits from gov't only as much, as he benefits from any other consumption. Gov't is consumption, and thus its income (taxes) should be proportional to other consumption that people are willing to spend on.
When gov't taxes production, it cannot be controlled, the only feedback mechanism, by which a growing gov't system can be stopped (if it's taxing production) is basically loss of jobs and of productivity, which implies reduction in production and wealth and destruction of economy. In that case the gov't usually switches to acquiring debts, which shouldn't be allowed.
Gov't with a debt, is a gov't that cannot be afforded by its country current and especially future.
Consumption based taxes would provide gov't with enough money to finance the minimum required spending, while also creating a feed-back mechanism, necessary to control the size (budget) of gov't, because if people spend less on everything, they end up spending less on gov't, and this basically reduces gov't consumption just like all other consumption, and it is a good thing, needed to restructure a slowing economy.
Obviously all Keynesian shamans' brains explode at this very moment, but that's also a positive thing, we need their brains to explode, they have done enough damage.
The only way to get out of a recession is the way it was always done: stop spending, save money, rebuild savings, have a deflation by reduction of money supply, see prices for products and labor fall, use the saved capital to start new businesses, rehire people, start production.
The gov't wants to do it like so: print/borrow money, prop up spending on consumer goods produced in different economies, OK, so support economies of other countries while destroying the currency itself, and robbing everybody who holds it of purchasing power, do not allow the savings to be rebuild by low interest rates. Somehow hope that this will inflate another bubble that economy will somehow use to float on, but this new bubble obviously needs to be bigger than the previous one, that caused the last recession.
Every new bubble is bigger and will cause a bigger explosion, until the very bubble that will end up taking out the currency itself, as well as bankrupting the country and sending interest rates into the skies. Good luck with restructuring then, the pain will be enormous.
Oh, the next bubble to blow - US bonds. Then it's probably hyper-inflationary depression, because the gov't still relies on Keynesians like Krugman.
Sell your bonds to your own population.
This of-course would require your own population to trust the gov't and it would require your own population to have money to buy the bonds, which just may require the gov't to stop collecting the income taxes.
Seriously, if you can't fund gov't programs by even getting the very population, who the gov't supposedly belongs to, to finance this debt, then how can you expect anybody in the world to finance it?
This is Krugman we are talking about here, right? Krugman, the guy who believes that the gov't should hire people to dig ditches and then fill them back up just to 'create jobs' during recessions, just another Keynesian shaman, who believes that printing and borrowing money is the answer to everything, even to the problems that were caused by the printing and borrowing and low interest rates in the first place.
However he IS right for the wrong reasons, I think this is normal for him - to be right for the wrong reasons, though he is mostly wrong.
In this case it is true, there should be no moral hazard introduced into economy by any government. But that's the problem - moral hazard that gov't introduces for example by insuring bank deposits. FDIC is such a moral hazard, which was created to fight an imaginary problem (actual percentage of lost deposits during the gov't created Great Depression did not exceed 3%).
FDIC though is a terrible moral hazard (and countries with no gov't deposit insurance do much better during the recessions, because their banks are less likely to gamble with deposits by defaults, since their customers, who are lending the banks their deposit money, do not automatically assume that the banks are always solvent, that their deposits are gov't ensured, so banks have to earn trust of their customers by not fooling around with the money.)
The correct thing to do is to have gov't stay out of economic decisions, to never have gov't interfere with economy and price discovery and interest rates and money creation and not to let gov't to modify economic outcomes for anybody in the market, be it a corporation or a union or any particular individual.
Gov'ts should not be in business, especially not in insurance, they are terrible, they think they are always solvent, they don't understand risks, they limit damage to some artificial numbers (like the BP liability cap). The FDIC, the Freddie/Fannie, the health insurance, the student loans, the minimum wage, the price controls, the subsidies and bail outs, the stimulus packages, the money printing and borrowing, etc.etc.etc. All of this is gov't interfering with economy.
I am not even suggesting that gov't is evil (well, we shouldn't 'question their motives', right?)
But imagine a small planet orbiting its Sun, and then imagine a gigantic asteroid that is about to hit that planet and push it off the normal orbit.
Is the asteroid evil? Is the planet good?
But what about the ecosystem on the planet, that supports some form of life, that evolved to live there based on the planet's orbit, the climate, the specific amounts/limits of energy that the Sun is providing? Various factors we can't even think of yet. All of that is disturbed and even destroyed once the asteroid hits that planet and it goes off its normal orbit.
Same with economy. The rules of economy are quite simple - market trading based price discovery sets everything, from interest rates to the price of your doughnut, to the labor cost, to the amount of real money and wealth, to the competition between all market players, everything.
Then the gov't decides it's going to force interest rates to 0%, it will print money to cover all borrowing and private bets of preferred players, it will create various moral hazards and it will negate the rules of market price discovery, etc.etc.
The orbit is no longer what it should be, the ecosystem is screwed. All of this is because the gov't has the power to compel you to do what you do not want to do by the threat of violence.
It's similar violence that the asteroid exerts upon an unsuspecting planet, the results is similar.
Marxist much?
Without capital there are no jobs, people with capital are the ones that do in fact provide jobs by using the capital to organize tools/land/labor into a system that adds value to the society in total.
Saying something to the tune of "importing cheap junk" is completely blind to the fact of how difficult it actually is to set up a working business, to meet the payroll every month, to keep the business afloat by somehow ensuring that business stays cash flow positive.
If you are not a gov't created/maintained/subsidized/bailed out monopoly, you are actually competing against such monopolies as well as you are competing against other legitimate businesses (and when I say 'legitimate', I do mean businesses that are not subsidized by the gov't.)
If it was a trivial matter - to "import cheap junk", to make it all work, to have a business that doesn't just run out of saved/borrowed money and die, something that actually works and employs people, while at the same time benefiting the society by providing it with wealth (and wealth IS the 'cheap junk', it's not money. People want 'cheap junk' and they are ready to part with their money to get it, because they it's this 'cheap junk' that gives them the quality of life they enjoy), it takes very hard work, very stressful hard work, very time consuming hard work, the kind of work that you do not do when you are on the clock, the kind of work, where you either really compete by innovating, by constantly working.
If it was as trivial as you make it out to be, then obviously there would have been many more companies doing it and there would have been much fewer people looking for just a 9-5 job.
Most people prefer not to work that hard, most people prefer the stability of a paycheck, most people do not in fact create wealth for their societies (and I mean wealth, as opposed to money.)
It's always easy to diss somebody who is taking this work and making it big while doing it, but this completely disregards the fact that most who try to do this - they fail. They lose money as opposed to making money. They end up losing time and capital and a calm sort of life, which most people have when they are working on a salary. Working for yourself, taking a risk, building a business, hiring people and ensuring they do get their paycheck at the end of the month, getting the business into the cash positive territory, growing a business, generating a profit and all of this, while providing the society with the wealth it is demanding, this is truly amazing anybody can even do it.
I put the regular businessmen much higher on the ladder of achievers than most other people, probably save for the most prominent scientists, who are at least at the same level if sometimes not more in terms of wealth generation for the society in total.
Indeed the highest ranking people AFAIC (and I really mean it) are those, who first invent/build something, some new idea, some new invention and then are even successful at bringing the idea to life in form of some useful product.
It's much harder to do that, than to be a pure scientist, but of-course we need pure scientists as well, it's not a or-or proposition.
Dissing businessmen who are there, making the society wealthy, that's easy. To understand what many of them actually do and how this increases the overall quality of life for all people, while HOPEFULLY making them rich, that's different.
AFAIC again, these people deserve much more respect than they actually get from the general public, but they are mostly hated I'd say due to the fact that SOME of them do end up much wealthier than any normal 9-5 worker and thus people are jealous of them and end up hating them, while not realizing even that they are benefiting from the dedicated and hard work of these very people through everything, from job creation, to wealth acquisition, to generally a basically working economy and stable and improving society, which depends on a working economy.
Let's cut to the chase already.
What they really want is for every house to have a scanner like that on the entrance, so you are scanned and/or patted down every time you enter and exit your house and every other building (and of-course every mode of transportation as well, including the buses, planes, trains and automobiles, yachts and ships and dirigibles and even you bikes.)
This is actually very amusing to me, as I was born in the USSR and one of our best satirists ever (Zhvanetsky) had a few monologues, where he described the soviet experiences in a half-imaginary way
Here is one of the monologues (my translation):
As usually, you are going somewhere, the face as usually is facing forward; The back of the head has no clue.
All of a sudden from behind:
- Continue moving!
- I am continuing.
- So go as you are going.
- I am going as I am going.
- Take a little to the right.
- Will take... taking.
- Don't talk!
- I am silent.
- Stand there, don't look back!
- Standing. Not looking. Letting something pass on the left. What is that behind me?
- DO NOT LOOK BACK!
- Not looking.
- OK, you are free to go!
- Yes, I am free!
here is another one, please don't get on my case for the translation style, it's difficult to translate something well anyway, and to make it even remotely funny while doing so is just ... very hard and I was trying to keep to the way the monologue was read, which was with leaving many of the necessary verbs out of the text on purpose, to create an 'air' of the idea that not every word needs to be spelled out for the listener.
Turnstiles.
At the end of every street need to set up turnstiles. Obviously, you can walk this and that way, as much as you want, but this is pure lack of responsibility - going wherever you want. So at the end of each street set up the turnstiles. Nothing special. They should let everybody through for now without any questions. Don't be afraid. Only the ricketting noise lets you know... And the security guards with sleeve insignia. Let them stand there and let everybody through. For now. Just their presense, just the steel stare... You are coming towards them - the face is burning up, you pass them - you back is burning up. And they are not asking anything... yet. This is the entire effect. And it's increasing the discipling. And at any moment you can lock everything up. Those with special commands have access to any house, etc.
By the perimeter of the plaza - until the security checkpoint. A man is walking along the fence, with the hands moving over the fence. Let's suppose three, four times he moves the hands over the fence - and into the security checkpoint, where NOBODY is stopping him, though the security guards are standing there of-course. Special paint on the fence, easy to check the fingerprints, this and that, etc. My god, nobody REALLY will be taking the fingerprints off the fence, don't worry about it. But in case there is some emergency... the fingerprints are right there and what are you going to do? For now of-course, let them go through without showing any papers. Though to have the papers on your person, that's for sure, just in case they mustc check, some emergency, etc. So obviously as you are coming closer towards the guard there, you already want to show something. To come through without showing - that's only to be suffering in doubt. In time you won't mind any of the checks. It will be a shame to walk around unchecked. All the more so - to come of a sudden and somewhere, as you do now. Or to yell - "my house is my castle" - that's just from internal immorality.
But IN the corridors you don't need to put security guards. For now. You have to start at the entrance, of-co
I think the entire thing is off base because it does not relate to real life in any meaningful way.
Call something: level Brown and people will understand - Brown is when you shit yourself.
Level Yellow is when you piss yourself.
Level Blue - that's when you have no air left and will die from suffocation.
Etc. Things like that.
Yes, I speculated during the housing bubble because buying houses was clearly not an investment.
Yes, shorting muni bonds is a speculation, it's not an investment, but a little money allocated to it can be an interesting experience, more importantly I am certain that US bonds will fail for the same reason I expect gold prices to continue going up AT LEAST until they are 1:1 to Dow, that's just history repeating itself
As to 'gold market crash'... gold is money.
Gold to me is actual money, while fiat is only a way of exchange between gold and goods (and an unnecessary exchange system at that.)
USD has been falling steadily since the Fed was introduced. It devalued by a factor of 20 since that time, it devalued by 30% against other currencies in the last 10 years and it devalued by hundreds of percent against commodities.
It devalued by about 300% against money (gold) in this time and other currencies have devalued against commodities and gold.
The point is that while the governments of the world are running a scam of printing fiat cash and not letting the market to set interest rates, the gold will go up in price, that's my assessment of it, I am certain of it.
Once the interest rates are let to be set by the market, THEN the gold will start falling in terms of DOW (or whatever stocks) but until then I expect gold to rise.
But in terms of fiat currencies that are being printed the gold cannot crash unless somebody collects all those money and burns them, to make them scarce and unless the bond debts are repaid.
Good luck waiting for that moment to happen.
As to gold company stocks, you don't even understand that the HUI index is still lower today than it was during the market crash in 2008, it's definitely not going up at any rate equal to the gold prices rising. That should be a clue for anybody with 2 bits worth of sense that there is no bubble in the gold market because the speculative money didn't even come into the game yet.
Yeah, there maybe a bubble in all of these things, and when the rising prices hit something like 10-20%/day, then I'll know it's a bubble and will get ready to jump off that ship and get into stocks.
Anyway, anymore advice from you?
Gold standard != 100% reserved currency. This seems to be a fundamental misunderstanding you have. The 19th cenury banking system was based on fractional reserves as was any serious attempt at banking in modern times.
- you give me no benefit of doubt of any kind, do you? Do you really think I am this dense, that I do not KNOW that gold standard does not preclude banks from lending out deposits and only holding fractions? Seriously? For real?
The only single reason why there were SOME bank runs and some people lost money due to them during the 19 century was that the banks engaged in this activity.
But fractional banking is a net NEGATIVE on the economy, which creates inflation and instability in banking, when too many people lose confidence in any particular bank and decide to pull their money out.
Why is it that people do that sometimes? That's exactly because they FIND OUT that the bank is engaged in this activity, so this means the public in general is against the fractional reserve, when it's their own money on the line and it's because they don't get any benefit from it.
MOST of the banks in 19 century did not engage in this activity to such an extent that it would collapse them due to a bank run. So that means that most banks either understood not to do this, and to have most of the gold/silver at hand or at least they would clue their customers on the scheme and allow their customers to PROFIT from it by giving them percentage points.
That means that the money that was lent out was actually directly lent out by the clients, so those were direct loans out of earnings, and then, if the loan was lost, it was a write off for the lender - deposit holder and some for the bank.
So that didn't end up actually creating inflation, because the money existed only as long, as it could be paid back. That's not fractional reserve, that's direct lending.
If you (person A) lend money to the bank (your deposit), and then bank and you loan that money to person B, and then person B buys something with that money, uses it to start a business, that money changes hands and goes to person C.
Person C may put it in the bank and may decide with the bank to loan it again to person D.
But if person B cannot return the money to person A and defaults, then the money only exists ONCE, person C has it. Person B doesn't, person A (you) do not either. The money is with C.
That's normal lending, though the money was used in a production cycle.
I can't begin to conceive what naive thinking makes you believe that constantly falling prices are a macroeconomic benefit.
- yet you are the one who doesn't understand that it is good for economy to have falling prices rather than rising prices.
The fact is that in the 19 century the US dollar has appreciated in value by a factor of 2. That's right, the dollar started off at half the value in the beginning of 19 century and by the end of it its value was doubled.
The Fed was introduced in 1913 and its mandate was PRICE STABILITY! It's amazing how terrible of a failure the Fed was at this one single goal, because since the 1913 the dollar has depreciated (or the prices rose) by the factor of 20.
So now the value o f dollar is 10 times less than it was in 1800.
Yet during the 19 century the quality of life was increasing at amazing pace, especially after the 1850, yet in 20th century the quality of life started falling down dramatically, especially after Nixon.
I believe that you are not simply naive, but you are purposefully ignoring all of these facts just to continue a fruitless discussion.
You also seem to be drastically misinformed about the nature of gold mining shares. While one might naively assume the price of a mining company to rise as gold prices rise, the company doesn't actually represent any metal beyond it's current inventory.
- really? Do YOU OWN any gold stocks?
How do you KN
There's also the area in southern India where people keep household cobras for rodent control ...
- I say, yes, most people would rather face a cobra any time of day or night than a rat.
Or would they?
I don't know who you are writing this to, but if it's about the US of A, that country is no longer the wealthiest, no longer the most productive, no longer even competitive. It lost jobs, productivity, meaningful government. It spends everything and it borrows to do so, thus it's putting its future generations into debt, and the future generations, if they are not stupid will just run away into other countries, where there are opportunities and actual Freedoms, because in US there are no economic Freedoms anymore and other ones are also disappearing fast.
The tax rate right now is high and it's getting higher. If we are talking about income tax, then there is only ONE correct rate for that: 0%.
0% is the only acceptable income tax rate.
Before 1913 the US gov't was funded by sales/import/alcohol taxes. The 19 century has show more in terms of improvement of quality of life than the 20 century has shown, and it was done with Free Market, by Industrialization and Capitalism and it was done with sound money, backed by gold/silver.
The social systems of today shouldn't even exist, they are destroying the country with debt. But of-course wars are destroying the country with even more debt - all that military spending.
The government is broke. The SS is broke, it's 'funded' with BONDS, which means that if money is actually needed, bonds have to be sold, and that means DEBT, the SS is 'funded' with debt. Saying SS is solvent is a huge FAIL in basic accounting.
The system is broke in many more ways than one, but basically it is the Federal government ran amok, completely destroying the free market with gov't monopolies, subsidies, bailouts, 'insurances', regulations, rules, taxes. Complete destruction of even idea of free enterprise, complete devaluation of the currency, total destruction of economy - it's all on gov'ts conscience, but it doesn't have conscience, so it's just on gov't record.
Social Security trust fund has government bonds.
Gov't places those bonds into the fund when it steals the money from the trust and spends it.
SUPPOSEDLY the bonds can be converted into money. However when gov't sells bonds, what it means is that government is BORROWING MONEY.
So SS is solvent why? Because more money can be borrowed based on the bonds that are in the fund so that payments can be made?
That's basic accounting FAIL right there. It means that SS is NOT solvent.
Gov't must get into more debt to pay, it's like writing yourself a check from your own empty account and saying: I have money to pay my bills, because I have this check.
It's nonsense. SS is insolvent, US gov't is bankrupt, Fed is killing USD with inflation. The standard of living is falling, the productivity if falling, the jobs are gone, the prices SHOULD be falling, but the fed inflates dollars instead of allowing prices to fall, and eventually it'll be a hyper-inflationary depression with no productive jobs and there will be no credit, interest rates will soar into high double digits and US as a country will be completely broke.
Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ooooo he heh eheheheheh hohoh ohohoho hohoh hahahahah hoahoehah aaaaa
u, you make me laugh so hard.
A US president? You don't have a Churchill, you don't even have a Truman, you definitely have no Lincoln or Washington or Jefferson.
Those are all gone, all you have now is a machine, you only have a machine and people are little tiny insignificant screws and smallish parts of it and they just don't do anything based on any actual principles anymore.
Sure, if you had Ron Paul as the president or Rand Paul or Piter Schiff for that matter. But those people will never become US presidents, that's ensured by the way the machine works.
Big deal, I have 35 years with C# and I am only 34.
Life has a 100% mortality rate.
- are you certain about that? There were about 100 Billion people on this planet, when they are all added up, but today there are about 7Billion who are still alive.
I'd say that certainty of mortality can be calculated to somewhere near 93%.
It's true, statistically speaking!
1. Fractional reserve banking inflates money and it creates undue risk on the deposits in the bank. I don't personally have cash in the banks, I have gold and gold mining stocks. Whenever I actually need cash, I exchange some of the gold for cash and try to get rid of that cash ASAP. There is a reason for that - I do not want my purchasing power to be stolen by the government printing money, by the fractional reserve banking, by anybody.
2. Again, you are saying that there is no ability to loan money without fractional reserve banking, and THAT is bat shit crazy. That's the only honest and correct way to loan money, otherwise nothing stops anybody from just coming up with completely imaginary money to loan (as the banks are actually doing, and that's why they end up owning everything while you own nothing.)
3. The industrial revolution was the most prosperous time, when the wealth grew the most, and the system was based on commodity backed money, whether it's silver or gold.
The result of this is that the prices for goods were falling and that is a GREAT thing, it's the best thing ever. Falling prices is what we want, we don't want prices to rise just because somebody is printing money all the time.
Inflation is theft and it's criminal AFAIC and I will not be part of it, as I said, I only see commodities and productive land/business as something of value, you for some bizarre reason think that FIAT is of some value. It's pure nonsense, fiat currency has no value at all. Give me gold backed loan, give me gold backed note, give me business backed note (stock), I can use that, that's valuable stuff.
Give me dollars? What happens to the dollars? 10 years ago the value of the USD was 30% HIGHER than what it is today in other currencies.
However in commodities USD is HUNDREDS of percent lower today, than it was 10 years ago.
Money is worthless in itself and it's constantly losing value. You can have the dollars, I'll have what I think has value. Bye.
I argue that there should be no insurance of any sort issued by the government because government:
1. cannot asses risk, and I can prove it, example is Bernanke sitting there saying in 2006: there is no housing bubble, while he was creating it, another example: Barney Frank, sitting there saying "Freddie and Fannie are alright, they won't cause any trouble", etc. FDIC, Freddie/Fannie, medical insurance of any kind, any financial insurance any sort of insurance at all by gov't should be stopped.
2. all that gov't 'insurance' ends up doing is introduction of moral hazard and rising prices.
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As to saying that without fractional reserve there can be no banking system and no loans, now THAT is bullshit.
Of-course there can be and were and STILL ARE TODAY loans without any fractional reserve.
Do you not understand the principle of loaning your money to somebody - that's a real loan.
That's when you EARNED money and then you loaned it to somebody else. You don't even understand a simple concept of loaning real money, rather than imaginary money.
Banks, when they loan YOUR DEPOSIT to somebody, if they are telling you that they do that and you agree to do that, then you should be making ALL of the interest on that loan and the bank should only be able to make a transaction (management) fee, but there should not be any FDIC or any federal involvement into the risk that you are taking.
You can have a real private insurance on the loaned money, but the best insurance is for you not to loan the entire amount of your money to just one individual/company.
What the heck are you talking about that there can be no real growth of economy without fractional reserve? That's nonsense.
What FDIC and gov't did, now THAT is very dangerous, as it creates a huge moral hazard for the entire economy, because now the bank owns your deposit, the gov't 'guarantees it', so bank can take any risk it wants with YOUR money and you are not getting any benefit from it at all, while your money is being risked, but again, the gov't 'guarantees' it. So if there is real systemic risk that crashes the economy, it is again: YOU, who takes the fall in a way of your economy dying, of your currency dying.
I don't know how I can help you to understand this, but it is the gov't that is killing the economy in the first place.