Why do you believe there is a relationship between the creation of real stuff and credit?
For example, the amount of credit in existence changes quite dramatically year on year, we are talking growth of about ~10% per year, i think about 9% is around the average. 9% growth gives a doubling period of about 7 years. So, you would expect the real stuff (you know, the wealth) to grow similarly, twice as many businesses, twice as many buildings, roads, cars, planes, boats etc etc. every 7 years.
Hmm, perhaps not.
Secondly, why does the debt ever need to be paid off? Just because you belly-feel that debt is bad?
Well no. Debt is an exponential function. It grows at a given percentage per unit time.
At some point one of two things has to happen. 1, there has to be significant inflation to the point that the debt is made irrelevant, with all the chaos that involves. 2. The interest on the debt will grow to the point where all of the economic activity is simply paying interest, with all the chaos that involves.
One is inflation, the other, deflation.
We are at ~50 trilllion now, so the debt has to double to ~100 trillion dollars over the next 7 years or so. The credit has to double to match in order to pay the interest. What do you reckon? Can *everyone* double up on their debts in the next 7 years?
Basically, it's the resulting chaos caused by growing interest on unpayable debts which I think is probably bad. Perhaps the Greeks would agree.
Money used to pay for debt isn't destroyed in the process.
Really?
Show me.
Now I absolutely would take your point as it applies to the ~5% physical cash, because it's physical and a credit entry is created when it is deposited in the bank meaning that credit entry is destroyed when the debt is paid... But the 95% of money which is made up of credit itself is purely a book keeping entry not physical cash and that absolutely does vanish when debts are paid.
Where did you think all the crashes and busts came from?
Re:Bitcoin to revolutionise economy
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Bitcoin Price Crashes
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The pieces of paper are backed by a country of 300 million people who will do work in exchange for them.
You realise that most dollars are not paper? They make up only about 6% of money. The rest is debt based.
There is only about ~900 billion paper and coin dollars. There is about ~14 trillion dollars worth of credit supplied by banks. There is about ~55 trillion dollars in total debt, again, supplied by banks.
What backs the dollar is the faith that the 14 trillion dollars will some day pay the 55 trillion dollars off.
War spending creates jobs, which is good for the economy. The Second World War is how the US managed to get out of the Great Depression.
Why not simply pay people to dig ditches and fill them back in again? Far fewer deaths and less destruction of real things.
Your argument is the broken window fallacy. The depression was caused by debt. It would have been much better to simply turn the printing presses on and repudiate the debt. That is effectively what they did, but killed millions in the meantime.
The "trillions for bankers" weren't subsidies, they were loans
Of course they are subsidies. What is the interest rate again? 0.25%? 0.01% at some points. Meanwhile inflation is hitting 7% (http://www.shadowstats.com/). Which is like 100 billion/year in free money.
E-85 was supposed to be the next big thing and it barely made a fart in the market at all. All we've ended up with is farmers who thought they had a huge market for their product and suddenly....don't.
Lets see. Trillions of free money for bankers, but only tens of billions for farmers? Hardly fair. Surely if they spent trillions on the farmers they would be able to grow enough corn to fill the gas tanks.
So what's next? Where do you think are the billions or trillions in subsidies going to be spent next? Hey it's free money, everyone should be getting involved.
The US dollar is the world reserve currency, about 60% of all international transactions involve US dollars. This means that the rest of the world has to purchase dollars.
Oil specifically is a commodity which almost all have to import, and the House of Saud in particular have (for some reason) insisted in the use of US dollars for oil transactions, this means therefore that oil backs the dollar, and it is military force which encourages and maintains the use of the dollar in oil transactions.
Didn't you wonder why most the 9/11 hijackers were Saudi? World started making some sense now?
Booms and busts are caused by the Fractional Reserve Banking system which we use. During the booms, interest rates are low, the money multiplier allows banks to expand the credit supply to the market (easy credit). This causes inflation in day to day commodities, the stock markets, property markets, commodity markets; A bubble.
When interest rates are increased or credit has expanded to the maximum allowed by the money multiplier, or simply banks decide to tighten credit and further "growth" isn't possible, there is a corresponding bust to follow with loan defaults, unemployment, stock market declines, housing market declines, commodity market declines.
How does Bitcoin prevent fractional reserve lending by banks and therefore this boom/bust scenario?
Those who take out loans early after a "recession", can use the money to make far larger gains than those who take out loans at the peak of a boom.
Those last in effectively lose everything or are at least deep under water for years to decades. US housing market is a classic example. At the end they were trying to grow the scheme by giving loans to people who patently couldn't afford to repay them in a million years. They were just bag holders.
Both stock and forex markets are secured against all kinds of foul play. Doing a pump and dump scheme or various other schemes isn't easy. With Forex the sheer amount of transactions and money changing hands makes it impossible and the law protects against such schemes with stocks.
It's easy if you are one of the Too Big To Fail banks, and the regulatory agencies have long since been captured by said banks. The regulators would all love to go work for the people with the money.
Banks and credit card companies are orders of magnitude more dangerous than PayPal. Paypal are small potatoes on the Evil scale.
The 1929 Great Depression? Banks. The 2008 Great Recession? Caused by banks. The fucking great boom we're in just now? (which is going to end at some point with a terrifying bust) => Banks.
No matter how bad PayPal's customer service, it doesn't compare to foreclosure fraud or the utter (20% unemployment) kind of mayhem which banks and credit card companies can wreak on an economy.
The purpose is to provide sufficient excuse to continue military spending. You may recall the USA hit it's debt limit and is about to default. This will persuade the dissenting politicians that they should vote for an increase in the limit.
Slashdot Mirror
No, you are talking about the interest, not the principal.
The principal is destroyed, as is the credit which was created at the same time as the debt.
Why do you believe there is a relationship between the creation of real stuff and credit?
For example, the amount of credit in existence changes quite dramatically year on year, we are talking growth of about ~10% per year, i think about 9% is around the average. 9% growth gives a doubling period of about 7 years. So, you would expect the real stuff (you know, the wealth) to grow similarly, twice as many businesses, twice as many buildings, roads, cars, planes, boats etc etc. every 7 years.
Hmm, perhaps not.
Secondly, why does the debt ever need to be paid off? Just because you belly-feel that debt is bad?
Well no. Debt is an exponential function. It grows at a given percentage per unit time.
For example:
http://media.chrismartenson.com/images/credit-market-doublings.jpg
At some point one of two things has to happen. 1, there has to be significant inflation to the point that the debt is made irrelevant, with all the chaos that involves. 2. The interest on the debt will grow to the point where all of the economic activity is simply paying interest, with all the chaos that involves.
One is inflation, the other, deflation.
We are at ~50 trilllion now, so the debt has to double to ~100 trillion dollars over the next 7 years or so. The credit has to double to match in order to pay the interest. What do you reckon? Can *everyone* double up on their debts in the next 7 years?
Basically, it's the resulting chaos caused by growing interest on unpayable debts which I think is probably bad. Perhaps the Greeks would agree.
Money used to pay for debt isn't destroyed in the process.
Really?
Show me.
Now I absolutely would take your point as it applies to the ~5% physical cash, because it's physical and a credit entry is created when it is deposited in the bank meaning that credit entry is destroyed when the debt is paid... But the 95% of money which is made up of credit itself is purely a book keeping entry not physical cash and that absolutely does vanish when debts are paid.
Where did you think all the crashes and busts came from?
The pieces of paper are backed by a country of 300 million people who will do work in exchange for them.
You realise that most dollars are not paper? They make up only about 6% of money. The rest is debt based.
There is only about ~900 billion paper and coin dollars.
There is about ~14 trillion dollars worth of credit supplied by banks.
There is about ~55 trillion dollars in total debt, again, supplied by banks.
What backs the dollar is the faith that the 14 trillion dollars will some day pay the 55 trillion dollars off.
War spending creates jobs, which is good for the economy. The Second World War is how the US managed to get out of the Great Depression.
Why not simply pay people to dig ditches and fill them back in again? Far fewer deaths and less destruction of real things.
Your argument is the broken window fallacy. The depression was caused by debt. It would have been much better to simply turn the printing presses on and repudiate the debt. That is effectively what they did, but killed millions in the meantime.
http://www.youtube.com/watch?v=d0nERTFo-Sk
http://www.youtube.com/watch?v=GTQnarzmTOc
And if it is a cause of war, then how are you sure you were not spoofed?
Because you attack the people you wanted to in the first place.
The "trillions for bankers" weren't subsidies, they were loans
Of course they are subsidies. What is the interest rate again? 0.25%? 0.01% at some points. Meanwhile inflation is hitting 7% (http://www.shadowstats.com/). Which is like 100 billion/year in free money.
E-85 was supposed to be the next big thing and it barely made a fart in the market at all. All we've ended up with is farmers who thought they had a huge market for their product and suddenly....don't.
Lets see. Trillions of free money for bankers, but only tens of billions for farmers? Hardly fair. Surely if they spent trillions on the farmers they would be able to grow enough corn to fill the gas tanks.
So what's next? Where do you think are the billions or trillions in subsidies going to be spent next? Hey it's free money, everyone should be getting involved.
Not a clue. What they vote for and against is what their lobbyists tell them to vote for and against.
Yay! Go big government. How big is the government debt now?
p.s. Isn't this the senate rather than congress?
Everyone would be up to their eyeballs in debt.
It is backed by the US military.
The US dollar is the world reserve currency, about 60% of all international transactions involve US dollars. This means that the rest of the world has to purchase dollars.
Oil specifically is a commodity which almost all have to import, and the House of Saud in particular have (for some reason) insisted in the use of US dollars for oil transactions, this means therefore that oil backs the dollar, and it is military force which encourages and maintains the use of the dollar in oil transactions.
Didn't you wonder why most the 9/11 hijackers were Saudi? World started making some sense now?
Solar thermal concentrating power stations to provide electricity to run air conditioning.
Booms and busts are caused by the Fractional Reserve Banking system which we use. During the booms, interest rates are low, the money multiplier allows banks to expand the credit supply to the market (easy credit). This causes inflation in day to day commodities, the stock markets, property markets, commodity markets; A bubble.
When interest rates are increased or credit has expanded to the maximum allowed by the money multiplier, or simply banks decide to tighten credit and further "growth" isn't possible, there is a corresponding bust to follow with loan defaults, unemployment, stock market declines, housing market declines, commodity market declines.
How does Bitcoin prevent fractional reserve lending by banks and therefore this boom/bust scenario?
Those who take out loans early after a "recession", can use the money to make far larger gains than those who take out loans at the peak of a boom.
Those last in effectively lose everything or are at least deep under water for years to decades. US housing market is a classic example. At the end they were trying to grow the scheme by giving loans to people who patently couldn't afford to repay them in a million years. They were just bag holders.
Ponzi would be jealous.
Both stock and forex markets are secured against all kinds of foul play. Doing a pump and dump scheme or various other schemes isn't easy. With Forex the sheer amount of transactions and money changing hands makes it impossible and the law protects against such schemes with stocks.
It's easy if you are one of the Too Big To Fail banks, and the regulatory agencies have long since been captured by said banks. The regulators would all love to go work for the people with the money.
For who?
For the entire world.
Banks and credit card companies are orders of magnitude more dangerous than PayPal. Paypal are small potatoes on the Evil scale.
The 1929 Great Depression? Banks.
The 2008 Great Recession? Caused by banks. The fucking great boom we're in just now? (which is going to end at some point with a terrifying bust) => Banks.
No matter how bad PayPal's customer service, it doesn't compare to foreclosure fraud or the utter (20% unemployment) kind of mayhem which banks and credit card companies can wreak on an economy.
Or something similar to it.
Use say cheap phone -> phone messaging as an excuse.
You have no idea what you are talking about. The GP is correct.
"not the same animal as, say, Bank of America."
Bank of America creates and destroys money every day.
Do you work? Do you work for money? Do you even know what money is? I suggest you learn.
"Ehm... You definitely don't know what "bank" means."
I know exactly what a bank is and does, and the bog standard high street banks create and destroy money every day.
I suggest you go find out what money is before you lose everything.
You have no idea what a bank is or does.
What makes a bank a bank is that they are allowed to create and destroy money.
The analogy would be to think of a bank as being just like PayPal, but with nuclear weapons.
And Americans = terrorist supporters.
e.g.
http://www.youtube.com/watch?v=3NUDWQ0U7N8
How many countries has the USA invaded recently? Whether you are better or worse than someone else is irrelevant. This is what you are.
The purpose is to provide sufficient excuse to continue military spending. You may recall the USA hit it's debt limit and is about to default. This will persuade the dissenting politicians that they should vote for an increase in the limit.