Fractional reserve banking allows the country to keep operating when people are hoarding money, because banks can still give loans to people to help kickstart the economy by expanding or starting new businesses. The fractional reserve system steals value from people's bank accounts and wage packets to inflate the economy, giving the value to someone else. When people hoard money under a gold standard, it's supply decreases and value increases; prices fall. Eventually an equilibrium is reached where their need for money is met by their need for products. The money is then spent. The economy doesn't freeze up. The money is spent on things of value rather than crap.
If people want to loan out their money they can still do so under a full reserve system, like the gold standard. They simply won't have access to that money while it is loaned out.
It's not a Ponzi scheme by any definition, and I wouldn't call it legalized counterfeiting, just "monetary policy." It's not like it's unconstrained, banks can only loan out a specific multiple more than they have in actual funds in reserve, hence the name "fractional reserve." Credit has to continue expanding in order for the fractional reserve system to function, debt is an exponential function, to pay the debts new larger loans have to be constantly taken out to pay off the interest and the old loans. As the credit system continues to expand it requires additional people to take out loans. Eventually, you start loaning money to those who really can't afford it. Then the system collapses in a sort of hmmm... credit, crunch.
Ponzi schemes operate in exactly the same way. They require continual exponential expansion to function.
It would also be a good idea to note about digital gold currencies that they are unregulated, and the federal government has been harassing some of these companies and freezing funds, so it's probably not a very safe place to put your money if you ever want to get it back. I don't agree with the federal government's actions, but it's still not safe. And by the same note, putting money in the bank isn't safe either. The federal government freezes bank accounts too... The reason banks must have state regulation is their fractional reserves. They are by definition, insolvent. They require government regulation to prevent them from folding. Without government regulation all banks would fold. DGCs on the other hand hold 100% reserves, they can satisfy any and all requests for redemption, they don't need government regulation. It's a fundamentally more secure structure.
We can control the amount of dollars in circulation so that they reflect the size of the economy. When it gets bigger, more dollars. When it shrinks, less. Do you really believe that works? Look around you. What you have is perpetual inflation of the money supply regardless of the economy. While the ideal would be neither inflation nor deflation I don't believe it's possible. Politicians and banks are simply untrustworthy. It's always expedient to spend a little more, and more, and more.
You overestimate the danger of inflation. Why is it bad, exactly? Why is it worse than deflation? Inflation is bad because it's theft, exactly. You don't think theft is bad? Inflation is the removal of the value someone has stored in money, without their permission.
Inflation moves value from the average person to the wealthy, it centralises the wealth (and power) in the economy in fewer and fewer hands. The growth in government and the growth in corporate power go hand in hand with control of and the the growth of the supply of money. The average person ignorantly and naively try to use money as a store of value. The wealthy don't. They use property, shares, commodities etc. All things which inflate in value with the currency. Inflation causes wealth to be speculated on whatever is going to increase in value most (tech stocks, property), rather than invested usefully, and the speculators are rewarded for the behaviour at the expense of everyone else. Wages increase at whatever the CPI is currently. 2% per year? The true level of inflation makes this a perpetual pay cut, and with poverty comes disenfranchisement.
What do you think will happen to the cost of things that use gold, like computers, when gold is used as currency? Frankly, I don't care whether gold specifically is used or not. It's just the most likely candidate. The other thing is I don't give a toss what happens to computers or things that use gold as part of the manufacture. If I'm losing 10% of my savings every year, whether computers use gold or copper is of little consequence to me.
In short, the gold standard is a stupid and outmoded idea promulgated by two types of people: those without a basic understanding of economics Really? Economics professors without a basic understanding of economics?
There's no such thing as perfect money, and actually, no need for a gold standard at all. With the Digital Gold Currencies individuals can take advantage of gold as a currency right now, ignoring the inflation around them.
In the last two years, gold has increased in cost from around $530 per ounce to $800 per ounce. If you were being paid in gold or your value was stored in gold you would personally have profited to around 50%. In fact it's everyone else who is losing out as their currency is being devalued.
Provided you already are in power. Which is why more power to politicians isn't such a good idea. Russia is coming from a totalitarian regime through the actions of it's people. America...
So at what point does public will tip the scales and cause these laws to become moot and oppressive? WT? People will quite happily kill each other. Hanging for stealing a loaf of bread etc.
Historically, inflation occurs regardless of whether there is a precious metal or other substance backing the currency. Um... I suggest you look up "Fractional Reserve Banking". No paper currency in the western world has ever been 100% backed by gold, even under the gold standard. The banks have always issued more notes and coins than there is gold backing it and your government have allowed the practice. This causes inflation.
Incidentally, you are aware that there isn't enough gold for the government to buy enough for 100% backing of the currency, right? Really, are you sure? At what rate? Doesn't that simply imply that the dollar's value has rather a long way to fall? How much gold is a bit of paper worth?
Ultimately there is just one magical attribute which gold possesses that a fiat currency does not...
Scarcity.
It's this scarcity which prevents inflation. Without the scarcity of something like gold, the politicians will always be able to simply print another... well, we're now into the trillions. How soon will we have to use zillions? How many zeros is that?
Essentially the real problem is Fractional Reserve Banking. It's basically legalised counterfeiting... A Ponzi scheme of massive proportions. The switch to full reserve banking is needed to prevent inflation along with the gold standard or some other way of preventing the arbitrary creation of money and therefore the theft of a person's time and effort.
Those of you with a Libertarian bent can switch to a gold or other commodity based standard today. There are several Digital Gold Currencies which would insulate you against inflation.
I mean fuck whats a billion dollar company to do? you people want the impossible. Nah. We just want them to go "germinate" themselves.
Nobody needs Monsanto. The problems in 3rd world countries have are nothing to do with the crops, they are political and economic problems which then cause crop problems.
You think that sending GM soya or rice to Africa will prevent the economic dumping of heavily subsidised US and EU soya/rice/corn/whatever on the African markets? It's the dumping which is putting African farmers out of business and reducing the productive farm land. If you think GM crops will make a blind bit of difference until the economic conditions are fixed you're an idiot.
you mean the people trying to develope drought and pest resistant plants so that 3rd world countries in even the most dry area's are able to feed themselfs. yeah wow what assholes. WOW. You are like, totally ignorant of Monsanto's business practices... And WOW, you are like, totally ignorant of the economic conditions which cause famine in third world countries.
Y'know. I despise the tactics that many large businesses use, but frankly some of you are so stupid that you're asking for it. Begging for it. It's like you're bending over saying give it to me hard.
I don't think anyone has any idea of the fantastic emergent properties you get from a billion-times increase in computing power. I do. You're something similar right now.
Basically, a paid library where the benefit is that I can get the books right on the device because I'm lazy. $10/book to own is too much for me, since I won't read most books more than once. That's what eBay is for. You'll probably find pretty much any book you care to read on ebay. Think of it as the national grid of books, movies and games.
But legalised free for all of any drug you want is bullshit, imagine a night out when the person beside you can snort some cocain or smoke some ice? That's the reality right now. Cocaine is only £20 per gram. I can pick up the phone and have it delivered. Like pizza, only it'll be here faster.
oh and the idea that it's ok to legalise something addictive, so you can tax people to fund their treatment is some of the worst logic i could imagine. You legalise the addictive substance to reduce the price. Even with the tax it doesn't even come close to the previous illegal street price. This then cuts off black market. The dealers lose their revenue source and all the drug price fueled crime goes away. Basically you allow the addicts to fund their own downward spiral. Eventually the problem solves itself.
You might think that liberalisation is a soft option making life easy for addicts. It's not. It's the "we're going to make you less of a problem till you die" option.
You see I don't really care about addicts, tobacco, alcohol or other drug of choice as long as they don't bother me. It isn't the abuse of alcohol itself which I object to, it's the effect it has on my life which I object to. You want to pickle your liver and die screaming as the hallucinations kick in, go right ahead. Just do it in the privacy of your own home, funded by your own taxed drug consumption.
It isn't my responsibility to stop you from killing yourself. Your loss will only be mourned by your own friends and family, the rest of the world benefits from the reduction in resource usage your death represents.
Yeah, OK, I can take my $300 / mo electric bill down to $200 a month, or even $150 a month, but that's not the same as _producing_ electricity. Producing electricity wastes about 60% of the energy in the first place. The best combined cycle gas turbine plants only make 65% efficiency at best, wasting 35% of the energy. Assuming 50% on average.
Quadrupling the efficiency of the use of that electricity is basically 8 times as effective in the use of resources as generating more electricity.
What a nasty world we live in where a kid will go into a sulk because they only got a "wrongly" branded $100+ MP3 player on Christmas morning. Didn't you know? Why do you think women go for Ferraris, Mercedes etc etc. It's because Honda are "wrongly branded". Despite the statistical evidence which shows the level of quality is higher.
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If people want to loan out their money they can still do so under a full reserve system, like the gold standard. They simply won't have access to that money while it is loaned out. It's not a Ponzi scheme by any definition, and I wouldn't call it legalized counterfeiting, just "monetary policy." It's not like it's unconstrained, banks can only loan out a specific multiple more than they have in actual funds in reserve, hence the name "fractional reserve." Credit has to continue expanding in order for the fractional reserve system to function, debt is an exponential function, to pay the debts new larger loans have to be constantly taken out to pay off the interest and the old loans. As the credit system continues to expand it requires additional people to take out loans. Eventually, you start loaning money to those who really can't afford it. Then the system collapses in a sort of hmmm... credit, crunch.
Ponzi schemes operate in exactly the same way. They require continual exponential expansion to function. It would also be a good idea to note about digital gold currencies that they are unregulated, and the federal government has been harassing some of these companies and freezing funds, so it's probably not a very safe place to put your money if you ever want to get it back. I don't agree with the federal government's actions, but it's still not safe. And by the same note, putting money in the bank isn't safe either. The federal government freezes bank accounts too... The reason banks must have state regulation is their fractional reserves. They are by definition, insolvent. They require government regulation to prevent them from folding. Without government regulation all banks would fold. DGCs on the other hand hold 100% reserves, they can satisfy any and all requests for redemption, they don't need government regulation. It's a fundamentally more secure structure.
Inflation moves value from the average person to the wealthy, it centralises the wealth (and power) in the economy in fewer and fewer hands. The growth in government and the growth in corporate power go hand in hand with control of and the the growth of the supply of money. The average person ignorantly and naively try to use money as a store of value. The wealthy don't. They use property, shares, commodities etc. All things which inflate in value with the currency. Inflation causes wealth to be speculated on whatever is going to increase in value most (tech stocks, property), rather than invested usefully, and the speculators are rewarded for the behaviour at the expense of everyone else. Wages increase at whatever the CPI is currently. 2% per year? The true level of inflation makes this a perpetual pay cut, and with poverty comes disenfranchisement. What do you think will happen to the cost of things that use gold, like computers, when gold is used as currency? Frankly, I don't care whether gold specifically is used or not. It's just the most likely candidate. The other thing is I don't give a toss what happens to computers or things that use gold as part of the manufacture. If I'm losing 10% of my savings every year, whether computers use gold or copper is of little consequence to me. In short, the gold standard is a stupid and outmoded idea promulgated by two types of people: those without a basic understanding of economics Really? Economics professors without a basic understanding of economics?
There's no such thing as perfect money, and actually, no need for a gold standard at all. With the Digital Gold Currencies individuals can take advantage of gold as a currency right now, ignoring the inflation around them.
In the last two years, gold has increased in cost from around $530 per ounce to $800 per ounce. If you were being paid in gold or your value was stored in gold you would personally have profited to around 50%. In fact it's everyone else who is losing out as their currency is being devalued.
Corporations are people too!
First we had the WAR ON DRUGS
Then we had the WAR ON TERROR
Now we have the WAR ON COPYING
Funded by the taxpayer of course.
Ultimately there is just one magical attribute which gold possesses that a fiat currency does not...
Scarcity.
It's this scarcity which prevents inflation. Without the scarcity of something like gold, the politicians will always be able to simply print another... well, we're now into the trillions. How soon will we have to use zillions? How many zeros is that?
Essentially the real problem is Fractional Reserve Banking. It's basically legalised counterfeiting... A Ponzi scheme of massive proportions. The switch to full reserve banking is needed to prevent inflation along with the gold standard or some other way of preventing the arbitrary creation of money and therefore the theft of a person's time and effort.
Those of you with a Libertarian bent can switch to a gold or other commodity based standard today. There are several Digital Gold Currencies which would insulate you against inflation.
Microsoft don't charge other people what they charge you for Windows. You see, they know you're a sucker so you get to pay the most.
Or is it decidedly creepy when the richest people in the world prepare for "The End"...
Nobody needs Monsanto. The problems in 3rd world countries have are nothing to do with the crops, they are political and economic problems which then cause crop problems.
You think that sending GM soya or rice to Africa will prevent the economic dumping of heavily subsidised US and EU soya/rice/corn/whatever on the African markets? It's the dumping which is putting African farmers out of business and reducing the productive farm land. If you think GM crops will make a blind bit of difference until the economic conditions are fixed you're an idiot.
WOW, you are like, a fine example of our future.
Y'know. I despise the tactics that many large businesses use, but frankly some of you are so stupid that you're asking for it. Begging for it. It's like you're bending over saying give it to me hard.
Not free, and not 802.11b/g/? . Something more like Motorola's Canopy which has far better range and performance characteristics.
Economic conditions drive behaviour. Americans carry so much debt because
1: Virtually all money comes from debt.
2: The US dollar is the world reserve currency which makes everything cheap to Americans.
The US economy is shitting the bed because the currency is in the long slow process of losing it's reserve status.
Interesting one in 30 days of night. There's no real idiot plot to it.
One could buy all the payphones, stick a wireless access point in them and an ADSL port on the other end of the line.
Hmmmm... With the dollar going off the cliff I might just be able to afford it.
You might think that liberalisation is a soft option making life easy for addicts. It's not. It's the "we're going to make you less of a problem till you die" option.
You see I don't really care about addicts, tobacco, alcohol or other drug of choice as long as they don't bother me. It isn't the abuse of alcohol itself which I object to, it's the effect it has on my life which I object to. You want to pickle your liver and die screaming as the hallucinations kick in, go right ahead. Just do it in the privacy of your own home, funded by your own taxed drug consumption.
It isn't my responsibility to stop you from killing yourself. Your loss will only be mourned by your own friends and family, the rest of the world benefits from the reduction in resource usage your death represents.
http://www.dbdh.dk/artikel.asp?id=479&mid=24
Quadrupling the efficiency of the use of that electricity is basically 8 times as effective in the use of resources as generating more electricity.
Look up "Ground Source Heat Pumps". They typically give about a 400% return on energy.
Innovation, imagination etc. All that will be left is "The Sure Thing".