I think that's one of the reasons arranged marriages were more common as well. A matchmaker traveled widely and could put you together with someone you would never likely have met in person.
Heh heh. My Mother's family comes from a rural area that doesn't see much migration over time. Her dad was about to go on a second date with a girl from the next town over when she brought him home to meet her parents. He looks on the mantle and says "Hey, how do you know uncle Albert and cousin Bob?"
Turns out they were second cousins and the date never happened. I think anything farther removed than first cousins is legal in the US, but that's not the same thing as not being icky.
No, that's not what they're talking about. They're talking about OTA channels. There's no cable bill for them to raise.
Television and radio broadcasters never paid for the spectrum they use. If they want to go to a subscription model I'm okay with it, provided the government has a spectrum auction and broadcasters pony up tens of billions like the mobile providers did.
How is the commodity backed system a better system (as you suggest with your initial comment in this reply line) than the fiat system, and how does it provide for more socially optimal outcomes, and why is this evidence that a proposal like bitcoin should be considered for mass adoption?
Oh, that's an easy answer. A fractional reserve system like the one we have in the US should provide for more socially optimal outcomes, provided it's managed correctly. Ideally money is just a medium of exchange, and forcing individuals and businesses to include deflation into their financial planning just provides opportunities for inefficiency. Well, I guess deflation is the wrong word here, since the money supply isn't actually shrinking. But you know what I mean. A negative CPI. In theory with a fiat currency you could buy a gallon of milk for your mother at age 12 for some amount of money and buy a similar (but not the same, hopefully) gallon of milk at age 72 for the same amount of money. Because the money supply is expanding when the economy grows and shrinking when the economy shrinks. So understand I don't have anything against a debt-backed currency in theory.
But. It seems to be impossible for democracies (most likely any from of government) to keep political and fiscal considerations from eventually dominating currency management. It's just too tempting to print money when you get into a fiscal bind, because there are a whole lot of people out there who don't understand that amounts to a tax on whoever is holding the currency. So I save money for retirement and every year the money I save is worth a little less than the day I saved it. That would be okay, I suppose, if I could make safe investments that matched the increase in cost of living, but even if I can the government is going to tax away part of that money, which is really a tax on my principle as the buying power of the money hasn't changed.
As far as bitcoins go in particular, I'm not actually advocating anything. They seem like a weird hybrid between a fiat currency and one based on commodities, and I don't trust my understanding of the math well enough to be sure there's no way to make more. And over the last few years it seems anything but stable. So I rather see a return to the gold standard, which I understand has its flaws. I just think its flaws are less serious than those of a fiat currency.
I meant whatever the previous commenter meant, to which the user provided no sources nor definitions. How would you like to define stability?
Well, for starters I would define a stable currency as one that had an average CPI of 0% with extremes between -2% and 2% or so. I would like to be able to stuff my mattress with money and not have the purchasing power of that money go down as I sleep. I don't really care what exchange rates are directly, since if another country doubles its money supply I ought to be able to buy twice as many quatloos (or whatever) for a dollar.
Which government do you belong to?
I don't belong to any government:). But I live in the US. I'm curious what country has managed to keep a stable currency (by my definition above).
NON governmental bonds. Mortgages and corporate bonds.
As I understand it most of the money from QE has been going into government bonds. Mortgages and corporate bonds were only added at all in the more recent iterations.
As for the Treasury's problem with debt, this will be made largely irrelevant because a hot economy generates excess tax revenue. The Treasury can keep the costs of borrowing flat, at least, because they won't need to borrow so much.
The amount of debt and obligations (primarily medical care and ACA) will swamp any possible effects of a hot economy, even assuming structural problems won't prevent the economy from more than an anemic recovery. IMO what's most likley going forward is a few decades of low to zero growth like we've seen in Japan. There will be three options: devalue the currency, raise taxes significantly, or cut services. I don't think the last two are politically palatable.
1- The percentage of the budget that services the debt is very low.
Well, sure. That's what QE is all about. The fed prints money and uses it to simulate demand for bonds, which drives down interest rates.
They own tons of non governmental bonds that they are sitting on.
Those aren't assets. The Fed can't sell more than a token amount of those bonds, because of #1. Selling the bonds would drive up interest rates, bankrupting the government almost immediately. And the government can't actually pay those bonds back without issuing new debt. And the new debt will be bought, in larger and larger amounts as time goes by, by the Fed. So how valuable is a loan you can't sell that will never be paid back? QE was just a sneaky way for the government to print trillions of dollars while at the same time pretending it wasn't doing any such thing.
there's so many levels of abject stupidity in your statement. yes, the fed has no assets. LIKE THAT IS A FUCKING FUNCTION OF THE FED
Right, which is why I was surprised when, in response to a discussion about the fed, you chimed in about the government selling off nonexistent assets. Try to read what people write and not what the little man in your head thinks they wrote. It's pretty obvious that of all the commenters on this thread you probably know the least, which is why you keep calling people stupid when they point it out. What else can you say?
it's a policy making body of a larger entity that is what really matters here. and no, you are right, they are not going to sell off PHYSICAL assets
Okay, then what "assets" are they going to sell? You don't have any idea how this stuff works, do you?
Well, in theory by creating money and using it to buy government debt the money they've injected into the system will be destroyed as the government pays off those debt obligations. I think we've passed the point where that could actually happen, though. The government can only pay off old debt obligations only by issuing new debt, so there's no way to get the money back out of the economy.
You do realize that empirical evidence shows that the government has maintained a quite stable money system for a long time, yes?
Depends on what you mean by "stable". The government has maintained a money system that slowly bleeds savers for about a hundred years now. That's not the kind of stability I'm interested in.
The Fed doesn't really control or constrain the supply of money, though many economists still believe that they do.
The Fed certainly has a lot of influence on the money supply. Lately they've been effectively printing trillions of dollars by doing the same double-entry bookkeeping and buying bonds as collateral.
With the gold standard there is no value in the dollar only in the gold. You don't increase the value of the gold that way, you only decrease the amount of gold backing each dollar and thereby increase the number you need to buy a candybar.
When I say "gold standard" I mean a fixed amount of gold for every dollar. And to be credible you should be able to take your dollars to the local federal reserve and exchange them for gold bullion. So no, you don't decrease the amount of gold backing each dollar.
In any case, not having enough of the stuff was the primary excuse given for moving to the inflating fiat.
That sounds like a rationalization. If there aren't enough dollars each one is worth more and you simply issue notes or coins with smaller denominations without changing the total number of dollars in existence. In other words, when dollar bills wear out you destroy them and replace each with ten dimes.
The big advantage to a fractional reserve currency is if you do it right prices will remain relatively stable over time. That's an advantage that shouldn't be underestimated, since it's a lot easier to do all sorts of financial planning if you don't have to take currency fluctuations into account. Of course the downside is no government in history has been able to refrain from inflating the money supply when it gets into a fiscal bind. That's why I'd rather see a move back to the gold standard despite the theoretical advantages of a fractional reserve currency.
Mostly the answer is found in the fact that gold is finitely divisible.
I'm not sure why you see this as a problem. Having a currency on the gold standard is not the same thing as using gold as currency. If I were to fix the dollar at a thousand per ounce of gold there's no divisibility problem. Eventually pennies will start being worth something, and then I can issue tenth-penny coins or hundredth-penny coins ad infinitum.
The biggest problem with currency on the gold standard is whoever is holding on to the actual gold might sell it out from underneath you.
Well, actually that wasn't me, since I don't respond to ACs. But since you've summoned the energy to actually log in let me reply that if you don't realize dollars are backed only by debt you have some serious reading to do. This isn't even a controversial point.
Again the unfortunate name of this group of elements comes back to bite us. Rare earth elements are not rare, they simply don't occur in high concentrations. There are exploitable deposits all over the world, but nobody wants to mine them because the process of extracting what you're after makes a big mess. That made China the perfect place for RE production because until recently they didn't seem to care about that.
This is no longer true. China has spent the last two decades building up a large modern navy. The newer ships have comparable systems to anything the US has, and they recently launched an aircraft carrier with plans to build two more. Even the pentagon admits if China was "willing to pay the diplomatic and economic price" we could not stop them from taking Taiwan.
Not entirely. Gold's intrinsic value means even if it lost its premium as a medium of exchange, it's still worth something in the same way a potato or a barrel of oil is worth something. With fiat currencies the currency itself is completely worthless, so you can get situations like Hungary after WW II or Zimbabwe more recently, where the value drops to zero, in essence.
so if i use bitcoin as a hedge against inflation, you would call me historically wise and longsighted?!
Way to read what you think I wrote instead of what I wrote.
a better hedge bet than gold in that scenario would be to invest in gang membership and heavy weaponry. then just go and take any fucking gold you want. because that's what happens when societies collapse on the order of extreme currency disruption: the rise of warlords
We were talking about the fed, not the government. And yeah, the fed has no assets. But even beyond that, the idea the federal government is going to sell off physical assets to deal with a solvency crisis is just daft. You keep spraying ignorant stuff on my screen and then accuse other people of ignorance. I would laugh if I didn't realize you're probably allowed to vote.
Assets? What assets? All they have is (mostly government) bonds, and they can't sell those bonds. Because of the amount of government debt outstanding just a percentage point or two increase in what the government has to pay foreigners who buy bonds will trigger a solvency crisis. So they won't sell. They'll just keep printing money until the music stops.
Slashdot Mirror
I think that's one of the reasons arranged marriages were more common as well. A matchmaker traveled widely and could put you together with someone you would never likely have met in person.
Heh heh. I was just gonna point that out. It's not impossible they could be near the same age, but it's not very likely either.
That implies that the average over a lifetime is more like 30, then.
Heh heh. My Mother's family comes from a rural area that doesn't see much migration over time. Her dad was about to go on a second date with a girl from the next town over when she brought him home to meet her parents. He looks on the mantle and says "Hey, how do you know uncle Albert and cousin Bob?"
Turns out they were second cousins and the date never happened. I think anything farther removed than first cousins is legal in the US, but that's not the same thing as not being icky.
No, that's not what they're talking about. They're talking about OTA channels. There's no cable bill for them to raise.
Television and radio broadcasters never paid for the spectrum they use. If they want to go to a subscription model I'm okay with it, provided the government has a spectrum auction and broadcasters pony up tens of billions like the mobile providers did.
Oh, that's an easy answer. A fractional reserve system like the one we have in the US should provide for more socially optimal outcomes, provided it's managed correctly. Ideally money is just a medium of exchange, and forcing individuals and businesses to include deflation into their financial planning just provides opportunities for inefficiency. Well, I guess deflation is the wrong word here, since the money supply isn't actually shrinking. But you know what I mean. A negative CPI. In theory with a fiat currency you could buy a gallon of milk for your mother at age 12 for some amount of money and buy a similar (but not the same, hopefully) gallon of milk at age 72 for the same amount of money. Because the money supply is expanding when the economy grows and shrinking when the economy shrinks. So understand I don't have anything against a debt-backed currency in theory.
But. It seems to be impossible for democracies (most likely any from of government) to keep political and fiscal considerations from eventually dominating currency management. It's just too tempting to print money when you get into a fiscal bind, because there are a whole lot of people out there who don't understand that amounts to a tax on whoever is holding the currency. So I save money for retirement and every year the money I save is worth a little less than the day I saved it. That would be okay, I suppose, if I could make safe investments that matched the increase in cost of living, but even if I can the government is going to tax away part of that money, which is really a tax on my principle as the buying power of the money hasn't changed.
As far as bitcoins go in particular, I'm not actually advocating anything. They seem like a weird hybrid between a fiat currency and one based on commodities, and I don't trust my understanding of the math well enough to be sure there's no way to make more. And over the last few years it seems anything but stable. So I rather see a return to the gold standard, which I understand has its flaws. I just think its flaws are less serious than those of a fiat currency.
I meant whatever the previous commenter meant, to which the user provided no sources nor definitions. How would you like to define stability?
Well, for starters I would define a stable currency as one that had an average CPI of 0% with extremes between -2% and 2% or so. I would like to be able to stuff my mattress with money and not have the purchasing power of that money go down as I sleep. I don't really care what exchange rates are directly, since if another country doubles its money supply I ought to be able to buy twice as many quatloos (or whatever) for a dollar.
Which government do you belong to?
I don't belong to any government :). But I live in the US. I'm curious what country has managed to keep a stable currency (by my definition above).
As I understand it most of the money from QE has been going into government bonds. Mortgages and corporate bonds were only added at all in the more recent iterations.
The amount of debt and obligations (primarily medical care and ACA) will swamp any possible effects of a hot economy, even assuming structural problems won't prevent the economy from more than an anemic recovery. IMO what's most likley going forward is a few decades of low to zero growth like we've seen in Japan. There will be three options: devalue the currency, raise taxes significantly, or cut services. I don't think the last two are politically palatable.
Of course the counter argument economists always employ in this situation is "We didn't do it hard enough."
Yeah, I don't really buy it either, but there's no way to know for sure.
Well, sure. That's what QE is all about. The fed prints money and uses it to simulate demand for bonds, which drives down interest rates.
Those aren't assets. The Fed can't sell more than a token amount of those bonds, because of #1. Selling the bonds would drive up interest rates, bankrupting the government almost immediately. And the government can't actually pay those bonds back without issuing new debt. And the new debt will be bought, in larger and larger amounts as time goes by, by the Fed. So how valuable is a loan you can't sell that will never be paid back? QE was just a sneaky way for the government to print trillions of dollars while at the same time pretending it wasn't doing any such thing.
Right, which is why I was surprised when, in response to a discussion about the fed, you chimed in about the government selling off nonexistent assets. Try to read what people write and not what the little man in your head thinks they wrote. It's pretty obvious that of all the commenters on this thread you probably know the least, which is why you keep calling people stupid when they point it out. What else can you say?
Okay, then what "assets" are they going to sell? You don't have any idea how this stuff works, do you?
Well, in theory by creating money and using it to buy government debt the money they've injected into the system will be destroyed as the government pays off those debt obligations. I think we've passed the point where that could actually happen, though. The government can only pay off old debt obligations only by issuing new debt, so there's no way to get the money back out of the economy.
Depends on what you mean by "stable". The government has maintained a money system that slowly bleeds savers for about a hundred years now. That's not the kind of stability I'm interested in.
The Fed certainly has a lot of influence on the money supply. Lately they've been effectively printing trillions of dollars by doing the same double-entry bookkeeping and buying bonds as collateral.
When I say "gold standard" I mean a fixed amount of gold for every dollar. And to be credible you should be able to take your dollars to the local federal reserve and exchange them for gold bullion. So no, you don't decrease the amount of gold backing each dollar.
That sounds like a rationalization. If there aren't enough dollars each one is worth more and you simply issue notes or coins with smaller denominations without changing the total number of dollars in existence. In other words, when dollar bills wear out you destroy them and replace each with ten dimes.
The big advantage to a fractional reserve currency is if you do it right prices will remain relatively stable over time. That's an advantage that shouldn't be underestimated, since it's a lot easier to do all sorts of financial planning if you don't have to take currency fluctuations into account. Of course the downside is no government in history has been able to refrain from inflating the money supply when it gets into a fiscal bind. That's why I'd rather see a move back to the gold standard despite the theoretical advantages of a fractional reserve currency.
Ah, well, that's different. I wouldn't mind going back on the gold standard, but I'm not sure gold coins are the way to go.
Mostly the answer is found in the fact that gold is finitely divisible.
I'm not sure why you see this as a problem. Having a currency on the gold standard is not the same thing as using gold as currency. If I were to fix the dollar at a thousand per ounce of gold there's no divisibility problem. Eventually pennies will start being worth something, and then I can issue tenth-penny coins or hundredth-penny coins ad infinitum.
The biggest problem with currency on the gold standard is whoever is holding on to the actual gold might sell it out from underneath you.
Well, actually that wasn't me, since I don't respond to ACs. But since you've summoned the energy to actually log in let me reply that if you don't realize dollars are backed only by debt you have some serious reading to do. This isn't even a controversial point.
Again the unfortunate name of this group of elements comes back to bite us. Rare earth elements are not rare, they simply don't occur in high concentrations. There are exploitable deposits all over the world, but nobody wants to mine them because the process of extracting what you're after makes a big mess. That made China the perfect place for RE production because until recently they didn't seem to care about that.
This is no longer true. China has spent the last two decades building up a large modern navy. The newer ships have comparable systems to anything the US has, and they recently launched an aircraft carrier with plans to build two more. Even the pentagon admits if China was "willing to pay the diplomatic and economic price" we could not stop them from taking Taiwan.
Not entirely. Gold's intrinsic value means even if it lost its premium as a medium of exchange, it's still worth something in the same way a potato or a barrel of oil is worth something. With fiat currencies the currency itself is completely worthless, so you can get situations like Hungary after WW II or Zimbabwe more recently, where the value drops to zero, in essence.
so if i use bitcoin as a hedge against inflation, you would call me historically wise and longsighted?!
Way to read what you think I wrote instead of what I wrote.
a better hedge bet than gold in that scenario would be to invest in gang membership and heavy weaponry. then just go and take any fucking gold you want. because that's what happens when societies collapse on the order of extreme currency disruption: the rise of warlords
Like I said. Historically ignorant.
Are you drunk?
Yes, actually gold has intrinsic value. It has some nice physical properties that make it useful for electronics and corrosion resistance.
We were talking about the fed, not the government. And yeah, the fed has no assets. But even beyond that, the idea the federal government is going to sell off physical assets to deal with a solvency crisis is just daft. You keep spraying ignorant stuff on my screen and then accuse other people of ignorance. I would laugh if I didn't realize you're probably allowed to vote.
Assets? What assets? All they have is (mostly government) bonds, and they can't sell those bonds. Because of the amount of government debt outstanding just a percentage point or two increase in what the government has to pay foreigners who buy bonds will trigger a solvency crisis. So they won't sell. They'll just keep printing money until the music stops.