Is it a catch 22, do We spend or do We save? (tier, borrow)

[sterlinggirl]

Originally Posted by Humanoid

You are only able to do this because someone else goes into debt.

I'd like to see everybody save until the system breaks. Maybe then we could go back to a dollar that's backed by something tangible.

I doubt its ever going to happen, but its nice to think about...

[Humanoid]

Originally Posted by HappyTexan

How right you are Humanoid. But there are lots of people out there that want their toys and gadgets. Even this crisis is not stopping them from holding back.

Not to state the obvious, but if people were consuming as usual we wouldn't be in a recession.

Bloomberg.com: Economy

Originally Posted by sterlinggirl

I'd like to see everybody save until the system breaks. Maybe then we could go back to a dollar that's backed by something tangible.

Something tangible? What like sea shells? Oh oh...I know...how about stones:

Rai stones - Wikipedia, the free encyclopedia

[sterlinggirl]

Originally Posted by Humanoid

Something tangible? What like sea shells? Oh oh...I know...how about stones:

Rai stones - Wikipedia, the free encyclopedia

I was thinking units of energy, but Rai stones would work too.

[chuck22b]

Originally Posted by Humanoid

Or we could you know....use the actual definition:

National savings = GNP - C - G

GNP = Gross national product
C = Consumption
G = Government spending

Investment isn't a separate variable its part of "total production", i.e, GNP.

I don't think we were defining national savings. The equation bale002 has, from what I can tell, looks to be a model for a "balanced" individual, household, or Country.

Production - Consumption = Savings + Investments

from what I can gather is similar to some accounting formulas

Production = Income

Consumption = Expenses

Savings = Retained Earnings / Equity

Investments = Investments - Money that goes back into the Individual/Company/Country for production

So,

Incomes - Expenses = Revenue

Revenue = Retained Earnings + Investments (or the amount of revenue should equal the amount saved and re-invested)

Or part of the accounting formula:
Assets = Owner's Equity

But, I added Credit (future liabilities) to add the leverage component.

Assets = Liabilities + Owner's Equity

=

Production - Consumption = Investments + Savings + Credit

... or we can sustain a level of production/consumption with the use of "some" sustainable level of credit

A company/buisness/individual/Country can still grow and be sustainable using some level of debt (leverage). The problem is the levels of debt we have had in the last decade is un-sustainable. The only way back is to deleverage back to a sustainable level...

Sustainable Growth Rate:
"The sustainable growth rate is a measure of how much a firm can grow without borrowing more money. After the firm has passed this rate, it must borrow funds from another source to facilitate growth."
Sustainable Growth Rate (SGR)

Ideally, we as individuals, household, Country can get to a point where we don't need to increase our leverage ratios to grow. Sadly, that hasn't been the case as of late.

-chuck22b

[Humanoid]

Originally Posted by sterlinggirl

I was thinking units of energy, but Rai stones would work too.

What unit of energy? And how would this even work? You have "energy certificates"? Would lightening hitting your house make you rich? In what sense is "energy" tangible?

Money is just a way of trading productive capacity, if you were going to try and back it by something intangible then it should be what its suppose to represent in the first place. But I doubt this would work either.

Originally Posted by chuck22b

A company/buisness/individual/Country can still grow and be sustainable using some level of debt (leverage). The problem is the levels of debt we have had in the last decade is un-sustainable. The only way back is to deleverage back to a sustainable level...

And the only way to deleverage back is a huge contraction in the money supply... You can't pay off debt without effecting the money supply. So, if all individuals and business pay off debt then either 1.) The money supply will contract wildly, 2.) The government will have to increase their debt. Of course, for these exact reasons 2 is occurring right now.

[Woof]

Originally Posted by sterlinggirl

I was thinking units of energy, but Rai stones would work too.

Hmmmm .... kilowatt hours. "My final offer for that sculpture is 100,000 UKHs (universal kilowatt hours)! Take it or leave it!

[Humanoid]

Originally Posted by Woof

Hmmmm .... kilowatt hours. "My final offer for that sculpture is 100,000 UKHs (universal kilowatt hours)! Take it or leave it!

Now the question is how will we store that much energy into a coin sized battery.

[Woof]

No, the dollar card will be BACKED by kilowatt hours, which could be redeemed if desired but would probably be used just as gold-backed currency stored in an electronic bank account would be.

You wave the card at the cashier, authorize the purchase of groceries or whatever, and it's transferred.

[texdav]

There is no catch 22;if you can save you should do so.If you can't then at leasst don't borrow what you can not pay back. That is what really hurts the economy.

[sterlinggirl]

Originally Posted by Humanoid

What unit of energy? And how would this even work? You have "energy certificates"?

You could peg the value of currency to whatever unit of energy you want: HP, KWH, Kcals, or BTUs, it does the same thing. Its a measure of the potential for work.

A benefit of pegging currency to energy would be the constant use of energy, which would keep currency in circulation.

Another benefit would be changing the cost of energy to a constant instead of a variable.