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Old 08-06-2012, 06:41 AM
 
Location: The Triad (NC)
31,341 posts, read 69,519,228 times
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Quote:
Originally Posted by mathjak107 View Post
you may have bought a car on credit and a home but little else was bought on credit in the 1950's. families also owned way fewer cars, smaller homes and fewer homes.
Posted earlier in the thread:
Quote:
Originally Posted by gwynedd1

Banks create bank credit to allow someone to buy a car
which is supposed to be credit added to the system to represent the new product, the car.

But it doesn't.
It represents about 10,000 already existing products and already existing debts.
At *best* it's a consolidation and securitizing of those smaller debts (sorta how mortgages get bundled).
Banks SEEK OUT people to take over the debt they are already carrying.

ETA: This allows everyone (well, after the bank gets their cut) to again have capital to operate with.
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Old 08-06-2012, 09:42 AM
 
Location: Here.
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As long as the money supply expands at the same rate as the economy grows, you don't have a problem. But when the money supply expands faster than the economy, you have inflation.

I use population as an example. If the population doubles, you can expect to double the money supply without a problem.
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Old 08-06-2012, 09:52 AM
 
Location: The Triad (NC)
31,341 posts, read 69,519,228 times
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Quote:
Originally Posted by Retroit View Post
If the population doubles, you can expect to double the money supply without a problem.
well....
if the money "supply" isn't actually in circulation..
or if those people that constitute the expansion aren't employed...
or they aren't employed at a level where they can actually provide for themselves....
that formula is pretty much thrown out the window.
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Old 08-06-2012, 10:42 AM
 
Location: The Lakes Region
3,074 posts, read 4,308,743 times
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Quote:
Originally Posted by MrRational View Post
well....
if the money "supply" isn't actually in circulation..
or if those people that constitute the expansion aren't employed...
or they aren't employed at a level where they can actually provide for themselves....
that formula is pretty much thrown out the window.
Especially when they jump onto the welfare support services which results in increased
costs for those who actually hold down jobs. This creates even more pressure and our fearless leaders
just print more money and develop more gubmint programs to spend it on.
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Old 08-06-2012, 10:42 AM
 
19,337 posts, read 16,935,945 times
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Quote:
Originally Posted by Mircea View Post
Well, I guess it's just too bad you weren't around to tell Lincoln that, or the Wiemar Republic, and it would seem Zimbabwe didn't get your memo either.
Quote:
That would be prima facie evidence that you don't understand monetary policy. On top of that, you threw a Straw Man out there for you to beat up on.
And on top of yours...oh wait, you didn't say anything.



Quote:
Standard-based currencies and fractional reserve banking are two entirely different things.
You mean just as dissimilar to each other as lobsters? Under the broad concept concept of "credit", they are the same thing. They are credit instruments.

Stick to the subject instead of going off on the typical pedantic rant about every form of credit. There is use value and then their is its use in trade, aka "credit". Open your own thread if you want to do that.

Quote:
If you're going to use fractional reserve banking with gold and/or silver backing it up, then you just created Real Inflation.
/quote]

Same thing happened when they discovered silver in Peru. You "got" real monetary inflation. There was monetary expansion. What's your point other than polluting this thread with how credit is created? And if you are going to tell me that silver is "real" value, then I would point out at the time it was nothing but a shinny metal. Art has lots of value, not because its useful, but because of its marginal utility in social one-upmanship.




So what? People on Earth have been doing that for 10,000+ years. It didn't just start happening yesterday.

How do you think people purchased goods in the US up through the 1950s?

On freaking credit.

You get your horse and wagon, roll into town, buy your seeds on credit, shoes for the kids on credit, clothes on credit, something for the wife on credit, and then you go home, plant your seeds, harvest your crop, sell it, go pay off your debts and whatever you got left is your profit.

How do you think doctors and hospitals operated in the US up through the 1970s? On credit.

Everyone used credit. Why did that kind of credit stop?
As I have said repeatedly, it stops when rent seeking replaced production as the primary driver of credit issuance. That is why your not particularly insightful point of the past does not apply. Values created by scarcity and marginal utility being fed by credit is the cause of inflation no matter what form of credit is used.

Quote:
Well, The Big Corporation really ain't on that. They have to keep their books up to date with SEC filings and what not. Fred's Pharmacy doesn't really give a damn. Neither does Harry's Hardware or Chuck's Chili Parlor or Ted's Tavern or Gary's Grocery or Sam's Shoes.

And then mobility. "Who the hell are you? Who's your papa? Who's your mama?" If you're new in town and no one knows who you are, then you don't get no credit.


And then telephones and things like key-punches. Banks could facilitate and manage credit better, plus bank credit is universal for the most part.
I really have not idea what you are saying here at all.



Quote:
Well, again, you've demonstrated complete ignorance of the issue.

Banks do not create credit, it is the fractional reserve banking system that does that.
What a bunch of semantic rubbish. I did not post this either, electrical impulses did. Stop waisting my time Are you still in junior high?

Quote:
When you are on a standard-backed currency, a bank can only loan against its deposits. If a bank has $100,000 in deposits, then how much can the bank loan? Not more than $100,000. In fact, a bank cannot even loan $100,000 because those are its deposits, and if a bank loans out $100,000 and you go to the bank to withdraw $100, the bank ain't got it.
Great, and we are not on a standards based system. And when supposedly we were, it was still up to the fiat of discovering more of the commodity and/or finding replacements. I would suppose it is useful to do so since creditors tend to end up strangling the real economy without periodic debt relief if they were right as far back as Babylon.

Quote:
The bank cannot loan more than it's deposits, because that would make the value of the currency worthless -- due to Real Inflation.
Then you have no understanding of credit. The argument is over whether the banking system we have assigns it well. The housing bubble implies it did not, this is especially so since credit is being assigned to the increasing marginal utilities of land scarcity in urban areas, aka ground rents.

Quote:
If a bank has $100,000 and loans out $200,000, then the value of $1 is not $1 rather its $0.50.
Tell that to your grandma. The value is always perceive by what it will purchase, not your Platonic idealism.


Quote:
As you can see, a standard-backed currency makes it nearly impossible for the economy of a country, a region, state/province, county or an household to grow.

And during the Great Depression, printing money would have led to Real Inflation, which would have exasperated problems, even more so since it would make the US Dollar worthless outside of the US. And why did banks collapse in the US? Because depositors withdrew their money, leaving the bank unable to loan money to anyone for any reason.
So on the one had you say it makes it nearly impossible for a country to grow with a standard-backed currency( which is wrong), but then you say allowing "inflation", relative to deflation, would have made it worse. Yeah, I think you are on your own thinking that decreasing the money supply in the 1930s was helpful.

And no, if greenbacks could win for the Union, they certainly could create value. Do you know which institution to which green backs it is most related? Been around for a very long time but Sparta made it famous. Its known as coercion.


Please abandon this pass time of macro economics. I have seen no improvement since you butchered the Maastricht and Lisbon treaties.

Quote:
Getting off the gold standard and using fractional reserve banking was the best way to grow the economy and get out of the Depression. With fractional reserve banking, the value of the currency is now for the most part tied to GDP, and not tied to the value of the standard in relation to the quantity of specie in circulation.

It's called fractional reserve, because a bank only needs to maintain a fraction of its cash/deposits as assets against its loan. Fractional reserve banking allows a bank with $100,000 in deposits to loan out $1 Million in part because it's backed by the central bank. Almost every country on Earth operates that way.
You are absolutely all over the place. Now you are explaining fractional reserve banking to me? The sky is blue. If you had any insight at all you would note that they are expanding credit privately, but with private motives and often for rent seeking and ponzi, the real cause of diluting the buying power of the currency.


Quote:
If the central bank increases the fraction, then the bank has to restrict its loans, so $100,000 in deposits might mean the bank can loan $500,000.

What the Ron Paul Pukes don't understand, is that on the Gold Standard, you ain't got no credit card. It's cash only baby. So if they want that 42" Plasma TV, they'll have to save up money for it, because there ain't no VISA or MasterCard. Now, maybe Best-Buy will allow you to set up a revolving charge account or installment account -- maybe.

Monetarily....
The Ron Paul "pukes", as you put it, are no kin of mine.
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Old 08-06-2012, 10:45 AM
 
19,337 posts, read 16,935,945 times
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Quote:
Originally Posted by Retroit View Post
As long as the money supply expands at the same rate as the economy grows, you don't have a problem. But when the money supply expands faster than the economy, you have inflation.

I use population as an example. If the population doubles, you can expect to double the money supply without a problem.
So simple and so true. The basis for your statement is the implication that the productive capacity will increase with population.
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Old 08-06-2012, 11:11 AM
 
Location: The Triad (NC)
31,341 posts, read 69,519,228 times
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Quote:
Originally Posted by gwynedd1 View Post
....productive capacity will increase with population.
until the saturation point of excess population is reached.

We could argue over when exactly that happened... but it is clearly in the past.
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Old 08-06-2012, 11:24 AM
 
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Quote:
Originally Posted by MrRational View Post
until the saturation point of excess population is reached.

We could argue over when exactly that happened... but it is clearly in the past.

If Mr rational would please tell us the precise number.

The discussion is confined to economics, not moral philosophy, zoology and ecology. Since technology is still increasing, your Malthusian perspective is a matter of speculation and taste.

I am not one to promote another baby boom either, but its really not relative to the basic discussion of credit creation.
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Old 08-06-2012, 11:34 AM
 
Location: The Triad (NC)
31,341 posts, read 69,519,228 times
Reputation: 37349
Quote:
Originally Posted by gwynedd1 View Post
The discussion is confined to economics...
No, it isn't... but even within economic terms alone there are saturation points.

Quote:
but its really not relative to the basic discussion of credit creation.
You're still on that? getting anywhere?
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Old 08-06-2012, 12:03 PM
 
19,337 posts, read 16,935,945 times
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Quote:
Originally Posted by MrRational View Post
No, it isn't... but even within economic terms alone there are saturation points.
So then does our low industrial utilization show such a saturation point? And the only real saturation point we have is energy because we simply have arranged our chess pieces in the most hospitable way to invite defeat. Pebble bed reactors? thorium? diesel? They are after thoughts as are any real attempt at fixing transportation.


Quote:
You're still on that? getting anywhere?
I guess not. So then I suppose here is as good a place as any to exchange meat pie recipes?
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