U.S. CitiesCity-Data Forum Index
Covid-19 Information Page
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 03-21-2009, 11:23 AM
 
19,337 posts, read 16,935,945 times
Reputation: 7515

Advertisements

Quote:
Originally Posted by oscottscotto View Post
I wish more than 5% of the people in the "Politics and Other Controversies" sub-forum understood this. I am not an economic expert by any means, but it seems like common sense.

If we stick with the current system, government debt is not a killer. In a perfect world, there would be monetary reform. However, in our real world, Obama/Congress building up the national debt right now is not "destroying our nation". There is a reason behind the "madness" (keeping the debt system afloat to "save us") and this current debt can always be "paid down" at a later point (with budget cuts/increased taxes) when deemed a good time to do so and when economic times are better.

But like I said, I am not an expert or even a novice on these things. It just seems like common sense ...
Hi oscottscotto,

I don't know if anyone is even an expert on economics but I will qualify myself as being experienced shall we say. Government debt is the entire basis of our money supply. We have created the government ability to tax and pay and used that as the basis for money. We have monetized government debt. Treasury bonds back the dollar. Paying down the national debt will cause one the following:

1. A depression.
2. Increased business debt at interest to banks.
3. Increased consumer debt at interest to banks.


Do any of those sound good? The more we pay down the national debt the more we pay interest to banks which can only be paid by default or more debt. If you make debt the money supply you can't pay it off. If we made garbage the money supply we could not toss it out. It makes sense to pay off debt and it makes sense to toss out the garbage but when you monetize it you can't. Its the money.


Who mostly benefits from the taxing power and credit of the United States? Commercial banks. They get to create money from value they don't create. They create up to 90% of the money supply by fractional reserves. Banks don't loan money, they create it.

If we put a saver in office without reforming the monetary system he would destroy us all.


Oh, if you want to pay off the national debt just take the system into the treasury print up 11 trillion in treasury notes and pay off every treasury bond in existence. Done. We are debt free and we no longer have a debt based currency. Would that cause inflation? Not if you raised the reserve requirements to 100%. As a matter of fact they would need to print trillions more. No more business cycles either. Why is this not done immediately? Because there is a loser in this scenario and its the financial industry who has all the money to educate and elect.
Rate this post positively Reply With Quote Quick reply to this message

 
Old 03-21-2009, 11:34 AM
 
Location: Charlotte, NC
2,193 posts, read 4,683,295 times
Reputation: 1075
Quote:
Originally Posted by gwynedd1 View Post
Hi oscottscotto,

I don't know if anyone is even an expert on economics but I will qualify myself as being experienced shall we say. Government debt is the entire basis of our money supply. We have created the government ability to tax and pay and used that as the basis for money. We have monetized government debt. Treasury bonds back the dollar. Paying down the national debt will cause one the following:

1. A depression.
2. Increased business debt at interest to banks.
3. Increased consumer debt at interest to banks.


Do any of those sound good? The more we pay down the national debt the more we pay interest to banks which can only be paid by default or more debt. If you make debt the money supply you can't pay it off. If we made garbage the money supply we could not toss it out. It makes sense to pay off debt and it makes sense to toss out the garbage but when you monetize it you can't. Its the money.


Who mostly benefits from the taxing power and credit of the United States? Commercial banks. They get to create money from value they don't create. They create up to 90% of the money supply by fractional reserves. Banks don't loan money, they create it.

If we put a saver in office without reforming the monetary system he would destroy us all.


Oh, if you want to pay off the national debt just take the system into the treasury print up 11 trillion in treasury notes and pay off every treasury bond in existence. Done. We are debt free and we no longer have a debt based currency. Would that cause inflation? Not if you raised the reserve requirements to 100%. As a matter of fact they would need to print trillions more. No more business cycles either. Why is this not done immediately? Because there is a loser in this scenario and its the financial industry who has all the money to educate and elect.
You need to write a book. I'll be your first buyer.

One thing I don't get, is why is this not inflationary if you raise the reserve requirements to 100%? Why does the money circulate differently if it's fractional based reserve or we have a full reserve system?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 12:51 PM
 
Location: Yes
2,660 posts, read 6,262,633 times
Reputation: 899
Quote:
Originally Posted by gwynedd1 View Post
Hi oscottscotto,

I don't know if anyone is even an expert on economics but I will qualify myself as being experienced shall we say. Government debt is the entire basis of our money supply. We have created the government ability to tax and pay and used that as the basis for money. We have monetized government debt. Treasury bonds back the dollar. Paying down the national debt will cause one the following:

1. A depression.
2. Increased business debt at interest to banks.
3. Increased consumer debt at interest to banks.


Do any of those sound good? The more we pay down the national debt the more we pay interest to banks which can only be paid by default or more debt. If you make debt the money supply you can't pay it off. If we made garbage the money supply we could not toss it out. It makes sense to pay off debt and it makes sense to toss out the garbage but when you monetize it you can't. Its the money.


Who mostly benefits from the taxing power and credit of the United States? Commercial banks. They get to create money from value they don't create. They create up to 90% of the money supply by fractional reserves. Banks don't loan money, they create it.

If we put a saver in office without reforming the monetary system he would destroy us all.


Oh, if you want to pay off the national debt just take the system into the treasury print up 11 trillion in treasury notes and pay off every treasury bond in existence. Done. We are debt free and we no longer have a debt based currency. Would that cause inflation? Not if you raised the reserve requirements to 100%. As a matter of fact they would need to print trillions more. No more business cycles either. Why is this not done immediately? Because there is a loser in this scenario and its the financial industry who has all the money to educate and elect.
Great explanation.

This is why I can understand and sympathize with those who want to revolutionize the system ... but it is also exactly why I cringe when people naively say "Obama is destroying our nation/economy", when in all actuality - he is just operating under the current monetary system that has been in existence since before he was born.

But I guess if our leaders actually explained this concept of debt/money to the American public, it would not go over that well ... to say the least . We (myself included) are still a nation that, for the most part, believes in the inherent good of saving.

On the same hand, however, if no monetary revolution ever comes about in my lifetime - then at least I know I can agree with what this admin is doing and how they are handling our current situation - given the current system we operate in.

But I will not get into politics. I'll admit I am biased to the left. I also speak in more layman terms, so the business forum is where I usually stay more quiet and just observe.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 01:01 PM
 
Location: Portland, Oregon
7,090 posts, read 11,168,904 times
Reputation: 4118
Nope, no problem of any one else...all his. He's been in power for all the decisions and put forth every single bill, law, and idea that has ruined everything. *Massive Sarcasm*
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 01:05 PM
 
19,337 posts, read 16,935,945 times
Reputation: 7515
Quote:
Originally Posted by sheenie2000 View Post
You need to write a book. I'll be your first buyer.

One thing I don't get, is why is this not inflationary if you raise the reserve requirements to 100%? Why does the money circulate differently if it's fractional based reserve or we have a full reserve system?

Hi sheenie2000,

Thanks for the comments. A book might be kind of fun. I would just need a lot of grunt work cross references and research. Maybe a Internet PDF someday. There is certainly a blind spot with even my favorite main stream theory of the Austrians. They don't seem to get other monetary manipulation resulted in enough power to install central banks. Sad to say Marx was the most correct with regard to the process of monopoly capital. The problem is his theory just becomes the primary instument of monopoly. The lowely Hunt brothers put silver on a ride. Thats my chief disput with the Austrians and its most famous representitive Ron Paul.

A money system must be public and simple in a republic or democracy.


To answer your question the mechanics of FRB expanding the money supply is based upon the size of the fraction left behind. A 10% fraction on a 1000 dollar multiplier is 1000/.1 which means $10,000 may be created in loan deposit cycles. Rasing it to 100% would leave no multiplier and the entire money supply would only be 11 trillion. Banks would be unable to create money and it would not be produced at interst. There would be a net surplus in the society instead of a net debt. The theory is that banks would not expand the money supply as needed to expand with productive capital.

Its bunk. Banks have never been much involved in expanding with fixed capital. They first engaged in lines of credit on discounted bills of exchange which usually involved some kind of circulating capital. Bond and stock markets have historically addressed this kind of capital thus money creation never was directly linked with expanding capacity. They have mostly involved themsleves in creating markets backed with government loan guaruntees. They created govenment backed institutions to buy up loans for real estate. Where the capacity in that? They also had no risk when they stuck to 20% down. Its just an absurd tax.
If anyone even dreams of FRB then it should be illegal to do so for consumtion, or rent collection and only for capital creation. That way the bank shares in the success or failure. I am also not one that dreams of it. It will be abused. Thats not what they teach in finance however .They always use models of increasing capacity so the field is full of hucksters.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 01:16 PM
 
Location: Coachella Valley, California
15,581 posts, read 37,966,695 times
Reputation: 13340
Quote:
Originally Posted by tonyandclaire89 View Post
President Barack Obama's budget would generate unsustainably large deficits averaging almost $1 trillion a year over the next decade, according to new estimates released Friday.

WH: Agenda on track despite worsening deficits (http://news.yahoo.com/s/ap/20090320/ap_on_go_pr_wh/obama_budget - broken link)
Um, yeah ...... I think the economy was in pretty p-iss poor shape long before Obama came on board.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 01:58 PM
 
Location: Raleigh, NC
9,043 posts, read 12,012,579 times
Reputation: 1395
Quote:
Originally Posted by Twinkle Toes View Post
Um, yeah ...... I think the economy was in pretty p-iss poor shape long before Obama came on board.
...and spending trillions we don't have will make it all better...

Oh, wait. I was distracted by the pretty unicorn.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 02:08 PM
 
19,337 posts, read 16,935,945 times
Reputation: 7515
Quote:
Originally Posted by oscottscotto View Post
Great explanation.

This is why I can understand and sympathize with those who want to revolutionize the system ... but it is also exactly why I cringe when people naively say "Obama is destroying our nation/economy", when in all actuality - he is just operating under the current monetary system that has been in existence since before he was born.

But I guess if our leaders actually explained this concept of debt/money to the American public, it would not go over that well ... to say the least . We (myself included) are still a nation that, for the most part, believes in the inherent good of saving.

On the same hand, however, if no monetary revolution ever comes about in my lifetime - then at least I know I can agree with what this admin is doing and how they are handling our current situation - given the current system we operate in.

But I will not get into politics. I'll admit I am biased to the left. I also speak in more layman terms, so the business forum is where I usually stay more quiet and just observe.

Hi oscottscotto,

I still think Obama is not a populist else he would have put money in the hands of people. He is certainly not a revolutionary. I just hope his handlers are of the Fabian type...

I was a right wing Republican for most of my life with the free markets, free trade and what have you until I realized that governments are not the ones interfering in the economy. There is no rational motive for governments to interfere with the economy since its their own tax base. The reality is that monopoly capital uses the government as an instrument. I don't even need to discard my patriarchs since Adam Smith observed that special interests were the source of it.
The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers. The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot perhaps be corrected, may very easily be prevented from disturbing the tranquillity of any body but themselves. -Wealth of Nations


So I cannot proceed with mere ideal economic theory and need to address the political landscape. If our government is defending an absurd monopoly then I doubt government is the source of it. The left does seem more aware of this than the right. Unfortunately the left is usually barren of good economic principles as much as the right is barren of it knowledge of the state of our markets that are anything but free.

Thats why I have libertarian tendencies but also find myself even taking ideas from LarouchePAC who were all over exposing the post Bretton Woods system at the start. Libertarianiasm is the best way of life but politically defenseless. So depending out what we are talking about this born and bred right winger can be very left.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 03:41 PM
 
Location: Orlando, Florida
43,856 posts, read 46,254,249 times
Reputation: 58669
I didn't vote for Obama.....but I'm not sure that I would expect ANYONE to fix this mess.....other than the American people coming to a place where they are willing to quit purchasing above their income means. The country doesn't belong to the president (regardless of who that person may be)....at the end of the day....this is OUR country. And we've got to be willing to come together and make the right choices instead of depending on some political party to FIX IT for us.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 03-21-2009, 05:17 PM
 
Location: Chino, CA
1,458 posts, read 3,055,299 times
Reputation: 555
Quote:
Originally Posted by GloryB View Post
I didn't vote for Obama.....but I'm not sure that I would expect ANYONE to fix this mess.....other than the American people coming to a place where they are willing to quit purchasing above their income means. The country doesn't belong to the president (regardless of who that person may be)....at the end of the day....this is OUR country. And we've got to be willing to come together and make the right choices instead of depending on some political party to FIX IT for us.
In spite of whatever actions taken by government, the economy, and the people ARE fixing it. A balance is going to be met.

By economy, people are saving, people are spending less on wants and more on needs, and more and more people are going to school to get educated or retrain.

The sad thing is, is without the ability for large corporations to fail and the introduction of true risk to the larger players (ie competition)... median incomes are still not going to rise to where they need to be and our society will always have to rely on the lower/middle classes to incur ever increasing debt to support the ever growing appetite of the conglomerates.

A more equitable distribution of debt (as debt is our money supply), would provide a far more stable and more sustainable economy like we had in the past. Even better is the total elimination of debt as the money supply as Gywnedd1 recommends... but I'd settle for a more equitable distribution (or higher median incomes).

As it is, the poor and the middle incur more debt for the benefit of the upper middle and the uber riche (upper 5 percentile). Without them incurring more debt, the economy fails - as we see now.

-chuck22b
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics

All times are GMT -6. The time now is 08:54 AM.

© 2005-2021, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top