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Old 11-27-2011, 09:21 PM
 
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Quote:
Originally Posted by gysmo View Post
money created out of thin air and intoduce into the ecomony is what has kept us going . but every time it has been done it has require larger amounts of worthless dollars monotizing government debt can not comtinue . there is no such thing as a free lunch


What about monetizing housing? What about ZIRP?
What about rent seeking which just sets up access charges in the real economy? That's all land speculation is. You buy it, sit on it and then up charge the one who wants to use it. Then most of this is passed on to the bank as interest. That is what has gutted our economy.

Trade Theory Financialized | Michael Hudson
These transfer payments to the FIRE sector and government agencies have transformed international cost structures, absorbing roughly 75% of U.S. family budgets. This helps explain the deteriorating U.S. industrial trade balance as the economy has become financialized.
Do you think repairing a bridge or R&D is worse than this?
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Old 11-27-2011, 09:26 PM
 
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Originally Posted by gysmo View Post
what bank is creating U.S DOLLARS?

All of them. Bank credit and loans create most of the money supply out of thin air. If you don't know this then I can see the confusion. Most money is loaned into existence.

Crash Course Chapter 7: Money Creation - Crash Course Videos at Chris Martenson - banks, Federal Reserve, fractional reserve banking, interest, loans, money creation

When it loaned out for land all you get is an asset bubble because land doesn't expand like widgets. It just makes everything more expensive.
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Old 11-27-2011, 09:47 PM
 
Location: Indiana
2,046 posts, read 1,570,628 times
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Originally Posted by gwynedd1 View Post
All of them. Bank credit and loans create most of the money supply out of thin air. If you don't know this then I can see the confusion. Most money is loaned into existence.

Crash Course Chapter 7: Money Creation - Crash Course Videos at Chris Martenson - banks, Federal Reserve, fractional reserve banking, interest, loans, money creation

When it loaned out for land all you get is an asset bubble because land doesn't expand like widgets. It just makes everything more expensive.
but those people that sold the land will go out and spend the money or save it in another bank returing the money supply back, no adverse effect on the money supply no inflationary effect!!
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Old 11-27-2011, 10:06 PM
 
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Originally Posted by gysmo View Post
but those people that sold the land will go out and spend the money or save it in another bank returing the money supply back, no adverse effect on the money supply no inflationary effect!!
That is what the feudal lords used to say to the peasants. Do you see absentee land owners doing any work?

That is the problem with monetarism.They balance transactions and don't look at reality. A rash of muggings doesn't cause inflation either and its circulated back into the economy. You can record it as a service.


No inflation, just slavery.
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Old 11-27-2011, 10:20 PM
 
Location: Indiana
2,046 posts, read 1,570,628 times
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Quote:
Originally Posted by gwynedd1 View Post
All of them. Bank credit and loans create most of the money supply out of thin air. If you don't know this then I can see the confusion. Most money is loaned into existence.

Crash Course Chapter 7: Money Creation - Crash Course Videos at Chris Martenson - banks, Federal Reserve, fractional reserve banking, interest, loans, money creation

When it loaned out for land all you get is an asset bubble because land doesn't expand like widgets. It just makes everything more expensive.
yes I get this money creation but this has no long effect on the money supply because it is to be repaid buy the borrower! when the government barrows it does so with no intention of repaying it. the government simply introduces the extra dollars into the economy driving the value of my dollars down!! in essence taxing my dollars to put value in the newly created dollars, a hidden tax. money taken out of your pocket without you even noticing!
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Old 11-27-2011, 10:26 PM
 
Location: Indiana
2,046 posts, read 1,570,628 times
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Quote:
Originally Posted by gwynedd1 View Post
That is what the feudal lords used to say to the peasants. Do you see absentee land owners doing any work?

That is the problem with monetarism.They balance transactions and don't look at reality. A rash of muggings doesn't cause inflation either and its circulated back into the economy. You can record it as a service.


No inflation, just slavery.
I am sorry didn't know the economy had to insure people's finances. what about personal responsibility
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Old 11-28-2011, 01:09 AM
 
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Originally Posted by gwynedd1 View Post
All money is loans, and the one with access to the lowest rates sucks up all the wealth. In a depression, the first one to get the cheapest money wins.

If I have 100 seats and 10 of them are empty, then new liquidity is going to fill those empty seat and drive up the profits of the other 90. Thus if I am losing money at $4 a seat with a profit starting at $5, Then the prices on all of them will be driven up quickly by a bidding war for the 100th seat, say up to $10.
The first one to get the cheapest money wins, and that was the banks, again. Now they can up real estate access charges with their seat monopoly.


They were also given treasuries for junk which is like exchanging a dead beat alcoholics IOU for a VP at DuPont.

BTW an IOU from a VP in DuPont among dope addicts is as good as MONEY. They'd pass it around and trade it for needles. If you just understood that then you will finally know what money is. Its a debt. All money, no matter what form it takes is debt. In this system, its created as a debt because before the VP at DuPont became indebted, it didn't even exist. Fail to understand this, and you may as well just babble terms out of an economic dictionary.
Though I believe you do understand more about the problems we are now seeing compared to the average person ... the highlighted part is the key to actually understanding WHY we have the problems we have now.

The reality is, money is NOT debt ... real money is an asset, not a liability, and is used to pay debts. The problem is, WE HAVE NO MONEY, since we've allowed the banker gangsters to convince us that their BANK NOTES or Federal Reserve Dollars (debt) is real money when it isn't.

If you want to know what real money is, all you need to do is to check to see what the various central banks consider to be money, and I promise you, it isn't number entries in an accounting system, or paper notes, or base metal coins. The central banks settle debts between each other with gold bars, because they understand that you really cannot pay one debt with another form of debt ... you must receive real money.

And since all of our money was taken away decades ago, we have no money, and so long as that continues, we will remain stuck where we are, and all of the complex economic "theories" are just a load of crap to keep the weak minded weak and uninformed.

What people now believe is money (Federal Reserve Dollars) are just IOU's with no real promise to pay. You receive $100 in FRN's from someone that owes you $100 ... and you transfer those $100 in FRNs to someone else for the $100 you owe them, and they in turn do the same. It's literally just passing debt from one person to the next.

So all of the complex economic theories are a smokescreen to cover up the reality that the entire economic system in it's current form is just a gigantic and sophisticated ponzi scheme, where the "money creators" extract all of the true value up front by using these worthless IOUs masquerading as money, which they convert into real money and assets, passing the debt for those gains to us in phony IOUs. Then we, the sheep, accept those worthless paper bills as legitimate payment, and agree to continue passing them back and forth to each other. It sounds crazy, and it is crazy ..but that is what is happening.

Now, I'm sure if I owed you $100 ... and I gave you the option to receive 100 federal reserve notes or 100 Morgan Silver Dollars as payment ... you'd probably choose the Silver Dollar option. Right?

Well, all you need to do is ask yourself why ... and you'll begin to see why it's such mind numbing ignorance for so many "economists" and regular people to continue regurgitating this nonsense about the glory of fiat currency and why we cannot return to an asset backed currency like gold and silver.
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Old 11-28-2011, 08:27 AM
 
20,621 posts, read 19,265,159 times
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Originally Posted by gysmo View Post
yes I get this money creation but this has no long effect on the money supply because it is to be repaid buy the borrower! when the government barrows it does so with no intention of repaying it. the government simply introduces the extra dollars into the economy driving the value of my dollars down!! in essence taxing my dollars to put value in the newly created dollars, a hidden tax. money taken out of your pocket without you even noticing!
Oh really? So when the interest sucks so much money out of the economy that a depression is an absolute certainty, this doesn't force the government to stabilize the bloated prices caused by the commercial banks?

I don't know where I get this stuff...except that is exactly what just happened right before our very eyes. So no, its the banks that that spewed the trillions on our economy.

Last edited by gwynedd1; 11-28-2011 at 08:47 AM..
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Old 11-28-2011, 08:41 AM
 
20,621 posts, read 19,265,159 times
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Originally Posted by gysmo View Post
I am sorry didn't know the economy had to insure people's finances. what about personal responsibility
No, I just proved your axiomatic, monetarist formula false. Its junk economics. When someone is robbed, no new money is created, and it circulates when the crook spends it. Since the same amount of product exists(only in the hands of crooks), we have perfect economic equality( according to neo-classicals). Why I'd say banditry is self financing and frictionless. Should we convert victims into a resource pool and draw up a resource utilization curve ? That it?

Economics isn't about junk, axiomatic, mathematical expressions. Its about pattern recognitions, and then when fully vetted, can have descriptive formulas. Everyone knows crooks don't create wealth. 10 land owners for 1 worker doesn't create wealth. Only a neo-classical economist and landed gentry thinks such an economy is running at 100%. A real economist knows its running at under 10%.
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Old 11-28-2011, 08:48 AM
 
Location: Long Island, NY
19,792 posts, read 13,900,929 times
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Quote:
Originally Posted by gwynedd1 View Post
Hi chickenfriedbananas

The reason why we are not seeing inflation domestically is because banks generally make loans secured by assets. There is nothing there to soak in a new loan. We are at debt saturation. Even worse is its been supported by rock bottom rates especially mortgages. Think how much damage. A 200k house at 5% rates now a 200k house at 4% is a serious and catastrophic back to the wall. Yet I'll bet most people think its the same housing price. Adjust the rate to 6% and see the price in 2006 terms.

Bank credit is dead meat. 80% of all bank loans were for mortgages. The only monetary growth is rent seeking over seas in in a currency war. Its stagflation as far as the eye can see. Unless people wake up to what I am trying to tell them.
With all due respect, I don't think that you know what you are writing about. You say we are at debt saturation. Are we?



The question was about why we're not seeing inflation and the answer is that in a liquidity trap there is not very much pressure to raise prices -- even though the money supply has increased dramatically.



On the overall thread topic, the problem isn't the short-term debt. Bill Keller summed it up perfectly in today's Times:

Quote:
There really is a textbook way to fix our current mess. Short-term stimulus works to help an economy recover from a recession. Some kinds of stimulus pay off more quickly than others. Once the economic heart is pumping again, we need to get our deficits under control. The way to do that is a balance of spending cuts, increased tax revenues and entitlement reforms. There is room to argue about the proportions and the timing, and small differences can produce large consequences, but the basic formula is not only common sense, it is mainstream economic science, tested many times in the real world.
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