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Author Topic:   The Giant Pool Of Money. Implications
crashfrog
Member (Idle past 1467 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 16 of 423 (585308)
10-07-2010 11:51 AM
Reply to: Message 15 by Buzsaw
10-07-2010 9:03 AM


Re: The American Mindset
All you need do is know your history. Any monetary system not backed by real value like gold or silver, etc eventually inflates away the wealth of the sheeple.
Inflation isn't limited to currency systems not on the gold standard. After all, people continue to mine gold, which deflates the value of your gold-based wealth.
Mining gold and printing money aren't fundamentally different and they're both inflationary if the increase in money supply - under any system - increases demand for goods ahead of supply.
The notion that "more money = inflation" is simplistic and ignores several steps. After all, when you spend a dollar at the grocery store, nobody at the store is adding up all the dollars in the country to determine what percentage of them your single dollar represents; no, they're just giving you a dollar's-worth of goods. Increasing the money supply only causes inflation when it increases demand for goods ahead of supply.
Currently, the inflation rate is next to zero despite significant deficit spending by the government. Why is that? Because supply so currently outstrips demand. In fact the American economy is missing an estimated 1.5 trillion in demand for goods and services. Until handing out dollar bills actually increases competition for the finite number of goods and services available, inflation is impossible and it's stupid to worry about it.

This message is a reply to:
 Message 15 by Buzsaw, posted 10-07-2010 9:03 AM Buzsaw has replied

Replies to this message:
 Message 18 by Buzsaw, posted 10-07-2010 7:57 PM crashfrog has replied
 Message 155 by Phat, posted 12-04-2011 1:45 PM crashfrog has replied

  
1.61803
Member (Idle past 1504 days)
Posts: 2928
From: Lone Star State USA
Joined: 02-19-2004


Message 17 of 423 (585362)
10-07-2010 5:44 PM
Reply to: Message 1 by Phat
10-05-2010 9:48 AM


Sleep

This message is a reply to:
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Buzsaw
Inactive Member


(1)
Message 18 of 423 (585385)
10-07-2010 7:57 PM
Reply to: Message 16 by crashfrog
10-07-2010 11:51 AM


Re: The American Mindset
crashfrog writes:
Mining gold and printing money aren't fundamentally different and they're both inflationary if the increase in money supply - under any system - increases demand for goods ahead of supply.
Where did you get that notion, Crashfrog? They are as different as the quantiy of paper pulp and the quantity of gold. They are as different as the value of paper pulp and of gold. Are you aware of how expensive it is to find and mine precious gold in comparison to wood pulp?
And now no need for even paper. All it takes is a few pecks on a keyboard or an electronically energized tabulation.
The amount of gold or silver per capita diminishes as population increases. Did you look at the charts in the link? The charts of gold and of the $$ go in opposite directions in times of inflation; the $$ down and gold up.
In fact all commodities go up when the value of the $$ goes down. That's why when I was young gasoline ranged from 19 cents a gallon to 35 cents a gallon. A new Buick was $2500 and the silver dollars circulating in my dad's cash register would buy 10 loaves of bread.
The gubm't taxes by inflating the $$. A good amount of my Social Security contributions were when a buck would by four gallons of gasoline. Now the gubm't pays me back in $3 gasoline money. If I saved up a silver coin when it was worth face value and sold it today for fifteen times that amount, the gubm't would tax me for a 90% profit when in fact I made no profit because the buck has inflated the paper money about 15 fold to the amount of my saved up coin. If I bought a house for $5000 in 1960, becoming worth $50000 today and I sold it, the gubm't claims I've made $45000 when in fact I've made nothing. Get it how the gubm't taxes by inflation, Crashfrog? But that's not all. That's the hidden tax on top of all of the other gubm't taxes we pay.
Bottom line: The price of commodities reflects the true amount the $$ has been inflated by the feds.

BUZSAW B 4 U 2 C Y BUZ SAW.
The immeasurable present eternally extends the infinite past and infinitely consumes the eternal future.

This message is a reply to:
 Message 16 by crashfrog, posted 10-07-2010 11:51 AM crashfrog has replied

Replies to this message:
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 Message 21 by crashfrog, posted 10-07-2010 8:42 PM Buzsaw has not replied
 Message 22 by Omnivorous, posted 10-07-2010 9:32 PM Buzsaw has not replied

  
Modulous
Member
Posts: 7801
From: Manchester, UK
Joined: 05-01-2005


Message 19 of 423 (585387)
10-07-2010 8:27 PM
Reply to: Message 18 by Buzsaw
10-07-2010 7:57 PM


Re: The American Mindset
If I bought a house for $5000 in 1960, becoming worth $50000 today and I sold it, the gubm't claims I've made $45000 when in fact I've made nothing.
Really? That's a strange system, doesn't the government tax you based on the value of the house when sold irrespective of value when bought?
If the tax was a flat 10% for those 50 years, then you might say
You could have sold the house in 1960 and paid $500 tax with a profit of -$500
or
sold the house today and pay $5000 tax for a profit of $45,000
If the value of your house has not changed since 1960 then the $500 was worth approx as much in 1960 as $5000 is today so how are the government taxing you by inflation? They gain money through higher dollar amounts, but they lose the value of those dollars just as you do so they surely make no profit here if you don't.

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jar
Member (Idle past 394 days)
Posts: 34026
From: Texas!!
Joined: 04-20-2004


Message 20 of 423 (585388)
10-07-2010 8:34 PM
Reply to: Message 19 by Modulous
10-07-2010 8:27 PM


Re: The American Mindset
You don't understand. Inflation in the price of gold is real money while inflation in the price of a house is not.
Edited by jar, : appalin spallin and two fast fingers

Anyone so limited that they can only spell a word one way is severely handicapped!

This message is a reply to:
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Replies to this message:
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crashfrog
Member (Idle past 1467 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 21 of 423 (585390)
10-07-2010 8:42 PM
Reply to: Message 18 by Buzsaw
10-07-2010 7:57 PM


Re: The American Mindset
Where did you get that notion, Crashfrog?
It's obviously true. Countries on the gold standard don't stop mining gold; their currencies inflate just the same as the others, only their economic growth winds up stifled because the government can't rectify demand inefficiencies by short-term monetary easing.
Are you aware of how expensive it is to find and mine precious gold in comparison to wood pulp?
Sure, but so what? Both are completely arbitrary mediums of exchange.
Money is a game, Buz, gold standard or not. It's a game we all play where we abstract the value of goods on a single system. Instead of having to remember the value of (say) one iPod in terms of chickens, and in terms of goats, and in terms of hamburgers, and in terms of number of times you could get your lawn mowed, and so on, we simply remember it's value in terms of the number of "dollars" you could exchange for it. The money has no inherent value except that it can be exchanged for other things. And you can still buy gold with your money! We just let the market decide how much, now, instead of allowing the government to simply dictate how much.
All it takes is a few pecks on a keyboard or an electronically energized tabulation.
That's hardly a new thing, Buz. People were buying and selling with marks on paper in the time of Christ. What do you think the moneychangers in the temple were doing?
The amount of gold or silver per capita diminishes as population increases.
No, it increases, because more backs are available to dig it up. It increases until we reach "peak gold", when we've extracted all the Earth's gold wealth that it's possible to cost-effectively get. Then you're really screwed because an increasing number of people are competing for the same limited amount of dollars, and then the value of investment plummets because of deflation. If there's one thing worse than inflation it's deflation. All of a sudden businesses are crippled because they can't get their hands on enough dollars to pay their employees, open factories, and make investments, because the best investment becomes "hoard your dollars and never spend them." Aka the liquidity trap.
In fact all commodities go up when the value of the $$ goes down.
Not all commodities. Debts shrink as the value of the dollar goes down, because the value of your debt doesn't increase with inflation, but your paycheck does. And, again, you're skipping the important step of where increasing the money supply increases the demand for goods (because more people have the money to buy them.) Inflation only occurs when the prices of things increase because of that additional demand. But if demand has already fallen short - over a trillion dollars short, in our case - then additional demand doesn't raise the price of anything - there's already plenty of goods to go around, languishing in warehouses.
As long as you're making up a shortfall in demand, you can print as much money as you like and throw it out from helicopters, and it won't be inflationary. It's very simple economics, Buz, it's the law of supply and demand.
The price of commodities reflects the true amount the $$ has been inflated by the feds.
The price of commodities and services reflect their demand. Their prices don't increase - inflation doesn't happen - until the increased demand outstrips the supply. Your greengrocer isn't counting up all the nation's dollars before he prices his produce in the morning; he's counting up yesterday's demand for produce.

This message is a reply to:
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Omnivorous
Member
Posts: 3978
From: Adirondackia
Joined: 07-21-2005
Member Rating: 7.3


Message 22 of 423 (585391)
10-07-2010 9:32 PM
Reply to: Message 18 by Buzsaw
10-07-2010 7:57 PM


Re: The American Mindset
Buz writes:
If I bought a house for $5000 in 1960, becoming worth $50000 today and I sold it, the gubm't claims I've made $45000 when in fact I've made nothing.
Hi, Buz--wrong again!
Most people who bought a house in 1960 or thereabouts and sell it now are selling their home. Such primary residence sales are essentially exempt from federal capital gains and income taxes.
quote:
Capital gains home-sale tax break a boon for owners
By Kay Bell Bankrate.com
What's the best tax break available to Jane and John Q. Public? If they're homeowners, it's selling their house.
Homeowners already know the many tax breaks that Uncle Sam offers, most notably mortgage interest and property tax deductions. Well, he also has good tax news for home sellers: Most of them won't owe the Internal Revenue Service a single dime.
When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes.
Of course, if you are selling rental or other investment property, your gains would be taxable in some form, though there are lots of loopholes.
The gubmint is actually pretty sweet to folks who make money moving those kinds of assets around.

Dost thou prate, rogue?
-Cassio
Real things always push back.
-William James

This message is a reply to:
 Message 18 by Buzsaw, posted 10-07-2010 7:57 PM Buzsaw has not replied

  
Buzsaw
Inactive Member


Message 23 of 423 (585409)
10-08-2010 8:34 AM
Reply to: Message 20 by jar
10-07-2010 8:34 PM


Re: The American Mindset
jar writes:
You don't understand. Inflation in the price of gold is real money while inflation in the price of a house is not.
Make that fiat/arbitrary unbacked money, having a worth dependent upon the arbitrary confidence of the sheeple and amount in circulation.
The only intention of the original paper $$ was that all of it printed would represent and equal amount of precious metal held in reserve. It could be taken to any bank and exchanged for an equal amount of silver coinage on demand. It was called a silver certificate on which were the words, "One dollar in silver payable to the bearer on demand, " depending on the denomination.
Step by step the $$ has descended into nothing but a numerical entry. The only thing supporting it's value today is the confidence of the sheeple in the gubmnt's stability and the amount of it issued/authorized.

BUZSAW B 4 U 2 C Y BUZ SAW.
The immeasurable present eternally extends the infinite past and infinitely consumes the eternal future.

This message is a reply to:
 Message 20 by jar, posted 10-07-2010 8:34 PM jar has replied

Replies to this message:
 Message 24 by jar, posted 10-08-2010 9:36 AM Buzsaw has not replied
 Message 30 by crashfrog, posted 10-08-2010 12:16 PM Buzsaw has replied

  
jar
Member (Idle past 394 days)
Posts: 34026
From: Texas!!
Joined: 04-20-2004


Message 24 of 423 (585424)
10-08-2010 9:36 AM
Reply to: Message 23 by Buzsaw
10-08-2010 8:34 AM


Re: The American Mindset
I'm sorry Buz but it that is all just nonsense.
Do you even have a clue what I said?
Let me try again.
How is inflation of a house price different than inflation in the price of an ounce of gold?

Anyone so limited that they can only spell a word one way is severely handicapped!

This message is a reply to:
 Message 23 by Buzsaw, posted 10-08-2010 8:34 AM Buzsaw has not replied

  
Jon
Inactive Member


Message 25 of 423 (585436)
10-08-2010 10:23 AM
Reply to: Message 6 by Phat
10-06-2010 12:58 PM


Re: Magic behind the Curtain
How can my Moms nest egg be invested to give her a livable 6-8% return so that she doesn't have to rely on her deadbeat son to support her?
If you think short termlike an investment that will pay off 6% before an 87-year-old woman dies short termyour investment will be crap and will make things worse for the long term. Besides, you and I both know that your mom is doing just fine financially; you only wanna load her up to the gills so she can leave you a shipping-crate full of cash when she dies.
Name just a few of these abundant investments that have not been covered previously.
Renewable energy; garbage reduction (product packaging, etc.); resource management; education; government reform...
How will they provide a return?
If 'provide a return' means double within 4 months, they won'tonly crappy get-rich-quick-scheme investments do that. But if you mean create benefits that will continue paying off in better standards of living for generations to come as well as an increasingly more biodiverse and habitable planet with less war and hatred and more cooperation, then I think the returns are self-evident.
There is no shortage of money or resources for doing the right thing; there is only a shortage of will power.
Jon

"Can we say the chair on the cat, for example? Or the basket in the person? No, we can't..." - Harriet J. Ottenheimer
"Dim bulbs save on energy..." - jar

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Phat
Member
Posts: 18262
From: Denver,Colorado USA
Joined: 12-30-2003
Member Rating: 1.1


Message 26 of 423 (585437)
10-08-2010 10:32 AM
Reply to: Message 13 by Percy
10-07-2010 7:55 AM


This American Life/N.P.R. Planet Money
Percy writes:
By the way, in the September, 2009, episode they discovered that the IMF had underestimated the original size of the giant pool of money at the start of the crisis, that it had actually been around $80 trillion, and that as of that episode it had grown to around $83 trillion. Got that? Despite world wide economic collapse, the giant pool of money had grown by around $3 trillion. The big difference is that this money is now seeking safe havens instead of high returns. Investors are now very tight with their money, and until they loosen up world economic growth will continue to be anemic.
And this makes sense to me. Was the 3 trillion dollars "inflated" dollars? The reason that I am a bit confused is that sometimes, people will talk of how todays dollar is worth 4 cents in the commodity purchasing power of a 1940 dollar.
Hence...is today's 83 trillion dollar pool of money simply an inflated version of the pool of money of yesteryear?
Jon writes:
If 'provide a return' means double within 4 months, they won'tonly crappy get-rich-quick-scheme investments do that. But if you mean create benefits that will continue paying off in better standards of living for generations to come as well as an increasingly more biodiverse and habitable planet with less war and hatred and more cooperation, then I think the returns are self-evident.
Money belongs to people and supports its owners first and the planet next. Of course we seek to invest in the planet, but the planet needs to at least pay us the rate of inflation for our money to be properly invested.

This message is a reply to:
 Message 13 by Percy, posted 10-07-2010 7:55 AM Percy has seen this message but not replied

Replies to this message:
 Message 27 by Jon, posted 10-08-2010 10:36 AM Phat has replied

  
Jon
Inactive Member


Message 27 of 423 (585439)
10-08-2010 10:36 AM
Reply to: Message 26 by Phat
10-08-2010 10:32 AM


Re: This American Life/N.P.R. Planet Money
Jon writes:
If 'provide a return' means double within 4 months, they won'tonly crappy get-rich-quick-scheme investments do that. But if you mean create benefits that will continue paying off in better standards of living for generations to come as well as an increasingly more biodiverse and habitable planet with less war and hatred and more cooperation, then I think the returns are self-evident.
Money belongs to people and supports its owners first and the planet next. Of course we seek to invest in the planet, but the planet needs to at least pay us the rate of inflation for our money to be properly invested.
Huh?
Edited by Jon, : No reason given.

"Can we say the chair on the cat, for example? Or the basket in the person? No, we can't..." - Harriet J. Ottenheimer
"Dim bulbs save on energy..." - jar

This message is a reply to:
 Message 26 by Phat, posted 10-08-2010 10:32 AM Phat has replied

Replies to this message:
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Phat
Member
Posts: 18262
From: Denver,Colorado USA
Joined: 12-30-2003
Member Rating: 1.1


Message 28 of 423 (585441)
10-08-2010 10:40 AM
Reply to: Message 27 by Jon
10-08-2010 10:36 AM


Re: This American Life/N.P.R. Planet Money
The pool of money is seeking investments with tangible returns. As an example, lets use a pension fund. For the money manager, the sole goal is to keep from losing it, and hopefully slightly increase it. It would be careless for a money manager to invest a pension fund in a new technology that may end up with high startup costs and a negative rate of return. While it may be true that said technology may indeed help the planet and humanity in general with lovey dovey altruistic returns twenty years from now, it wont help the pensioner who only needs money from the pension fund, not a bunch of brownie buttons for being socially responsible.
Edited by Phat, : spalling

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Replies to this message:
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jar
Member (Idle past 394 days)
Posts: 34026
From: Texas!!
Joined: 04-20-2004


Message 29 of 423 (585443)
10-08-2010 10:48 AM
Reply to: Message 28 by Phat
10-08-2010 10:40 AM


safe investments
Stop and think Phat.
The US decided about thirty years ago that safe investments were NOT what the US needed. The voters supported getting rid of safe investments.
Safe Investments were found in three basic areas, Regulated Utilities and Transportation where a limited monopoly was granted but the business was heavily regulated, and in Government Bonds.
The public decided that we should deregulate the first two.
We made the decision that those pension managers should adopt risk as opposed to safety.
Sorry Charlie but you tossed the secure pension away thirty years ago.

Anyone so limited that they can only spell a word one way is severely handicapped!

This message is a reply to:
 Message 28 by Phat, posted 10-08-2010 10:40 AM Phat has seen this message but not replied

  
crashfrog
Member (Idle past 1467 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 30 of 423 (585463)
10-08-2010 12:16 PM
Reply to: Message 23 by Buzsaw
10-08-2010 8:34 AM


Re: The American Mindset
The only intention of the original paper $$ was that all of it printed would represent and equal amount of precious metal held in reserve.
Right, but the value of precious metal is by fiat, too.
Whether you're trading gold or trading paper dollars doesn't matter, Buz. Money is just an abstract representation of how valuable we consider goods and services, and how much demand for them there is. There's literally no difference between trading paper dollars that represent fiat values of precious metal, and trading paper dollars that are themselves a fiat value.
It could be taken to any bank and exchanged for an equal amount of silver coinage on demand.
So what's so great about silver, Buz?
Step by step the $$ has descended into nothing but a numerical entry.
It was always a numerical entry, Buz, that's the point of money. It doesn't matter whether your money is fiat "silver certificates", or fiat paper dollars, or fiat giant stone wheels on the island of Yapp.

This message is a reply to:
 Message 23 by Buzsaw, posted 10-08-2010 8:34 AM Buzsaw has replied

Replies to this message:
 Message 31 by Phat, posted 10-09-2010 11:13 AM crashfrog has replied
 Message 145 by Buzsaw, posted 05-20-2011 10:04 AM crashfrog has replied

  
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