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The velocity of the part of our money supply that exists as T-bills is very low. Turn them into cash and get the velocity up and prices will skyrocket. It doesn't take new money creation with new debt.
All it takes is trying to get out of dollars and into something else. And yes I am very stubborn.
Actually I would say that is creating money, debt free money. I am good with it. As I said who is the dog that will not go past the invisible fence? Lots of ways to create money.
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That debt saturation is the problem. The monetary base isn't moving like it should. T-bills are potential monetary base. Sell the T-bills to the fed, a lot of them and then what happens as you do a 5X on the monetary base? What happens to the price of oil? Gold? Silver? Steal? Wheat? Corn? Do they do a 5X? A 5X on the price of everything is called what?
Indeed its like a they gave the banks a fatter hose, but the spigot is still off. In this system we create money from debt. No one can go into debt because asset prices will not support it. If they did, we would be right back where we are driving up the cost of production until we reach saturation. People don't realize our beloved little dollar is only about 40 years old.
What a ya gonna do? Only one out of a hundred people seem to understand the issue, and complexity is out of the jurisdiction of democracy. Once they stuck in this Federal reserve system hairball, it was only a matter of time.
No one can go into debt because asset prices will not support it.
Almost Wages don't support asset prices and so asset prices are falling. That is why you can't get a loan. Higher wages and asset prices would be going up not down.
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Originally Posted by gwynedd1
If they did, we would be right back where we are driving up the cost of production until we reach saturation.
People don't realize our beloved little dollar is only about 40 years old.
What a ya gonna do? Only one out of a hundred people seem to understand the issue, and complexity is out of the jurisdiction of democracy. Once they stuck in this Federal reserve system hairball, it was only a matter of time.
At 1 in 100 you are being generous. More like 1 in 10,000 really understand. If we had 1 in 100 that understood I wouldn't be the only one talking about a $30hr minimum wage.
You clearly don't have an understanding of our economic system and/or accounting. The banks are not mining money. Nothing about a loan is "mining". A loan is a balanced transaction, along with interest.
And how does the bank rape you as a tax payer?
And no one is forcing you to use anything as tender. You can use peanuts, and no one will stop you.
When you borrow money (a balanced transaction), how are you getting raped? And who is raping you? When you lend money, are you raping someone?
You are most likely a banker or work for someone like Goldman.....
Loans are no longer a balanced transaction.... we have reached a "saturation" in debt capacity and with ZIRP policy our Government is stealing from us via inflation.... then we print more money to supposedly stimulate more and we get what? More inflation......
At 1 in 100 you are being generous. More like 1 in 10,000 really understand. If we had 1 in 100 that understood I wouldn't be the only one talking about a $30hr minimum wage.
That's not a perfect solution. If I had to pay my babycare staff $30/hr, I'd go out of business. In this economy, I've lost 40% of my clients. Yet, by law, I cannot reduce my staff. It's not a perfect world for business owners either.
You are most likely a banker or work for someone like Goldman.....
Loans are no longer a balanced transaction.... we have reached a "saturation" in debt capacity and with ZIRP policy our Government is stealing from us via inflation.... then we print more money to supposedly stimulate more and we get what? More inflation......
I work in daycare and software. I am not a banker. Nice guess though.
You are most likely a banker or work for someone like Goldman.....
Loans are no longer a balanced transaction.... we have reached a "saturation" in debt capacity and with ZIRP policy our Government is stealing from us via inflation.... then we print more money to supposedly stimulate more and we get what? More inflation......
Inflation would be great. We are getting stagflation. World finance is now in a currency war creating banks notes while the citizens in the respective countries must redeem them. Its far worse than inflation. Its a tax on the goods and services economy.
That's not a perfect solution. If I had to pay my babycare staff $30/hr, I'd go out of business. In this economy, I've lost 40% of my clients. Yet, by law, I cannot reduce my staff. It's not a perfect world for business owners either.
No it isn't a perfect solution but it is the only one I've run across that will stand a chance of working. The people that are using your service would be making more, much more than the $30hr after the minimum wage went up. Part of my plan is to print a bunch of money and give it to everyone. Business owners like you would get the money to cover the difference in wages for a bit. Everyone would get a wad of cash to spend. That should push to full employment, even with the higher minimum wage.
The Fed may have an infinite balance sheet which implies there is no limit to the money they can create.
No, the value of any currency is in part related to its Supply & Demand. There is a limit to what the um, "Fed" can "print."
The "Fed" doesn't actually print money, the US Treasury Department does that.
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Originally Posted by gwynedd1
That is what banks do. They create money out of thin air in the fractional reserve system.
They do not create money, they create credit.
And it's a good thing they do, otherwise you'd be living in a cramped apartment sharing it with 2-3 other households.
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Originally Posted by gwynedd1
So essentially banks loan money from absolutely nothing, to something that can never reach 0 since its a means of production or natural monopoly power.
That's necessary so you can have some semblance of a life-style and an increasing standard of living, but then maybe I'm falsely assuming you don't want to live in a cardboard box and eat mud.
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Originally Posted by gwynedd1
...however there should be no government debt when there is full employment.
You can never have "full employment." You would have learned that in ECON 101 if you had ever taken the course.
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Originally Posted by gwynedd1
The real rape however is the fractional reserve system, loans for assets instead of productive capital...
You don't have enough productive capital.
As I explained in another thread, Capitalism does not inherently drive demand for Capital (and for the same reason neither does Socialism nor Communism), but Capital does have an inherent need to expand.
Increasing population forces Capital to expand and increase. And that's just to meet basic subsistence needs of a population. It does not speak to an increase in quality of life or standard of living, which requires an exponential amount of Capital to support.
Like I said, I just assumed you don't want to live in a cardboard box and eat mud.
People like you who make absurd comments about banks charging interest are hilarious.
If banks got their labor and all of their Capital, ie their computers, and software and IT infrastructure for free, and employees worked for banks for free and did not demand any benefits at all, then maybe banks just might be able to make interest free loans.
And it's a good thing they do, otherwise you'd be living in a cramped apartment sharing it with 2-3 other households.
That's necessary so you can have some semblance of a life-style and an increasing standard of living, but then maybe I'm falsely assuming you don't want to live in a cardboard box and eat mud.
It is also why Jewish law has years of Jubilee where all debts are forgiven. Because we live on an exponential debt curve. Time to do away with 80% of our debt.
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Originally Posted by Mircea
You don't have enough productive capital.
that is a rflection of our low national savings rate.
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Originally Posted by Mircea
As I explained in another thread, Capitalism does not inherently drive demand for Capital (and for the same reason neither does Socialism nor Communism), but Capital does have an inherent need to expand.
Increasing population forces Capital to expand and increase. And that's just to meet basic subsistence needs of a population. It does not speak to an increase in quality of life or standard of living, which requires an exponential amount of Capital to support.
Like I said, I just assumed you don't want to live in a cardboard box and eat mud.
People like you who make absurd comments about banks charging interest are hilarious.
If banks got their labor and all of their Capital, ie their computers, and software and IT infrastructure for free, and employees worked for banks for free and did not demand any benefits at all, then maybe banks just might be able to make interest free loans.
The interest on loans is a drag on the economy. If you keep the total debt under control less than 150% of GDP then the interest on loans isn't that big of a problem. But I'd rather have the government collect the interest as taxes and pay interest on savings as a tax return. If you had a 75% return or so then the savings rate would go way up.
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Originally Posted by gwynedd1
There is no reason for government's to borrow against their own credit. Its the bond behind the federal reserve note that makes the note valuable. There is no reason to pay interest on a national debt.
How you go about creating this happy state of affairs is to convert all of the outstanding national debt into cash and then have the banks hold that cash in reserve in the fed at no interest rate.
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Originally Posted by gwynedd1
The only debts required are to foreign interests.
Those aren't required if we have a high enough savings rate.
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Originally Posted by gwynedd1
The only good reason to issue debt is during full employment and to encourage some people to defer consumption,
Issuing debt making loans encourages consumption it is spending future income now.
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Originally Posted by gwynedd1
however there should be no government debt when there is full employment.
No, the value of any currency is in part related to its Supply & Demand. There is a limit to what the um, "Fed" can "print."
The "Fed" doesn't actually print money, the US Treasury Department does that.
And who said print? I said create money, or credit actually. You are also creating artificial time constraints. Technically there is no limit to the Fed balance sheet; its simply time constrained. What I said it absolutely correct.
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They do not create money, they create credit.
Ask your grandma if she has credit in here bank account.
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And it's a good thing they do, otherwise you'd be living in a cramped apartment sharing it with 2-3 other households.
Its completely false. People will bid up the price of the land until the marginal return on investment = 0. Take a micro economics class and find out. People will leverage a property that makes $1000 a month, pay $999 in interest and book a $1 profit. How lucky we are the bank created as much credit as we like so that they get all the money.
Banks that do not make productive loans, as in encouraging the creation of widgets, will simply put up a toll booth on a piece of land. Banks creating credit can only be productive when new money can expand the supply of capital. You cannot expand the supply of land, minerals and monopoly in its pure form, or in its element within a given enterprise. All it does is dilute buying power and reroute a free lunch to the financier.
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That's necessary so you can have some semblance of a life-style and an increasing standard of living, but then maybe I'm falsely assuming you don't want to live in a cardboard box and eat mud.
Perhaps I am falsely assuming you are not a Harvard fox that eats chickens.
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You can never have "full employment." You would have learned that in ECON 101 if you had ever taken the course.
Thanks for the systematical corrections, again. It you were so erudite then why not nail it down and bring up the term frictional unemployment. Full employment from the standpoint of economic policy is the level of frictional unemployment. Its semantical argument.
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You don't have enough productive capital.
As I explained in another thread, Capitalism does not inherently drive demand for Capital (and for the same reason neither does Socialism nor Communism), but Capital does have an inherent need to expand.
Capital expands when its defined as products of human labor. The means of production do not expand. That is the problem with today's junkenomics.
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Increasing population forces Capital to expand and increase. And that's just to meet basic subsistence needs of a population. It does not speak to an increase in quality of life or standard of living, which requires an exponential amount of Capital to support.
Like I said, I just assumed you don't want to live in a cardboard box and eat mud.
People like you who make absurd comments about banks charging interest are hilarious.
Ignorance is bliss.
The math is simple, credit expands and land does not. You just can't figure it out, so you laugh and dance.
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If banks got their labor and all of their Capital, ie their computers, and software and IT infrastructure for free, and employees worked for banks for free and did not demand any benefits at all, then maybe banks just might be able to make interest free loans.
Who ever said anything about interest free loans? That would be no one. Read it again. When I buy bonds I expect to be compensated with interest. You are obviously comparing that to bank credit of which there is no similarity whatsoever.
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