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  1. #81
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    I tend to think that in the big picture of the world economy, that money is economic energy, like a giant hurricane raging around us all the time. We each have our little wind generator sticking out in it, trying to siphon a little (or a lot) of energy in for our own wants. When we pay out, our little bit of energy goes back into the grid powering a turbine that blows more wind into the hurricane.

    This is how I picture the fact that the debt of nations will accumulate in perpetuity, and that there will never be a settlement required, because it is more important to keep the wind blowing than it is to suck ALL the energy out of the hurricane because then none of our little generators will work any more.

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  3. #82
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    Quote Originally Posted by HuFlungDung View Post
    I tend to think that in the big picture of the world economy, that money is economic energy, like a giant hurricane raging around us all the time. We each have our little wind generator sticking out in it, trying to siphon a little (or a lot) of energy in for our own wants. When we pay out, our little bit of energy goes back into the grid powering a turbine that blows more wind into the hurricane.

    This is how I picture the fact that the debt of nations will accumulate in perpetuity, and that there will never be a settlement required, because it is more important to keep the wind blowing than it is to suck ALL the energy out of the hurricane because then none of our little generators will work any more.
    Sounds like a lot of hot air to me.


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    Quote Originally Posted by jamscal View Post
    Sounds like a lot of hot air to me.

    Yep, it is a lot of hot air. Think of how the stock traders 'react' to news events. Money is supposedly created and destroyed in an instant. But really, nothing is happening except the strength of the hurricane varies a little. There is no panic, that is totally contrived, but because we all believe it is somehow affecting a 'giant pile of money' somewhere, fear sets in.

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  6. #84
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    Quote Originally Posted by HuFlungDung View Post
    I tend to think that in the big picture of the world economy, that money is economic energy, like a giant hurricane raging around us all the time. We each have our little wind generator sticking out in it, trying to siphon a little (or a lot) of energy in for our own wants. When we pay out, our little bit of energy goes back into the grid powering a turbine that blows more wind into the hurricane.

    This is how I picture the fact that the debt of nations will accumulate in perpetuity, and that there will never be a settlement required, because it is more important to keep the wind blowing than it is to suck ALL the energy out of the hurricane because then none of our little generators will work any more.
    Smart guy.

    Some folks go insane while watching the wheels turn though...

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    Fiat Money is a fluctuating medium of exchange. It can have it's value stolen because of it's nature.
    Printed money follows economic laws of supply and demand. So instead of inflation the correct term would be devaluation. Unfortunately, in the US our money is based on the belief that it has an actual value. Gold, Silver, Copper and other commodities actually have value, but in reality is what we are willing to accept or pay for goods and services that defines our monetary system
    To make something money all the governing authority has to do is demand a specific thing for payment of taxes, an example of that is the Talley stick Under King Henry the First.

    A book that I recommend is ....
    A Caveat Against Injustice
    or, An Inquiry into the Evils of a Fluctuating Medium of Exchange,
    by Roger Sherman

    Food for thought...in a debt based system .....
    The promise to pay is money, any debt note is money and a coupon can be treated as money depending on the form of acceptance.


  9. #86
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    Seeing as how the "value" of gold has fluctuated between $35 and $1,000 an ounce (as measured by dollars, whatever you may think those are), in my lifetime, how is it superior to any other kind of money? How does it hold its value when someone stumbles across a new vein of ore and mines it and floods the market, and the benefits accrue solely to the person who owns the mine?

    And Roger Sherman's book, written in 1752 or so, concerned itself with the kind of obsolete and illegal banking that existed before we had a national currency--for that matter, before we were a nation and had national laws at all.

    The problem with all of these threads that chat about money is the same problem that afflicts the threads that chat about perpetual motion and free energy. They start with some elementary lessons in a high-school textbook, and launch into orbit without any knowledge or understanding of the entire story. Sure your high school physics textbook taught some simple lessons about kinetic energy, and potential energy, and work, by presenting equations that considered mass times velocity and force times distance. They also disregarded friction, as a variable that requires a separate course of study.

    So they taught us that a cannonball and a feather, both tossed off the roof at the same time, will hit the ground at the same time, provided we assume that it happens in a vacuum. They will hit with different forces, but they will fall at the same rate. They were right, but we don't live in a vacuum, so without understanding friction the information really doesn't help us design engines, or airplanes. And kinetic energy is indeed 1/2 mass times velocity squared, but the ball that hit you in the head will hurt you a little less than it might have according to the equation, because friction slowed it down. And try as you might, you will not invent a perpetual motion machine, no matter how many hours you spend in your home shop in the basement.

    And so it is with all the elementary texts on how banks create currency in theory. They disregard the inconveniences of accounting, of the law of fraud, of regulation, of how people actually work, and save, and pay for things. These "inconveniences" are the economic equivalent of friction. Sure you can dredge up historical anecdotes about wilderness redemption centers, and unregulated state banks before the creation of a national currency--but they don't represent much of anything except history. Now we have "friction" in the form of accounting rules, laws against fraud, banking regulations.

    If you think that when you walk into a bank and sign a promissory note for X dollars the bank will just create the money and hand you a checkbook with that amount as the balance, then tell your friends to watch that bank and see how long it stays open.

    There are plenty of problems with the economy, and Keynesians, Monetarists and Real Business Cycle adherents will spew out thousands of pages of learned articles in the pages of the various Federal Reserve Bank Quarterly Journals, which are read with fond indulgence by people who will write learned rebuttals. But none of them will be so foolish as to think these notions can be put into practice. While undergraduates will continue to struggle to understand IS-LM curves, only to discover that if they go to graduate school in economics, professors will tell them that they wasted their time learning such obsolete rubbish.

    If you want to worry about money, worry about whether deposit insurance is a good thing or a bad thing. If you think its a good thing, then you'll be glad to take the payoff check if your bank fails, even if it is in "fiat" currency. If you think deposit insurance is a bad thing, then you better learn how to pick a bank that isn't likely to fail soon. I know how to do that, and will gladly teach you -- my consulting fee is $5,000 per hour, 40 hour minimum, payable in advance in money. Not gold, money

    On edit:

    I re-read the foregoing and it's pretty crabby. Well, I feel pretty crabby, because I just euthanized my dog, who was with me for nearly 14 years, and I miss her. But crabby or not, it's still true, and no number of citations to YouTube videos created by uncredentialed whack jobs will change that.

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    Im sorry to hear about your dog SF.

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    Money? Bit like poker.

    XE.com - EUR/USD Chart

    One is stable the other isn't. Or is it vice versa?

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    Nice post Sea Farmer- spot on.
    As huflung mentioned there is a equivalency to whatever we use as currency- wring your hands as one might over the faults or weaknesses they don't matter one wit to ones prospects for prevailing in our course through life as compared to our fellow man.


    Sorry about your old gal- we lost one last year and our old boy is nearing his end.
    It's quite a loss to endure.

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    "Printed money follows economic laws of supply and demand. So instead of inflation the correct term would be devaluation. Unfortunately, in the US our money is based on the belief that it has an actual value. Gold, Silver, Copper and other commodities actually have value, but in reality is what we are willing to accept or pay for goods and services that defines our monetary system "

    So let me get this straight: paper money follows economic laws of supply and demand. But commodities magically don't?

  15. #91
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    Quote Originally Posted by jim rozen View Post
    "Printed money follows economic laws of supply and demand. So instead of inflation the correct term would be devaluation. Unfortunately, in the US our money is based on the belief that it has an actual value. Gold, Silver, Copper and other commodities actually have value, but in reality is what we are willing to accept or pay for goods and services that defines our monetary system "

    So let me get this straight: paper money follows economic laws of supply and demand. But commodities magically don't?
    I don't know. I don't think we have any standard of reference anymore. I read the headlines: "US dollar goes up, gold is down". WTF, both did not happen, one or the other happened, but we have no yardstick.

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    Some people like to twist words and misconstrue what was said..

    In the 1930's when the government took all the gold. The exchange rate was $20 oz ,after they had most of it the value was changed to $35 oz

    Nixon closed the silver window in the 1960's.

    The creditors of the US were redeeming their federal reserve notes for "lawful money" look at title 12 sec 411 etc...that is why the window was closed.

    Everything in commerce follows the economic laws.

    It was the defined value or exchange rate that gave us our buying power. It was coded in law and later changed.

    Since the Gold and silver window are closed or not accessible to redeem for lawful money we have the petrodollar instead.

    The current way we show "defined value" or the exchange rate is the petrodollar for our currency.

    If anyone doubts the danger of printing money look at Zimbabwe's fiscal problems...

    The only thing that, I really care about is while dealing with persons in commerce is that they accept whatever form of legal tender our government makes legal for the purchase of goods and services.

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    Quote Originally Posted by JS View Post
    Some people like to twist words and misconstrue what was said..
    Yes. But, keep in mind thems that are heavily invested in their beliefs. Stone tablets signed by the guy himself wouldnt be enough for some o those folk to consider the depths of their own ignorance, x10 it seems in this subject.

  18. #94
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    "Some people like to twist words and misconstrue what was said.."

    No. I asked a perfectly simple straight forward question. Which you declined to answer.

    From this I can only surmise that gold and silver, like dollars, are subject to the laws of supply
    and demand, and in this way are the SAME THING. Same as oil, steel, cans of beans, boxes of
    .22 ammo.

    Nothing magic about magic metals.

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    Actually, Nixon ended the convertibility of dollars and gold in 1971. Nixon Ends Convertibility of US Dollars to Gold and Announces Wage/Price Controls - A detailed essay on an important event in the history of the Federal Reserve.

    Convertibility of Silver Certificates has a mushier history, but it ended under the Johnson Administration in the 1960s. But only Silver Certificates could be exchanged for silver dollars or bullion, not Federal Reserve notes.

  20. #96
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    I did answer your question.

    As for Nixon an error in dates is reasonable otherwise I would be digging though all the crap I've accumulated over the years for a quick post.

    Look on the bright side you were enjoying the conversation so much you did some research...

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    No research--memory still works sometimes.

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    this thread reminds me of fish arguing about wether water exists or not.

    I dont really care if Fiat, or Chrysler, made my currency.
    I function, as a business and an individual, swimming in the sea of US dollars, and the vast majority of them are virtual these days.
    That sea is, for all practical purposes, invisible to me in real terms.
    I get direct deposits from my customers, and have autopay from that account that pays my bills.
    Several of my suppliers wouldnt take cash, even if I spent the time, hassle, and expense of trying to pay them in cash.
    I often go a week or more without making a "cash" transaction.

    I dont understand how the evil gubberment took my gold away- I got a bit stashed, and its still there, last time I checked.
    Its value varies so much that its pretty impractical as a method of exchange, but its amusing to keep it for the zombie apocalypse, when, I am told, the zombies will decline to eat your brain if you give them a pie shaped shaving off a krugerand, or something like that.

    What I mostly think about money is that I like it when I get paid.

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    Bump.

    Given the current situation might be worth exploring some but first the important stuff.

    Rip Sea Farmer

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    Quote Originally Posted by Gordon B. Clarke View Post
    What? Doesn't everyone own a money printing press?

    is this a thread on who can ask the daftest question?
    It is NOW.

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