[quote]vroom wrote:
Woohoo, some conversation with “meat” in it!
orion wrote:
First of all, the system you are describing is less than 100 years old.
So far there were dozens of hyperinflations and every fiat currency we know of ended in hyperinflation.
Well, perhaps you should define your terms a bit. Has mismanagement led to periods of high inflation from time to time? Yes. Have some countries basically devalued their currency to laughability from time to time? Yes.
So, I won’t argue that it can’t be screwed up, just like gold reserves could be “fudged” or coins could be created with cheaper metals, it’s all been tried. I don’t think it matters what the system is, there are going to be those that try to cheat it.
Our current money sytem IS a giant conspiracy (yeah the things that could never, ever exist in a world where everybody knows how money is created) that requires you to pay back the money your government loaned to benefit banks and giant companies first (more accurately their owners) while your are hit by inflation while those mentioned before have already profited.
So, you are fucked twice.
The current system puts a market, driven by profitability, in front of the monetary system. It also creates a system that allows the creation of new liquidity and capital to help enable smoothness of transactions. It is indeed very good for the business and investment world in terms of making money available for expansion – which is something the entire world has been chasing and valuing quite highly.
As for being fucked twice, I don’t agree at this point. You certainly don’t have to borrow money if you don’t want to. Also, since employee labor also exists in a market, your wages generally increase along with inflation. If not, get a better job or rise up through the corporate hierarchy. There are a lot of options available to all players in these markets.
You are required to pay back, with interest, the new money your government helped create to fuck you with infation.
Perhaps you could clarify this statement. Are you suggesting that the borrower is the government? Again, I realize the government borrows money to finance it’s operations, but I am already on record stating I don’t like large government spending and I certainly don’t like government deficit spending.
The monetary system itself is not at fault for a government running itself into debt. Let’s put the fault where it really lies. The government spends too damned much. The populace does nothing to hold it accountable for doing so. These are problems. The abuse of the monetary system, in this system or another, is a choice that is being made.
Yes, we tend to “scapegoat” the monetary system.
The rest is trickier, but at least you have an idea what you are talking about.
The van Mises institute has a few excellent films on fractional reserve which is called fraudulent in every other business and the idea that economic cycles could be controlled via money supply is so Keynesian it is practically Marxist.
Even so, western democracies tend to increase interest rates, making it more expensive for capital investment, to help restrict inflationary forces… while at the same time lowering interest rates when inflationary forces are not out of hand in order to foster growth.
Too bad it’s such a shitty idea when everybody is doing it.
On the contrary the mis- allocation of scarce resources because of artificially cheap credit is the reason ´for the bigger bust that is to follow.
Think about it, why would the government know what the right money supply is?
They cannot even plan agriculture without mass starvations.
And yet this is where the government can actually responsibly employ deficit spending to help keep the economy from collapsing during a natural downturn. Again, I think the big problem is incredibly unwise deficit spending that is in fact slowly tying the hands of the government and making it unable to operate effectively.
With a big and irresponsibly created debt load the government will have a harder time reacting during an economic downturn and it will place a huge burden on the populace in terms of taxes collected in order to service debt instead of provide services.
This is a huge problem that Ross Perot and his voodoo stick (ah, good times) were trying to address. People actually got serious about curbing spending, for a while, and really, I don’t see a lot of problems with the current monetary systems except through massive abuse.
However, I’m more than willing to be enlightened as to what the problems are, though it will probably be difficult to achieve that… ;)[/quote]
Ok, that´s a lot.
Let`s break it down:
Gold money could by tampered with, by shaving, clipping whatever.
Right now your money is shaved and clipped each year, it is called “inflation”.
If your money is a receipt for gold stored, not giving you the exact amount back is a fraud and a crime.
So yes this can happen, like at every butchers that has his thump on the scales.
Now it is systematic, then it would be a crime.
The question is, do you want your government to go after the criminals or should your government BE the criminal?
To: Our system brings liquidity into the market.
What does this even mean? You can only invest what you have saved before OR you can steal via inflation and invest that.
However, inflation therefore discourages savings, encourages stealing via inflation and corrupts whole segments of society with easy money.
Bottom line is, you can only spend what you, or other people you have robbed have saved before. Creating new money does not magically increase the amount of capital stock and that is the only thing that makes teh GNP grow.
As to fucked twice:
Would you only borrow money and invest it.
Then you would only be fucked 1 1/2! Right now government makes debts, inflates share prices and other bubbles and YOU, who benefits very little from those bubbles will be taxed to pay back your governments debts with interest.
If you are against a big spending government the gold standard should excite you, because without the ability to create money out of thin air or to devalue their debts each year via inflation their would only one way left for the government:
Raise taxes.
They would actually have to say: “Want to have this or that? Fine it will cost you xxxx$”
Wanna bet why they do not do that?
Economic cycles:
Again, this whole managing economic cycles is a myth. Small economic corrections are perfectly normal and big ones are created by the injection of surplus money.
Think about it, if you make credit cheaper people invest in things and buy stuff they would not have bought otherwise.
That is the whole idea behind it.
This cheap supply of money cannot hold on forever or you have an hyperinflation OR you must cut back the very production capability you built before in this artificial boom.
So, these government interventions make these boom, bust cycles worse, not better.
Ross Perot and “voodoo economics”:
I think that means the Laffer curve, that showed if you lower taxes you can actually earn more in taxes as a governmet.
That actually works.
