39 posts
O.K., stupid question. Bank of America pays back 45 billion in bail out funds. Great. Sounds wonderful.
We printed the money, gave it to them, they pay it back. Then what? Do we then destroy it? ;D You know, to right the wrong? Does the government use that money to pay down the debt? Or, and this is probably a pretty good guess, do they find something to spend the money own?
If the government, who works for us, doesn't take this damn money and return it to the children you and I have, the taxpayer, pay down the debt immediately with it.....this government can kiss my fucking ass. If they use this money or crises to further their desires in anyway, they are fucking worse than the damn Mofia.
If these motherfuckers don't pay down the debt, and I don't guess they will, with this money, I will never have one fucking thing to do with politics and as a non-voter will have a lifetime worth of bitching about their decisions....even if I didn't vote.
All that said, please tell me I'm wrong on my assumptions.
Ok. You're wrong. The Government no longer has any money, only these things called "Federal Reserve Notes" which, of course, are no longer backed by anything any more. ;)
your missing the point. it was never real money to begin with. think of it in simple accounting terms. the fed created the % out of thin air creating thus a liability and an asset. this is a basic law of accounting. when the money is repaid the liability is satisfied and the $ disappears. that is a very limited view of what is happening. in reality the banks took that $ from the fed as an asset and leveraged it 10 to 1 (extremely conservative figure. probably closer to 20:1) thereby turning that 45billion into 450billion in loans made to consumers. than they turn around and slap you with a 30% APR for borrowing it from them. nevermind they are getting the $ at the window for nothing....
fractional reserve banking at work...
Is there any such thing as real money, chase? For you, as long as we are in debt, there is no real money, right? So we haven't had any money for 50+ years. Amazingly, we are still able to buy and build things. It's like we live in an alternate universe. I've been trying to figure out how much we made from BofA... my guess is in the 5 billion range. I can't find the numbers this morning though.
The point I was making is we have a fiat currency
charger — Dec 10, 2009Is there any such thing as real money, chase? For you, as long as we are in debt, there is no real money, right? So we haven't had any money for 50+ years. Amazingly, we are still able to buy and build things. It's like we live in an alternate universe. I've been trying to figure out how much we made from BofA... my guess is in the 5 billion range. I can't find the numbers this morning though.
Quite the opposite. If we were to pay off all our debt we would have no $. The key is finding a balance between debt and GDP that keeps others believing we can pay our liabilities
Ok my point
Fiat money is not real
So what form of money is real ?
Gold - why ?
Think carefully about it.
Money is and has never been real it is just a social construct backed by belief.
it is all based on IOU.
Gold is a relatively useless commodity to own.
It is just the representation as an IOU that has any value.
i.e. - it has no real difference to fiat money.
The Austrian school of economics is nothing more than a cult imo.
It believes in the magic of gold for no other reason than it is in limited and essentially fixed supply - which could actually prove to be wrong in future anyway.
Read up about Conquesting Spain - repatriation of new world gold fucked them right up economically/.
In any case why not pick another economic unit of money - how about a uranium standard or some other unit based on another commodity.
It is meaningless as it is all based fundamentally on the notion of representing IOU for an ape society that has grown larger than tribal subsistence groups of < 100 where everyone has the reckoning tallied in their heads.
The fundamental problem with the gold standard is this.
In order for an economy to change and grow in wealth prices have to depreciate against a fixed amount of money.
i.e. growth is only possible through deflation.
This runs against human nature - it is instinctive and rational for the individual to either not buy as things will be cheaper in future.
But the kicker is this.
Money is just IOU - so however you organise it, it is based on faith alone, backed by productive capacity of the economic activity that backs the money.
Gold has no value without that promise of exchange for stuff you really need and/or want.
Neither has fiat money, or tulip bulbs or pebbles or any other kind of money you care to use.
It is the same thing.
Fiat money has many features that make it superior, it is under economic control and can be traded against various other fiat monies and relative value can be assessed.
The Gold standard of money can be "cornered" by a ruthless dominant empire - at least in theory.
ok - this is Reductio ad absurdum argument
Say one Empire managed to get all the gold
What are all other countries and communities supposed to do exactly
give up and serve the Empire.
Fuck that - you create another form of IOU management - i.e. new money
It is economically illiterate to think that money means anything other than an "accountants entry on a balance sheet"
Reminds me of that part from one of the Hitchhiker's Guide to the Galaxy sequels where all the hair-dressers and telephone sanitizers crash land on Earth and declare leaves to be their official currency. :D
I guess we can always return to the barter method. Hey Howie, I'll trade you a chicken for your Rebel 20! ;D
fingers — Dec 10, 2009Ok my point
Gold - why ?
Think carefully about it.
Money is and has never been real it is just a social construct backed by belief.
it is all based on IOU.
Gold is a relatively useless commodity to own.
... unless you measure wealth in elaborate burial masks.
Money is a very strange thing.
it is such a fundamental banal everyday thing that people have gut feelings about it that are just plain wrong.
Most people talk as if money has some separate existence - before humans invented it :)
They laugh at those poor natives who sold their land for a pile of sparkly beads.
Not realising they are no different to those natives in their belief in sparkly things.
Money doesn't exist without us.
I was caught out like a "native" years ago,
I won a load of money playing poker - using matchsticks to represent "real" money as we didn't have change to play the game.
after much drinking over a long night - I just ended up with a load of match sticks :)
It wasn't a bad thing - I was playing with the boys in the family including my Dad on a family trip.
Just at the end of the day - we had invented bad money - I had a load of match sticks, but no one had any idea who lost them to me in a way that the account could be settled.
I was pissed about it at the time - but seeing as I was straight out of college on a family holiday and on real things I was being totally bankrolled by all the guys around the table I wasn't going to press the issue.
I ended up winning money on subsequent nights as well, which looking back now I can see it was no more than charity.
Like I would do with one of my nephews now.
Only so we can say - wow - you won £40 - you can buy the next round :)
It was really a way to get me feeling good about being on bar duty :D
But - oddly - that episode did make me think about the meaning of money quite deeply and abstractly.
charger — Dec 10, 2009[quote author=fingers link=1260416454/0#8 date=1260483576]Ok my point
Gold - why ?
Think carefully about it.
Money is and has never been real it is just a social construct backed by belief.
it is all based on IOU.
Gold is a relatively useless commodity to own.
... unless you measure wealth in elaborate burial masks.
Yes - You can just imagine an economic cycle based on that - those burying the money and those digging it up after.
"Money is just IOU - so however you organise it, it is based on faith alone.".....
;D ;D
My mind jumped at this one. I'd like to faith a few items, myself. ;D
Everytime I hear or read the word faith, I think of Religion. ;D
At least with money I can buy shit. There's a little more value in money than faith entails. I had faith in God and he didn't get me nothin. ;D
I don't completely understand everything Fingers was saying, partly because I worked from 7am to 10pm today having faith I would get paid for it, but the gold standard has long been gone, in reality.
How can the U.S. function with the amount of debt it has at this time if money had a true value? ;)
Hookbender — Dec 11, 2009"Money is just IOU - so however you organise it, it is based on faith alone.".....
;D ;D
At least with money I can buy shit. There's a little more value in money than faith entails. I had faith in God and he didn't get me nothin. ;D
I don't completely understand everything Fingers was saying, partly because I worked from 7am to 10pm today having faith I would get paid for it, but the gold standard has long been gone, in reality.
How can the U.S. function with the amount of debt it has at this time if money had a true value? ;)
the trick is to maintain the faith in your money, be it gold, silver, or strips of canvas with old guys faces painted on it. the dollar is on it's way to losing prominence right now. while you might not care about that much, it has a definite impact on your life right now. the amount of goods and services your money purchases you is eroding as we type. the allure of precious metals is that they have always had value to people, and will likely continue to do so if for no other reason than that.
do you buy gold at 1200 to get rich? of course not, although some analysts say with a coming dollar implosion gold will hit 2000/oz. look at precious metals as a hedge. you could do the same thing right now in different currencies as well. insist your employer pay you in euros and see how that goes over :D
If you wanted to, you could go stick all your money in a European bank, and then it would be in Euros. Or and English bank, and then it would be in English pounds. Ultimately, you can buy a bunch of gold but it's just an investment, like any other investment. You can't pay people in gold. No one will take gold shavings for a cup of coffee. Eventually it has to get turned into whatever money you need to use to accomplish your goals. At some point your wife wants a house, not a gold chain.
I think money has plenty of Value. What can you buy in the U.S., within reason, for Gold, silver, whatever? Nothing. The value of the dollar changes all the time. Right now it's suffering. Just wait til interest rates go back up. Check with me then. The value of the dollar usually follows. Or, at least the dollar usually raises in value. The government printing money, of course, hurts the dollar also. Both these things are killing us right now. But, it will change.
I remember one technique that was suggested for those with enough wealth to make it worthwhile. Diversify your money into three currencies (like the US$, Euros and Yen) because whenever one or two go down the other one or two tend to rise to make up the difference. The goal being that you would always be worth about the same and can weather any hits to one or even two of the currencies.
Hookbender — Dec 14, 2009I think money has plenty of Value. What can you buy in the U.S., within reason, for Gold, silver, whatever? Nothing. The value of the dollar changes all the time. Right now it's suffering. Just wait til interest rates go back up. Check with me then. The value of the dollar usually follows. Or, at least the dollar usually raises in value. The government printing money, of course, hurts the dollar also. Both these things are killing us right now. But, it will change.
your missing the point. buy precious metals as part of an investment strategy, not to buy groceries on the weekend. as to golds price relative to the dollar, i don't expect much of a change. with the rising demand by consumers in china, and the amount of gold bullion being stocked by the Chinese government, gold will remain relatively high. by the way, the interest rate is forecasted to remain near 0 for the foreseeable future, so don't hold your breath on gold deflating. it peaked 1200 on a strong buying spree and has since settled back down to around 1000. my money is on silver (or in it, literally). i bought it at around 18/oz and am awaiting the elevator ride...
invest in the dollar!!!!!!!! all is well!!!!!!!!!!!!!!
http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html
actually, were i a gambling man i would buy dollars short term. as one advisor put it; when everyone is on one side of a boat, sometimes you have to run over to the other side even if the boat is sinking...
I can't help thinking that I clearly remember you saying you wanted a serious correction so the market could straighten itself out. Now you are posting about 10% unemployment... what kind of "serious correction" did you want?
chase — Dec 15, 2009[quote author=Hookbender link=1260416454/0#16 date=1260835111]I think money has plenty of Value. What can you buy in the U.S., within reason, for Gold, silver, whatever? Nothing. The value of the dollar changes all the time. Right now it's suffering. Just wait til interest rates go back up. Check with me then. The value of the dollar usually follows. Or, at least the dollar usually raises in value. The government printing money, of course, hurts the dollar also. Both these things are killing us right now. But, it will change.
your missing the point. buy precious metals as part of an investment strategy, not to buy groceries on the weekend. as to golds price relative to the dollar, i don't expect much of a change. with the rising demand by consumers in china, and the amount of gold bullion being stocked by the Chinese government, gold will remain relatively high. by the way, the interest rate is forecasted to remain near 0 for the foreseeable future, so don't hold your breath on gold deflating. it peaked 1200 on a strong buying spree and has since settled back down to around 1000. my money is on silver (or in it, literally). i bought it at around 18/oz and am awaiting the elevator ride...
I'm expanding the point. ;D I'm hearing talk about the rates going up pretty soon. I personally hope your right. I'm trying to sell my home now and will buy shortly after.
charger — Dec 15, 2009I can't help thinking that I clearly remember you saying you wanted a serious correction so the market could straighten itself out. Now you are posting about 10% unemployment... what kind of "serious correction" did you want?
what i'm talking about is the debt tied up in the system that is a loss, but isn't being recognized right now as a loss. remember the worthless bonds that were labeled as AAA fraudulently? do you think that has stopped? their is still a lot of that happening right now. what i would like to see is everybody come clean on the balance sheets and start over. have the banks realize the losses they have sustained and move on. unfortunately that won't happen
And if it did happen, we'd be in a world of shit. Much worse than we are now for sure. I'd like to see the government take all this money that is being repaid right now and pay down the debt rather than try to find a way to spend the shit that doesn't really exist again.
yes, but the future would look better. do you really not see where this is going? here's a relevant story from today
http://blogs.barrons.com/stockstowatchtoday/2009/12/16/bernanke-honored-dissed-by-saudis/
The future would be better????? :-?
Why isn't the future better now? Without a complete crash of the U.S. economy? And others possibly?
Who cares what those guys do with their currency? Kinda like saying your God isn't really God, our God is. ;D
we are delaying the inevitable crash instead of fixing the problems. whether the crash is a long slow slide or a spectacular boom is anybodies guess. by future i am talking long term.
What do you think the problems are?
With healthcare, as an example, we know that roughly 20% are uninsured. We know that they can't pay for any service they get. We know they are driving up healthcare cost and insurance cost. That's one problem we know of, in general. So, to fix that problem, why doesn't the government or existing health insurance companies come up with a reasonable plan to insure the uninsured and simply pay the cost to the insurance companies directly? Simply doing that would solve the problem of uninsured people driving up healthcare cost and should bring down cost for healthcare and insurance. Why change or fix what isn't broke at a stagering cost?
Fix one problem at a time. But to let the economy simply crash and hope for the best is just insane when you don't have to. I would say stabilize the situation and avoid the crash you mention, then fix the problems one at a time.
i think your missing the scope of this argument. healthcare is such a small # in the midst of our problems; a few years ago roughly 40 billion(1) was the tab for uninsured healthcare costs. the estimated losses on HELOC's was 1 trillion in the USA alone. this hasn't been disclosed yet as most banks are hiding the losses on the balance sheets. instead of forcing these disclosures and moving on as i would like to see, we see a shell game. WE AREN"T FORCING THEM TO DEFAULT ON BAD DEBT.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQXMKqIsAFFg&pos=7
what's happening here is the banks have unrealized losses that would wipe them out if forced to balance. instead now they get a 3 year grace period in hopes they can raise enough capital so that the losses won't wipe them out. in plain english, many banks have failed but aren't showing it yet. it is an effective ponzi scheme.
add in the fun fact that the purchasing of our debt has drastically slowed (china bought none in our last auction, instead opting for gold bullion). our target was 150 trillion. foreign investors only bought 8 billion... http://www.treas.gov/press/releases/tg443.htm
i can go on and on as the bearer of bad new. essentially the rest of the world is calling our ability to pay off our liabilities into question. they are doing this by forming a new currency to replace the dollar in the OPEC countries, stocking bullion instead of T-bills, etc and so on.
1-Jack Hadley and John Holahan,How Much Medical Care Do the Uninsured Use and Who Pays for It?, Health Affairs Web Exclusive, 2003-02-13. Retrieved 2007-10-05.
Hookbender — Dec 17, 2009What do you think the problems are?
With healthcare, as an example, we know that roughly 20% are uninsured. We know that they can't pay for any service they get. We know they are driving up healthcare cost and insurance cost. That's one problem we know of, in general. So, to fix that problem, why doesn't the government or existing health insurance companies come up with a reasonable plan to insure the uninsured and simply pay the cost to the insurance companies directly? Simply doing that would solve the problem of uninsured people driving up healthcare cost and should bring down cost for healthcare and insurance. Why change or fix what isn't broke at a stagering cost?
Fix one problem at a time. But to let the economy simply crash and hope for the best is just insane when you don't have to. I would say stabilize the situation and avoid the crash you mention, then fix the problems one at a time.
fixing the problem will cause a crash
I don't think so. For example....
I'm no expert on this crap but...lets say a huge bank that got this money to fix or help fix the problems paid us back all the money received from the government but still has bad debt on the books and simply hasn't done shit to resolve their situation.
Take all the good from this bank and distribute it to small community banks with great balance sheets that are operating with profits each year. Their doing business the right way. Fire everyone in the big bank and sell the land, buildings, jets, etc., and pay down the bad shit on the books. One at a time.
The results of that will be....the results. But it won't cause a crash of the entire economy.
I know that sounds stupid, but simplfying these fixes with a little common sense can do wonders really quick at a much less severe cost and reward good business practices. A good start in my opinion.
I think the government doesn't want to fix shit the way it should be fixed. The right way. They want to take advantage of the bad situation, like printing all this money, knowing full well that they are doing in this way to create money, funds, to promote their stupid fucking agenda, whatever that may be.
The most ignorant thing about all this bad shit that's happened lately is that they are trying to fix the problem doing exactly what got us in this mess to begin with. Debt. Borrow and spend. Fuck it attitude. Just doesn't make sense, not even to a redneck from Alabama.
debt is printing money.
money multiplies with debt.
there is no bucket of real good money and a bucket of bad
It is not a place you can go to - where you unravel it all to some absolute where money is real.
Money is not real.
It is simply backed by the state, institutions and us.
Money does not have an independent existence. period.
you can unravel it to zero - there is no absolute floor to it apart from worthless.
You get banks to acknowledge losses now = well they are bust now.
Much like it will make everyone else bust who has a mortgage and can't pay back the principal - now.
Your instinct is to bankrupt the country and the world with the classic emotion of the "run on the bank" herd.
And you find that the money doesn't exist and is worthless - thereby bringing down yourself.
macro economics is often bizarre and counter intuitive.
But the reality is that if government and institutions renege on money the economic and social fall out is way beyond your wildest nightmares.
So be careful what you wish for
fingers — Dec 19, 2009 there is no bucket of real good money and a bucket of bad
I wouldn't mind a bucket of either at the moment... ::)
fingers — Dec 19, 2009debt is printing money.
money multiplies with debt.
there is no bucket of real good money and a bucket of bad
It is not a place you can go to - where you unravel it all to some absolute where money is real.
Money is not real.
It is simply backed by the state, institutions and us.
Money does not have an independent existence. period.
you can unravel it to zero - there is no absolute floor to it apart from worthless.
You get banks to acknowledge losses now = well they are bust now.
Much like it will make everyone else bust who has a mortgage and can't pay back the principal - now.
Your instinct is to bankrupt the country and the world with the classic emotion of the "run on the bank" herd.
And you find that the money doesn't exist and is worthless - thereby bringing down yourself.
macro economics is often bizarre and counter intuitive.
But the reality is that if government and institutions renege on money the economic and social fall out is way beyond your wildest nightmares.
So be careful what you wish for
all roads lead to the same end it seems like. we can continue on and reach a collapse of the dollar and the american way, or we can take a monsterous hit, possible survive, and come back strong. one thing is for damn sure, the way we are going it won't take long
http://market-ticker.denninger.net/archives/1752-There-Is-No-Way-Out-Of-This-Box.....html
take the time to read the article