What is money?

[Kshartle]

It would be funny if it wasn't so deadly tragic. To think of all the wasted lives and sufferring caused by this nonsense. When you see how it works you really have to avoid reflecting on it for long stretches.

[Kshartle]

Tech informed me I'm spelling counterfeiting incorrectly.

My apologies everyone!

Hey I learned something today!

[Gumby]

That's because you believe that counterfitters magically know how resources should be utilizied in the most efficient manner.

Enough with the "magic" and putting words in my mouth. I don't necessarily believe that. Governments rarely ever make the right choices.

I simply said that a government can theoretically create economic growth by printing during a downturn.

[Libertarian666]

It impairs the value of contracts, especially long-term contracts, which suffer more from devaluation; this makes people reluctant to enter into such contracts. It also causes capital consumption because people think they are richer than they actually are.

Both of these effects impair capital, thus reducing real economic growth.

I believe you are talking about the effect on printing within a healthy economy. But, when private credit is contracting, or collapsing — and people are unemployed and ready, willing and able to work — I don't see why printing money, to get people to build a needed bridge or a highway, would reduce economic growth.

As private credit collapses, the broader money supply would be rapidly decreasing and the base money would be trying to play catch up with the losses in private credit. Therefore, printing might not even be able to raise the broad money supply or even properly get it into everyone's hands.

The whole "it's been proven beyond a reasonable doubt" is a bit dramatic. I don't think anything in economics has ever been "proven beyond a reasonable doubt."

Printing money DOES NOT CREATE WEALTH!!!!! If it induces people to work for wages that they would scorn otherwise, but are in fact no higher than the ones they turned down in sounder money, then they are ignorant and must be educated! Further lying to them in the guise of helping them by cheapening the money is just adding to the problem, not improving anything!

Sheesh, do I have to explain EVERYTHING?

[Kshartle]

That's because you believe that counterfitters magically know how resources should be utilizied in the most efficient manner.

I don't necessarily believe that. I simply said that a government can theoretically create economic growth by printing during a downturn.

(head explodes)

[Kshartle]

Printing money DOES NOT CREATE WEALTH!!!!!

What if it's a quadrillion and used to fund a bridge to hawaii?

I realize no one else has said exactly this phrase. Just things nearly identical to it.

[Kshartle]

If capital is idle it's because no one can presently use it profitably or it's in a transfer process to someone who can.

The transfer is quick and smooth unless the masters/govt get in the way by printing and wasting the resources on some welfare/vote gathering project.

[Pointedstick]

It would be funny if it wasn't so deadly tragic. To think of all the wasted lives and sufferring caused by this nonsense. When you see how it works you really have to avoid reflecting on it for long stretches.

I know how it all works and it upset me very dearly for a long time. Then I realized there wasn't a damn thing I could do to change any of it and that upset me a great deal too. Then I read Harry Browne's How I Found Freedom in an Unfree World and came to terms with it, realizing that living life upset about things you can't control is a form of self-imposed mental imprisonment. I agree with your broad points. I think the house of cards will collapse. I think fractional reserve banking and debt-based money is counterfeiting. I think the government is a mad monster that wants to control everything.

But within those constraints, all I want to do is better understand how it all currently works, so I can hopefully profit from its internal movements as well as be prepared for the inevitable collapse, should it occur within my lifetime. I want to know how the house of cards is put together, how one could add onto it without upsetting it, why it hasn't yet fallen down, etc. But wanting to learn more about the construction of houses of cards in no way makes me think they're stone castles that won't be blown over by a stiff breeze.

[Gumby]

That's because you believe that counterfitters magically know how resources should be utilizied in the most efficient manner.

I don't necessarily believe that. I simply said that a government can theoretically create economic growth by printing during a downturn.

(head explodes)

Are you suggesting that lots of economic growth didn't happen during and after World War II? Or are we supposed to believe that all the war printing hurt the nation? Again, not saying war is a good thing. Just pointing out that lots of economic growth happened.

[Gumby]

Printing money DOES NOT CREATE WEALTH!!!!!

Right, but I'm pretty sure building a bridge or a school or a house does create wealth. If your argument were true we'd be the poorest nation on Earth.

[Libertarian666]

Printing money DOES NOT CREATE WEALTH!!!!!

Right, but I'm pretty sure building a bridge or a school or a house does create wealth. If your argument were true we'd be the poorest nation on Earth.

Please compare, in detail, the current economic situation in the US with the situation that we would be in if the US had never gone off the gold standard. I want real wages, industrial production figures, and unemployment, to start with.

[Kshartle]

Are you suggesting that lots of economic growth didn't happen during and after World War II? Or are we supposed to believe that all the war printing hurt the nation? Again, not saying war is a good thing. Just pointing out that lots of economic growth happened.

Man that WWII sure was a wonderful time of economic growth.

This is more propganda from those who would be your masters.

No shame, practically everyone was taught this nonsense.

[Kshartle]

But within those constraints, all I want to do is better understand how it all currently works, so I can hopefully profit from its internal movements as well as be prepared for the inevitable collapse, should it occur within my lifetime.

That's why I'm not currently buying their bonds, because I believe I do understand it. My understanding has led me to the conclusion that currently their is no way to profit long-term. I might be enticed post collapse. We'll see what form it takes.

If the government slashed it's obligations and rates were higher.......I'd have to consider loaning them cash despite the obvious moral objections.

[Libertarian666]

I don't necessarily believe that. I simply said that a government can theoretically create economic growth by printing during a downturn.

(head explodes)

Are you suggesting that lots of economic growth didn't happen during and after World War II? Or are we supposed to believe that all the war printing hurt the nation? Again, not saying war is a good thing. Just pointing out that lots of economic growth happened.

No actual economic growth happened during WWII; most production was for the war, which produced nothing but death and destruction. After the war, the prediction was made that there would be another depression (or a continuation of the one still in progress, actually) because of the end of all the "stimulative" war production. What actually happened was a great economic boom.

So much for the "conventional" wisdom about the wonderfulness of government spending.

[Kshartle]

Are you suggesting that lots of economic growth didn't happen during and after World War II? Or are we supposed to believe that all the war printing hurt the nation? Again, not saying war is a good thing. Just pointing out that lots of economic growth happened.

Man that WWII sure was a wonderful time of economic growth.

This is more propganda from those who would be your masters.

No shame, practically everyone was taught this nonsense.

Probably 60 million people slaughtered, millions of homes bombed out, people starving, no TV and cars being built, just tanks and bombers and guns.........now that is the definition of economic growth....government style.

WWII is the greatest single argument against central planning and non-free market in history.

Thank you for bringing it up.

[Kshartle]

(head explodes)

Are you suggesting that lots of economic growth didn't happen during and after World War II? Or are we supposed to believe that all the war printing hurt the nation? Again, not saying war is a good thing. Just pointing out that lots of economic growth happened.

No actual economic growth happened during WWII; most production was for the war, which produced nothing but death and destruction. After the war, the prediction was made that there would be another depression (or a continuation of the one still in progress, actually) because of the end of all the "stimulative" war production. What actually happened was a great economic boom.

So much for the "conventional" wisdom about the wonderfulness of government spending.

The boom happened because the government slashed it's spending.

[Gumby]

The boom happened because the government slashed it's spending.

Can you prove it? When did the government slash its spending below what it was spending before the War? I see $12 billion on the Marshall Plan to rebuild Europe and a permanent War economy that has lasted to this day!

[Gumby]

Printing money DOES NOT CREATE WEALTH!!!!!

Right, but I'm pretty sure building a bridge or a school or a house does create wealth. If your argument were true we'd be the poorest nation on Earth.

Please compare, in detail, the current economic situation in the US with the situation that we would be in if the US had never gone off the gold standard. I want real wages, industrial production figures, and unemployment, to start with.

Waaait a second... You were the one that said, "it's been proven beyond a reasonable doubt" that economic growth is retarded from money printing. I just gave the reasonable doubt. Aren't you the one that has to prove your own statement? Where is this "proof" you speak of so confidently?

Probably 60 million people slaughtered, millions of homes bombed out, people starving, no TV and cars being built, just tanks and bombers and guns.........now that is the definition of economic growth....government style.

WWII is the greatest single argument against central planning and non-free market in history.

Thank you for bringing it up.

We both agree that governments are typically sh*tty at choosing what to spend on. As much as you want to crack jokes about it, all I'm saying is that printing can cause economic growth. It did. A permanent military economy — as terrible as it is — is technically creating economic growth.

Libertarian666 kept saying that "it's been proven beyond a reasonable doubt" that printing retards economic growth. But, my question is... where's the proof? And if it was supposedly "proven" in the 1920s, the latter half of the century would seem to disprove that theory since we've seen an explosion of economic growth since WWII that the world has never seen before.

I'm saying that there's "reasonable doubt" there. Huge amounts of economic growth have happened since we really started printing — particularly after we dropped gold from the money supply. If Libertarian666's "beyond a reasonable doubt" statement were true, we should have seen retarded growth — not an explosion of growth.

[Gumby]

Not trying to be rude, but to be honest, it sounds like you guys are very good at denying actual historical events.

You say that there could never be a liquidity problem with gold... and yet there was a well-documented liquidity problem with gold in the midwest, during the late 1800s. And trade deficit nations had obvious gold shortages.

You say that it's been "proven beyond a reasonable doubt" that economic growth is retarded from money printing.... and yet, the greatest economic expanses in history, over the past century, coincided with/after a lot of money printing.

A lot of what you're saying makes sense in the context of a textbook. But reality seems to play out very differently. Imagine if you had bet against economic growth in the US after 1940, or 1950, or 1980, or 1990, or today....

Who knows, maybe economic growth will die in the US going forward. But, just because you have a text-book version of the future in your head doesn't mean it will play out that way.

[doodle]

Not trying to be rude, but to be honest, it sounds like you guys are very good at denying actual historical events.

You say that there could never be a liquidity problem with gold... and yet there was a well-documented liquidity problem with gold in the midwest, during the late 1800s. And trade deficit nations had obvious gold shortages.

You say that it's been "proven beyond a reasonable doubt" that economic growth is retarded from money printing.... and yet, the greatest expanses in economic history, over the past century, coincided with/after a lot of money printing.

A lot of what you're saying makes sense in the context of a textbook. But reality seems to play out very differently. Imagined if you had bet against economic growth in the US after 1940, or 1950, or 1980, or 1990, or today....

Who knows, maybe economic growth will die in the US going forward. But, just because you have a text-book version of the future in your head doesn't mean it will play out that way.

Agreed. Back to WW2... The fact that the printed money during that period was spent on war machines doesn't negate the fact that the government printing money created a lot of jobs and the real production of material goods. Those productive forces could have been mobilized towards creating more socially beneficial things besides bombs and tanks, but that is beside the point which is that massive government printing took a depressionary economy with high unemployment and reduced unemployment to 0 percent and ramped up production of material goods significantly. This is a solid empirical argument that money printing can facilitate the creation of real material wealth. Again, the fact that it went to creating war machines instead of bridges and schools is only because it took a massive war to mobilize our politicians to begin really deficit spending to the degree necessary. Roosevelt attempted stimulus before hand but it was insufficient in size and scope compared to that which occurred during the war.

[moda0306]

Not trying to be rude, but to be honest, it sounds like you guys are very good at denying actual historical events.

You say that there could never be a liquidity problem with gold... and yet there was a well-documented liquidity problem with gold in the midwest, during the late 1800s. And trade deficit nations had obvious gold shortages.

You say that it's been "proven beyond a reasonable doubt" that economic growth is retarded from money printing.... and yet, the greatest expanses in economic history, over the past century, coincided with/after a lot of money printing.

A lot of what you're saying makes sense in the context of a textbook. But reality seems to play out very differently. Imagined if you had bet against economic growth in the US after 1940, or 1950, or 1980, or 1990, or today....

Who knows, maybe economic growth will die in the US going forward. But, just because you have a text-book version of the future in your head doesn't mean it will play out that way.

Agreed. Back to WW2... The fact that the printed money during that period was spent on war machines doesn't negate the fact that the government printing money created a lot of jobs and the real production of material goods. Those productive forces could have been mobilized towards creating more socially beneficial things besides bombs and tanks, but that is beside the point which is that massive government printing took a depressionary economy with high unemployment and reduced unemployment to 0 percent and ramped up production of material goods significantly. This is a solid empirical argument that money printing can facilitate the creation of real material wealth. Again, the fact that it went to creating war machines instead of bridges and schools is only because it took a massive war to mobilize our politicians to begin really deficit spending to the degree necessary. Roosevelt attempted stimulus before hand but it was insufficient in size and scope compared to that which occurred during the war.

That.

[doodle]

Sure, the farmers can demand payment in whatever they want... before they make the contract to sell their products. Unilaterally deciding AFTER the fact that they don't want to live up to the bargain they voluntarily entered into is theft.

And it is also theft if the government decides later that the farmers don't have to pay in whatever money they agreed to pay in.

So you are saying that the farmers agreed to sell their produce for gold coins before they even planted it? My understanding is that the farmers used the gold coins to purcahse the land and it is that debt on the price of the land that they must pay back in gold coins. Im not talking about payment for the land though, I'm talking about the produce that came from that land which they are now selling back to the bankers. Instead of selling the produce in exchange for gold coins though, the farmers demand to be paid in another currency which the bankers can freely exchange their gold coins for if they want to eat. Why can't the farmers demand payment for their produce in whatever form of money they choose?

They would have every right to do that. The problem is that they contracted to pay back the mortgages on their farms in a specific kind of money, namely gold dollars. Then they discovered that they couldn't pay back that number of gold dollars because the prices for their produce were too low, in that same money. So their solution was to change the type of money of their debt, retroactively and unilaterally.

Now, you could say that the bankers were crooks who were manipulating the money supply to impoverish the farmers, and if you could demonstrate that, then maybe the farmers should be able to void their contracts. But make no mistake that voiding their contracts is what we are discussing.

No, the farmers intend to pay the bankers back in gold coin....we are not talking about voiding contracts. The farmers are simply saying that the bankers must buy the farmers produce in blue jay toenails. Now, the hungry bankers can either go out and harvest blue jay toenails or they can exchange gold coins for those toenails. Seems pretty fair to me. I don't see how what the farmers are doing is wrong. They are simply setting the currency that they want to be paid in and because this currency is so rare (blue jay toenails) in relation to the amount of produce they have...it is extremely valuable and therefore the exchange rate of toenails to gold coins is very high.

[Pointedstick]

The fact that the printed money during that period was spent on war machines doesn't negate the fact that the government printing money created a lot of jobs and the real production of material goods. Those productive forces could have been mobilized towards creating more socially beneficial things besides bombs and tanks, but that is beside the point which is that massive government printing took a depressionary economy with high unemployment and reduced unemployment to 0 percent and ramped up production of material goods significantly.

It may be beside your point that the money was spent on guns and bombs and death, but it's actually a very important thing to note. You and I both know that governments just don't behave in the way you want. They don't print money to fully employ everyone to build schools and bridges and churches and distribute free electricity and water and internet access and invent iPhones and deliver food to the homeless and give everyone as much free, high-quality, non-biased education as they want.

If would be nice if we lived in that world, but we don't. Governments much prefer to kill innocent people, boss everyone around, take loot, and redistribute it to politicians, state employees and their friends.

[Gumby]

It may be beside your point that the money was spent on guns and bombs and death, but it's actually a very important thing to note. You and I both know that governments just don't behave in the way you want. They don't print money to fully employ everyone to build schools and bridges and churches and distribute free electricity and water and internet access and invent iPhones and deliver food to the homeless and give everyone as much free, high-quality, non-biased education as they want.

If would be nice if we lived in that world, but we don't. Governments much prefer to kill innocent people, boss everyone around, take loot, and redistribute it to politicians, state employees and their friends.

I think we all agree that there's a lot of bad decisions made by governments. But, despite that, we are generally discussing these matters from a perspective of what to invest in. Based on history, choosing one's investment strategy based on what the government "should" do doesn't seem to help us very much.

[doodle]

The fact that the printed money during that period was spent on war machines doesn't negate the fact that the government printing money created a lot of jobs and the real production of material goods. Those productive forces could have been mobilized towards creating more socially beneficial things besides bombs and tanks, but that is beside the point which is that massive government printing took a depressionary economy with high unemployment and reduced unemployment to 0 percent and ramped up production of material goods significantly.

It may be beside your point that the money was spent on guns and bombs and death, but it's actually a very important thing to note. You and I both know that governments just don't behave in the way you want. They don't print money to fully employ everyone to build schools and bridges and churches and distribute free electricity and water and internet access and invent iPhones and deliver food to the homeless and give everyone as much free, high-quality, non-biased education as they want.

If would be nice if we lived in that world, but we don't. Governments much prefer to kill innocent people, boss everyone around, take loot, and redistribute it to politicians, state employees and their friends.

Governments decisions are only as enlightened as those individual people who comprise that institution. The fact that people want to kill other people is a sad state of affairs...government as such only amplifies that evil tendency. But, it is certainly capable of also amplifying socially beneficial outcomes should the individuals within that institution chose to use it towards those ends. When an economy stagnates and people suffer, government certainly has the ability (as we saw during world war 2) to put people back to work creating tangible goods and services. People suffered during the great depression because of a monetary slump. People went to bed with full stomachs in 1929, by the early 30s these same hardworking people went to bed cold and hungry despite the fact that the skills and capital resources within the economy were identical.