see http://www.tarpley.net
Webster Tarpley says that the large corporate banks lead by George Soros are using hedgefunds to attack the indebted Greek economy.Greece is seen as the weakest link amongst the PIGS and this would could cause a domino effect of weakening the Euro and thus strengthening those who hold assests in $ US.

The Greek Govt and others have responded by stopping the trading of Govt Bonds via hedge funds.ie they cannot use the levage of their phoney money to futher devalue assets of the Greek Govt.

The whole system will eventually collapse,since tax payers have been forced to bail out non-productive derivatives at the expense of real productivity and real jobs.They have no idea how these hedge funds ,credit default swaps and other derivatives are woven into the real economy.Some say the phoney money is worth $150 trillion world wide.It is about time we put the phonies into bankruptcy and let the real economy grow.

When are all our political leaders going to stand up to these bullies
who caused the GFC in the first place and now want us to pay a second time for their greed?

Arjay
I don't think there are any politicians who understand it. They are pretty much all steeped in Keynesianism, so they believe in all the tenets that are causing the problem in the first place.

I Will never understand why I answer you arjay.
or will I ever understand you.
But I do understand why Greece has these problems.
They spend like drunken fools money they do not have.
And fear the actions they just have to take to start fixing their troubles.
Are you aware arjay government employees retire on full pensions at a very early age.
And the pressure put on all political party's to continue such madness has far more to do with this crisis than your conspiracy's.

This is the year that the $ US will collapse.They cannot go on creating monopoly money to bail out their failed hedge funds.Do the analogy Belly.What happens in a game of monopoly when the bank is allowed to create as much money as it wants? The price of properties will skyrocket.They actually need a new game that includes derivatives and rents that are not fixed.Then you will understand.

The private banks who presently own the US Federal Reserve are;
Rothschilds of London and Berlin
Lazard Bros of Paris
Israel Moses Seif of Italy
Kuhn Loeb & Warburg of Germany
Lehman Bros,Goldman Sachs
Rothschilds controlled Rockerfeller of NY.

These Banks own & create the money for the USA and Europe.They have power beyond your imagination.Just imagine this Belly.The $ US has lost 96% of it's value since 1913 at the inception of the Fed.This means that they have increased the amount of money by 25 times above pop increases and production.Why cannot you Belly create money from nothing? Yes,you would be arrested for counterfeiting.They call it monetary policy.The creation of money should be in the control of sovereign Govts,after all money only represents people's productivity.It has no intrinsic worth.It does not belong to private banks.

This why our taxes are so high and all countries are in so much debt.We don't have money for infrastructure/medical since we do not create our own credit.Look at the system before you place blame on individual Govts.

So what these banks have done is to create massive amounts of cash making them rich enough to buy into the best shares and create the massive bubbles we see on wall Street.They have fingers in all the keys shares like energy,minerals,medical,arms manufacturing etc.Rupert Murdoch would not dare cross them since he is a very small player.

If we have $150 trillion in worthless derivatives ie 150 times our GDP,this means an enormous economic collapse if we do not do the right thing.

So choose Belly,economic armageddon with the real possiblity of a world war,or real productivity,jobs and peace.

Arjay, on subjects such as this I always find your musings well worth the read - thanks.

I won't contribute though, I don't know enough about it - I hope others will.

Arjay

"The creation of money should be in the control of sovereign Govts,after all money only represents people's productivity."

I think your chain of reasoning is correct, right down to but excluding your conclusion.

Even if money only represents people's productivity, whatever that's supposed to mean, that is not a reason for it to be controlled by sovereign governments. If what you say is true, and money represents people's productivity, then to vest it in government, is to say in effect, that government should have a monopoly power of controlling, and of debauching, the productivity of the people, which is what we are witnessing now.

It is precisely control by sovereign governments that has caused this problem by enabling sovereign governments to delegate the power to a privileged monopoly. The privileged monopoly – the Fed– got it from a privileged monopoly – sovereign governments.

Money is a market phenomenon. It arises out of the market, owing to the defects of barter. Contrary to popular myth, money cannot be in theory, and never was in history, a creation of government. (The reason we know is because it would have required government, on the day of its creation, to have stipulated the price of everything in relation to the price of everything else.)

Government control of money always piggy-backs on, or rather hijacks, a pre-existing medium of exchange. It always confers a privilege of creating new money, which has myriad destructive effects. Ethically and economically, it is not different from a licence to counterfeit. It transfers wealth, secretly and silently, from the productive class to the parasitic class. It causes inflation, which in turn, causes the so-called ‘trade cycle’ of greedy boom and depressing bust. It misrepresents the time preference of the mass of consumers. It distorts the entire capital structure towards instant grat, debt, and speculation, and away from delayed grat, work, and savings.

cont.

Interest rates are also market phenomena. They represent people’s valuation of present versus future dollars, which ultimately depends on people’ subjective values.

There is no way someone can decide, in the abstract, what everyone else’s subjective values are or should be, nor tell everyone how they should value one scarce thing *relative* to all other scarce things. Anyone pretending to decide, in effect, what the structure of interest rates should be is a charlatan, and all Keynesianism and monetarism is charlatanism. It is based on a false pretence of knowledge: economists pretending to know what the capital structure of the entire economy should be. There is no way an economist can know this because
a) of the subjective values and relative valuations involved, and
b) because capital is not just one big monolithic lump or quantity as they treat it to be. Capital includes all the trucks, tyres, sheepyards, working dogs, shearing sheds, ramps, gates, bakers’ ovens, hammers, roads, protective clothing, calculators, shops, factories, offices, tools, and machines whatsoever that people use to produce goods and services ready for consumption. It is complete and utter bullsh/t that academic economists know, or can know, what the supply of productive goods should be relative to the supply of all other productive goods, and consumer goods, now and in the future.

No person, committee, or board *whatsoever* has or can have the ability to know what they would need to know, in order to decide interest rates, without at the same time systematically advantaging one group, and unfairly disadvantaging another group. The problem with the Fed cannot be solved by transferring the decision-making monopoly from a clique of banksters dependent on government privilege, to a claque of bureaucrats dependent on government privilege.

The solution is to abolish any legal monopoly on supplying money, and for there to be free competition in the supply of money. This would prevent the current problem of privatized profits and socialized losses.

Oops Arjay, its all gloom and doom, time to slit your wrists or
jump out of that window :(

Fact is, Greece has been cooking the books for years, now the truth
is coming out. Now you want to blame speculators! Arjay, Greece
cooked the books, not speculators.

We've been through all this Fed stuff before, but it does not sink
in with you. All savings banks in the US, are part owners of the
Fed. But I remind you yet once again, Fed profits are paid to the
US treasury, this year IIRC it was about 50 billion$.

Yes, Bernanke printed some money. Had he let everything collapse,
the alternative would have been a domino effect, a global
depression. You Arjay, might have been out of a job.

Interestingly, most of the money lent to banks has in fact been
repaid, at a good profit for the US taxpayer. Financing the US
deficit is another story. If not enough can be borrowed from
China etc, they will have to print more. The present administration
admit that its unsustainable, but the it was George who crashed
the US economy into the ditch, so short term they need policies to
get it out again.

But anyhow, we would not want these facts to interfere with your
hobby of conspiracy theories, you'd have nothing to do then, to
amuse yourself.

Good stuff yabs.
Over to you Arjay.

On the first day of 2011 or 2100 for that matter and America has not gone bankrupt the arjay syndrome will live on.
Yes America is in a bad way, financially, a self imposed wound.
But broke? never.
Kings in olden days often got into such debt, they cut the heads of those they owed money to.
Capitalism has always used credit ,cash we did not have, to make mass production work.
Look at just one average new home buyer, about to go into debt to purchase.
Home and contents in Sydney surely one million dollars at least.
And even if house hold income is large, say 100.000 a year ten years total income, in reality 20 at least to pay that debt.
It however will be paid, hard times harsh times much pain, but in time most debt gets paid.
Unless you are governing Greece, then you spend and blame Germany for nor giving enough in reparations 60 years ago.
Some like arjay will support that.
not me.

Yabby, Belly
You seem to think governments can inflate indefinitely?

Peter, I think you'll find that the world's central banks decided
that annual inflation of around 3% was quite acceptable and can
be lived with. Its certainly one way in which alot of them, will
pay off their debts.

You could of course lower that, by creating a massive credit
squeeze, so that people would battle to borrow. The result would
be an economy that tanks, lots of unemployment etc.

So yes, we can live with 3% annual inflation.

Belly & Yabby just don't get it.Before you join the dots boys ,you have to put lead in your pencil.The US Govt debt is $15 trillion or $200,000.00 per family of 4.Add to this their mortages and personal debt and this adds up to bankruptcy.As Ron Paul says ,it never can be repaid.So who is going to pay? The banks and Wall St won't.Real unemployment in the US is like 18%.Then there are huge numbers of under employed.How do they pay off debt?

Yabby you say profits of $50 billion are going back to the US Govt from the Fed.Well the Fed have taken far more than they have given.
$50 billion profit? It is nothing in an economy 15 times our size.Their Govt debt is 3000 times bigger than this.It won't even cover the interest payments.

Peter Hume I agree that Govt should not alone be the creator of currency.Do we go back to gold and silver as being the basis of our curencies?

Ron Paul wants a new currency to compete with the Feds $.They had competing currencies in the past.

For those of you who think all is rosy in the US,have closer look and speak to people who live there and visited there recently.It could quite easily errupt into civil war.

Yabby you have to progress beyond the Mirror and the Australian for your news and info.

Arjay, you are not the smartest pea in the pod lol, you really arn't.

What the US has to do is get back to the point where Clinton left
office, where they had a balanced budget, even a surplus. It was
those republican scoundrels, George and Dick, who gave away unfunded
tax cuts, then went on huge spending programmes, all unfunded. Now
poor old Obama is left with the mess to clean up, with an economy
in crisis.

One thing about America, they are an innovative bunch and its
innovation which will dig them out of their hole. Just look at
Google, Ebay and the rest of silicon valley. Mostly companies that
simply did not exist some years ago, now mega billion $ cash
generators. Green energy is their new baby, so stay tuned.

Why should America ever repay its debt? I remind you that the
US$ is the global default currency and countries, people need to
park their money somewhere.

It seems its 15 trillion that you are panicking about. Lets see,
3% inflation a year, that is a decrease of 450 billion, without
actually repaying a single cent! That is most likely how it will
be repaid, Arjay.

I really don't care if Fed profits are only 50 billion a year. The
point is, profits are going to the treasury, not to those evil
bankers, which you hate so much.

* speak to people who live there and visited there recently.It could quite easily errupt into civil war.*

Ooh Arjay, so how many have you spoken to? 2,3, 20, 50 perhaps? Are
they members of the conspiracy movement as you are? I remind you that
300 million live in America. Your circle of conspiracy nut friends
don't make up for the majority, just a teensy weensy small group of
extremists.

Arjay
"Do we go back to gold and silver as being the basis of our currencies?"

There's no need for government to decide. They have their own interests in conflict with those of the rest of the population, and have shown themselves completely untrustworthy and incompetent.

But if the government monopoly were abolished, and anyone could supply money in a competing market, people would almost certainly choose gold and silver for their special qualities as money - and even copper, as they have done in the past. In special circumstances, other media would come into currency, as cigarettes did during the war, or tobacco in the Old South. It should be entirely for the parties to decide, it is simply none of the government's business, and their claims to know better or to have managerial competence are false, self-interested, and destructive.

Yabby, that is just standard Keynesianism. It rests on the assumption that we can increase net real wealth by stamping pieces of paper. We can't. The only effect is to transfer wealth from the productive class to the political class. I once read about a guy during the German hyper-inflation who had paid into a superannuation fund all his working life. When he retired, he cashed in his policy, and the entire proceeds bought a loaf of bread. Inflation and central banks are nothing but machinery for legal theft, that is all. What *central banks* satsify themselves is a sustainable rate is irrelevant. Even at a rate of 3 percent, the average person's life savings will be stolen during a fifty year career. "Do the math."

The idea that inflation is necessary or desirable for generalised economic benefits is pure charlatanism, the high priests teaching the masses the Pharaoh can do no wrong, even as he defrauds them. All the problems the central banks falsely claim to solve, such as the economy tanking, are themselves the result of earlier inflationary interventions. In any event, such problems disprove the entire foundation for government intervention, namely, its supposed competence at managing the economy in the first place.

Arjay your posts a getting weirder.
Did you truly ask me and yabby to put lead in our pencils?
have you any idea what an Aussie takes that to say.
And you constantly infer those who disagree with you are,uninformed, unbalanced, have been miss lead, a host of insults.
Have you ever considered it may be you, not the world who has got it wrong.
Peter Hume come you do don't you? know that interest rates of around 3% are the profits lenders get for lending/risking their cash.
Modern, even changing capitalism, needs credit, credit lenders need profit.
We once had 17% interest, I still get verbal bashings over it, but debt was paid, some went under but we had the recent boom times and are doing well, our and Americas current debt will be repaid.

I think I may have worked out why you spend so much of your time fretting about the financial end-times, Arjay.

It's the company you keep.

Webster Tarpley, Ron Paul...

The thing is, it would be far more productive for all of us if you applied some independent thought to the issues, instead of simply channelling their views into this forum.

Do you share Tarpley's belief that the Dalai Lama is a CIA operative, for example?

http://economycollapse.blogspot.com/2010/02/webster-tarpley-dalai-lama-is-cia.html

Don't you think that is, sort of, stretching credulity just the teensiest bit?

No? Hmmm.

Do you also agree with him that Jundullah is a NATO-funded false-flag operation?

http://tarpley.net/2010/02/25/the-battle-for-baluchistan-iran-nabs-top-nato-terrorist-with-help-from-pakistan/

Or are they, as this article so persuasively advocates, an agency of the CIA?

http://www.sourcewatch.org/index.php?title=Jundullah

Or both?

As for Ron Paul, he has some very "fundamental" concerns about life on this planet.

http://liberalvaluesblog.com/2007/12/22/ron-paul-backs-creationism-denies-evolution/

Here's advice that I can guarantee you will not take.

Find more reliable sources.

You'll find life will get oh-so-much more agreeable.

>Peter Hume come you do don't you? know that interest rates of around 3% are the profits lenders get for lending/risking their cash.

Yes I do know that. But that’s not in issue, which is, whether government should be able to use a monopoly of the supply of money to inflate the currency, and whether doing so creates net real wealth, or just transfer it from A to B.

>Modern, even changing capitalism, needs credit, credit lenders need profit.

That’s not in issue. The question is whether the government should use a monopoly of the supply of money to expand credit by lowering interest rates below the rate at which they would have been if government wasn’t doing that.

Pericles
Do you think we can increase net real wealth by inflating the currency?

A fascinating thread Pericles, the plot thickens!

*It should be entirely for the parties to decide,*

Peter, it is already up to the parties to decide. You are not
compelled to store your wealth in banknotes. You can buy gold coins,
gold bars, silver, oil, farmland, etc, to store your wealth. You
are free to barter those things for things that you would like to
purchase, as long as the other party agrees.

People use money, simply for convenience. Those who use it as a
store of value, are kidding themselves. Money is a means of
exchange, more like a commodity. It changes value, depending on
supply and demand

Yes that's largely true.

But I think money is still the only legal tender for payment of a debt?

And if people forego the use of money so as to avoid what is in effect a tax - inflation - they also forego the many and great benefits that go with using the general medium of exchange, which benefits are the reason why it evolved. They are in effect put back in the position of many of the disadvantages of barter.

There might be something to be said for this if the government obtained for society a great and significant benefit from inflating the currency. But the idea that there is such a benefit, or any benefit from inflation and credit expansion, depends on the underlying fallacy: that inflation the performs, as Keynes said, 'the miracle of making a stone into bread'. The underlying idea is that in inflation we have discovered a way to make something valuable out of nothing. But it doesn't and we haven't. Work and production are the only bases of real wealth. Printing pieces of paper does not create net real wealth and, that being so, there is no corresponding general social benefit for the many general social costs and injustices which are imposed on society by inflationary policies, such as would justify requiring anyone to forego the advantages of using the general medium of exchange so as to avoid the disadvantages of the inflation-tax.

Of course, the mere direct tax effect of inflation on currency users is the least of the problems that inflation causes.

For a powerful summary of the many under-estimated social, economic, cultural, and spiritual destruction done by inflation, see http://mises.org/daily/1570

That's a trick question, isn't it Peter Hume.

>>Pericles Do you think we can increase net real wealth by inflating the currency?<<

It's a bit like asking whether we will improve the quality of Government by paying our politicians more money. The answer can be yes, no or maybe. Always qualified with "but only if other factors are brought into play".

I'm fairly sure you use "inflating the currency" as a synonym for, and interchangeably with, "increasing money supply". The former can be used pejoratively, while the latter can be a simple and straightforward fiscal strategy.

Some obvious answers - none of them particularly useful - would be "no, not if that's all you do", or "yes, if the new money is put to productive use", or "maybe, given favourable international terms of trade".

In technical terms, "that depends".

Obviously, I'm with Yabby on the gold standard furphy.

Gold is freely available to those who wish to convert paper money into a "store of wealth".

What I fail to see is how using the value of a mineral instead of the value of a piece of paper will impact inflation. Would not the underlying "store of value" fluctuate in the same manner as currency?

>>[should] government be able to use a monopoly of the supply of money to inflate the currency<<

That's another "when did you stop beating your wife" question, isn't it.

Should government have a "monopoly" on money supply in the first place? If it should, then it is responsible for the efficient management of that supply.

If you believe it shouldn't, I'd love to hear an alternative.

Make certain you include schools, hospitals, police, armed forces etc. in your response, since they all rely upon taxation for their survival. Unless of course you believe that these can all be supplanted by private enterprise, in a pure "user-pays" paradise.

Which would be ok as far as it goes, I suppose, so long as you implement a Soylent Green solution alongside it.

Peter Hume is correct Pericles.We cannot continue to create money to bail out non productive derivatives.Has this reality escaped your grasp.You are good at distractions but when people nail you down to a reality you skirt around it with ad hominem or a subject change.

So answer the question.How does the creation of more bail out money by our central banks add to productivity and wealth?

It's all topsy-turvy, but when has it been anything else. It now appears the role of government is to tax the people and transfer this tax revenue to big-business in one of the many forms of 'corporate welfare'. Gone are the days such as immediate post WW II Great Britain, where government funds were used to house and educate the populace, provide for the retired and unemployed, and create a national health system. Thanks to the von Hayek/Friedman inspired Ronald Thatcher, the 80s saw the end of government as a social good for which we all paid as it transformed into the collection agency for big capital. Oh well, cannon fodder is all we will ever be, whether we are blown to bits in capital's eternal war, or robbed blind to bail out the latest failure of market capitalism (an economic system said to be the most efficient...which needs war, environmental destruction, usury, and thievery to function). Then we have that Westerwelle nong from Germany and his silly talk that the German welfare system is leading to "latter-day Roman decadence", too true, as an unemployed person I am squandering my benefits on such luxuries as rent (50%), food (15%), phone and utilities (20%), and my filthy habits of smoking and driving a car(15%), and we can't be having that now! (and how I buy birthday and Christmas presents for my nearest and dearest is a mystery, I guess I must have to dine on bread and dripping while I shiver in the dark).
C'est la vie
C'est l'amour
C'est le guerre,
Say no more.

Back to your dirty tricks and evasions Pericles? You answered Arjay with irrelevant fallacies about other people’s personalities. I asked you a straightforward question on the issue, which is whether we can increase net wealth by inflating the currency. So you answer by assuming bad faith, assuming what is in issue, and obfuscating, ready in advance to scurry away into personal argument when you are thrashed in the substantive argument, as you are about to be.

>…[T]he latter [increasing money supply] can be a simple and straightforward fiscal strategy.

What’s that supposed to mean? If you mean it’s a simple and straightforward strategy to raise money, then why would governments not raise the money by levying taxes? Answer the question, fool.

> … "no, not if that's all you do", or "yes, if the new money is put to productive use", or "maybe, given favourable international terms of trade". In technical terms, "that depends".

My question is not whether *a part* of the increased supply of money can realize a profit on investment. A bank robber can realise a net increase in wealth on investment, by taking the capital from other people.

Obviously the government can confer a net increase in wealth on someone by giving him someone else’s wealth – idiot.

That‘s not the issue, which is, whether increasing the money supply *as a strategy in itself*, is able to realize a net increase in wealth for society considered as a whole, not for the privileged recipients of a political handout.

> The answer can be yes, no or maybe.

Well what’s an example of where the answer is yes, fool?

> …What I fail to see is how using the value of a mineral instead of the value of a piece of paper will impact inflation.

People only acquire money, and only try to use it as a store of value, because they intend to use it later on as a medium of exchange, otherwise there’d be no point in acquiring or storing it.

The primary function of money is as a medium of exchange. All other monetary functions are secondary. Your and Yabby’s argument only addresses a secondary function.

> Would not the underlying "store of value" fluctuate in the same manner as currency?

No. What makes gold valuable as a medium of exchange is precisely the fact that people in general, and governments in particular, can’t just produce it by fiat. Now can you see how that will impact inflation?

The problem with paper money isn’t that its value *fluctuates*, it’s that it’s constantly *going down*. By contrast, the value of gold in real terms has gone up.

> Should government have a "monopoly" on money supply in the first place? If it should, then it is responsible for the efficient management of that supply.

Don’t make me laugh.

You haven’t established that government *should* have a monopoly of the supply of money in the first place. Because? So it can hand out billions to private corporations and banks? So it can fund aggressive wars in foreign military adventures? Because it lost 97% of value since 1913? Because its money supply management within 16 years produced the Great Depression?

>If you believe it shouldn't, I'd love to hear an alternative.

Private competing currencies.

>Make certain you include schools, [etc.] since they all rely upon taxation …

You are confusing taxation with the money supply, fool.

> Unless of course you believe that these can all be supplanted by private enterprise, in a pure "user-pays" paradise.

User-pays has nothing to do with it. Public schools, etc. should be funded by taxation. The money supply is not there so government can debauch it to supplement its revenues by deception because it’s too dishonest to levy taxes. So much for the government’s "efficient management" of the money supply, you clown.

> Which would be ok as far as it goes,... so long as you implement a Soylent Green solution alongside it.

The fraudulent warfare state social engineer has the gall to accuse a libertarian of a Soylent Green solution?

Peter, people can store their wealth, in any form that they like.
They only need to convert it back to a common currency, when ready
to spend it. So the amount of ready cash on hand, affected by
inflation, need only be a tiny % of their assets. That is their
choice.

The money supply will increase, by the very nature of bank borrowing
and lending. Overall, is that a good thing or a bad thing? I think
its a good thing, for it limits the power of those with money and
makes starting a business, buying a house or car, possible for
anyone, not just those born from a rich set of testicles.

Yes Govts benefit from inflation, in terms of fiscal drag, in
taxing things like interest and not allowing for inflation. It
is up to us electors to make them accountable for these actions,
if we don't, we only have ourselves to blame. If it were up to
me, they would all be major election issues.

*People only acquire money, and only try to use it as a store of value, because they intend to use it later on as a medium of exchange, otherwise there’d be no point in acquiring or storing it.*

In that case Peter, the real fools are those who try to use money
as a store of value, when there are limitless other options out there.

My head is starting to hurt ... but I love it!

I do confess to a quiet chuckle when I am accused of "ad hominem" attacks, by people who end each sentence with "fool". Makes me all warm and gooey to realize that my contributions have made them so uncomfortable.

>>You answered Arjay with irrelevant fallacies about other people’s personalities<<

I prefer to think of it as "check the credibility of your sources carefully". But, whatever.

>>What’s that supposed to mean? If you mean it’s a simple and straightforward strategy to raise money, then why would governments not raise the money by levying taxes? Answer the question, fool.<<

(There you go. That "fool" thing I was talking about.)

In what sense do you equate increasing the money supply with taxation? One puts money into the economy, the other takes it out.

>>Obviously the government can confer a net increase in wealth on someone by giving him someone else’s wealth – idiot.<<

Not too sure about that. Sounds like a zero-sum game to me. Please explain.

>>Well what’s an example of where the answer is yes, fool?<<

(Are you by any chance channelling the A Team? Just asking)

You probably missed it in all the excitement, but I did actually give you an example.

"yes, if the new money is put to productive use"

Which after all, was the whole idea behind "quantitative easing".

>>No. What makes gold valuable as a medium of exchange is precisely the fact that people in general, and governments in particular, can’t just produce it by fiat. Now can you see how that will impact inflation?<<

But they can dig it out of the ground. Or they can refrain from digging it out of the ground, as a deliberate fiscal policy. If they did the latter, what would happen to the price of gold, do you think?

>>You are confusing taxation with the money supply, fool.<<

(Perhaps it's a mild form of Tourettes Syndrome?)

I thought we established earlier that it is you who fails to make this distinction?

On the topic of "Private competing currencies", would they be allowed to declare bankruptcy?

If not, why not?

Yabby
What you say goes only to the question of store of value.

The effect of increasing the money supply is to dilute the value of the money held by everyone else: that’s why they do it. And whenever any given store of value is converted into a medium of exchange - money - you’ve got the government doing its counterfeiting operation – printing new dollars. Far from being insignificant because it doesn’t affect the store of value :
a) it affects the entire supply of money in circulation at any given time,
b) it affects the value of the real goods against which that money is being exchanged at any given time.

And the store of value is still degraded because of the indirect effects of inflation – capital consumption and economic destruction, which make everyone poorer, not richer.

And still, even if what you say were conceded, which it’s not, that would only go to say that inflating the currency is not bad, or not so bad. But the question is, what good is it? The idea that it is, depends on the idea that we can create real wealth by printing paper. We can’t. And it doesn’t matter how much, or how strongly people believe we can – we still can’t. It’s rubbish. And it just happens to function to give credibility to a gigantic racket of fraud and exploitation.

If people understood it, they would abolish it immediately. The reason the government does it, is precisely because only one person in a thousand understands it. And one of the main reasons most don’t is because of an entire industry of government-funded cheerleaders and charlatans aka academic and central bank economists.

But no-one will answer the question: *how* do we create net real wealth by printing pieces of paper?

Pericles

> (Perhaps it's a mild form of Tourettes Syndrome?)

LOL. Look you’re getting hit all over the park, but I’ll do you a deal. Whoever uses personal argument loses. Qanda, Yabbay and Arjay can be the referees. Otherwise why should I argue mannerly while you argue unmannerly?

> In what sense do you equate increasing the money supply with taxation?

Both involve government taking other people’s wealth without their consent: tax by monopoly force, inflation by fraud based on monopoly force.

> One puts money into the economy, the other takes it out.

You are confusing money – meaning paper notes - with money – meaning real wealth. Increasing the money supply puts more paper notes into the economy, not more real wealth. Taxation doesn’t ‘take money out’ of the economy, since tax moneys are still exchanged for goods; it confiscates and re-directs it.

>>Obviously the government can confer a net increase in wealth on someone by giving him someone else’s wealth.<<

> Please explain

It’s only a net increase of wealth to the privileged recipient. Inflation is a zero-sum game for society as a whole, that’s the whole point of the argument.

>>[Pericles says he gave an example of increasing the money supply creating a net real increase in wealth:] “if the new money is put to productive use"

That’s not an example, it’s an evasion.

What would be an *example* of printing more paper notes resulting in a net increase of real wealth to society as a whole?

> But they can dig [gold] out of the ground. Or they can refrain from digging it out of the ground, as a deliberate fiscal policy.

Who’s ‘they’? Why would private diggers refrain from digging it out of the ground as a ‘deliberate fiscal policy’?

But yes, the supply of gold as money would affect the price. However gold would be as much more stable than fiat money, as the value of gold has been stable compared to the value of fiat money. Gold would not intrinsically involve systematic fraud, as fiat money does.

>On the topic of "Private competing currencies", would they be allowed to declare bankruptcy?

Yes

Peter, printed pieces of paper only make up a very small fraction
of the money supply. All that we need is enough notes and coins,
so that there is not a shortage.

The way I understand is this, point out to me where my thinking
is wrong:

The very nature of modern banking, with banks holding 8% as
reserves etc, means that lending and borrowing by banks, increases
the money supply. Govts don't actually need to print anything.

Now if we never had that system, credit would be virtually
impossible to obtain. I happen to think that would be a bad thing,
for it would deny people huge economic opportunities of starting
expanding businesses etc. In other words, the shortage of money
would be the problem, we would be worse off because of it.

Only in your imagination, Peter Hume.

>>Look you’re getting hit all over the park<<

And we've only just started.

>>Both [taxation and an increase in money supply] involve government taking other people’s wealth without their consent: tax by monopoly force, inflation by fraud based on monopoly force<<

"Without consent"?. If I hired you tomorrow, I would require your consent to withhold tax from your wages.

"By fraud"?

fraud n. A deception deliberately practiced in order to secure unfair or unlawful gain

There's no deception, no unfairness and it is not unlawful.

You may be starting from the premise that our present system is evil, and working backwards from there to examine its components. Neither taxation nor inflation is inherently bad, as you appear to believe.

Both would be a concern, of course, if they got out of hand.

>>[re taxation takes out, while an increase in money supply puts in] You are confusing money – meaning paper notes - with money – meaning real wealth.<<

I don't believe that I am.

Let's say for a moment that I increase the tax on business to 80% of profits, leaving just enough to keep going, but taking away any opportunity to invest in growth.

Now let's say instead I ease money supply, allowing those businesses to borrow money to expand.

Which is more beneficial to the economy?

That is what I meant when I asked "In what sense do you equate increasing the money supply with taxation? One puts money into the economy, the other takes it out."

>>Why would private diggers refrain from digging it out of the ground as a ‘deliberate fiscal policy’<<

To force up the price. As OPEC does with oil. Is this a good thing?

>>gold would be as much more stable than fiat money, as the value of gold has been stable compared to the value of fiat money.<<

Really?

When the US came off the gold standard in August 1971, the price was $35 an ounce. Today it is $1,120. That is a 9.3% per annum inflation rate.

Even without the "GPEC" factor.

I maintain that that line of reasoning is wrong. It results not in providing huge economic opportunities that would otherwise be unavailable, but in consuming capital on a vast scale thus making society poorer than it would otherwise be, at the same time as it causes injustice and exploitation on a huge scale.

We can approach the problem either in terms of real things, or in terms of paper.

In terms of real things, the capital – tools and machines etc. – to increase productivity must come from consumption foregone. If we consumed all we produced, there would be nothing left over to produce capital goods. Thus it is the accumulation of real capital, not borrowing per se which is the necessary foundation of increased productivity. Whether people obtain the use of these capital goods by savings or by borrowing, ultimately the increase of paper does not increase the real capital available. Real capital like other economic goods is scarce, and that scarcity cannot be conjured away by increasing the number of paper tokens that stand for capital.

In terms of paper, we need to distinguish between:
a) Money properly so-called (gold, where people are free to choose; government “banknotes” and coin under government fiat)
b) Money certificates – paper which stands for real money, and is redeemable on demand in real money, (e.g. banknotes under a gold standard ie the receipt you get on depositing your gold; and under a fiat system, the paper backed up by the 8% reserve deposits)
c) Money substitutes – paper which stands for, but is not redeemable on demand in real money (e.g. the paper lending out the 92% unbacked by real assets). This includes the zillions of dollars in problematic derivates etc.

Yes, to inflate the currency, government doesn’t “need” to increase fiat money banknotes and coins, because they can increase the “money” (substitute) supply by granting permission to banks to increase their money substitutes. In fact under a fiat money and central banking system, government inflates *both* the supply of money in the narrow sense, and money substitutes, especially the latter.

(This spreads both inflation and confusion, causing the population to think of worthless paper as “money”. When gold is money, no-one ever confuses money with money substitutes.)

Since interest rates reflect the time preferences of savers and borrowers for future as against present dollars, therefore manipulating interest rates sends (false) signals as to these time preferences. It also misrepresents the amount of physical capital that is available. Entrepreneurs start out on ventures (the boom) and the Keynesians are all happy. But the falsification of economic calculation is like a builder who miscalculates how many bricks he needs. When he’s finished half the walls, it becomes clear there isn’t enough physical capital to finish the job. The project must be aborted, and the malinvested allocates liquidated – converted to cash at a loss. We get the bust, and then the Keynesians all blame the capitalists.

Thus the effect of the inflation is to deceive people, on a massive scale, into starting projects for which neither the underlying real capital of savers, nor the underlying real demand of consumers is enough. (That is why ‘greed’ is not an explanation of the boom or bust. Greed is always there. The question is, why is there a cluster of entrepreneurial success during the boom, and of entrepreneurial failure during the bust?)

If people were free to choose, and anyone could supply money, would you accept my Peter Hume paper dollars which I could increase at will? Probably not. The market would tend to choose as money something whose virtue is that it could *not* be increased at will – like gold.

Under free competition, savers or banks could still lend either money (say, gold) itself, or paper notes backed 100% by gold, or paper notes backed only fractionally by reserves in gold, e.g. 90%, or 50% or 8%. Different risk, different return. The risk-averse could deposit their money at 100% backing, with no return (because it couldn’t be lent out). And others expecting higher returns for higher risk could expect no public bail-out when things go pear-shaped, which is as it should be.

*The risk-averse could deposit their money at 100% backing, with no return (because it couldn’t be lent out).*

Ah Peter, but you have the choice to do that very thing right now!
In fact you can play it even safer. Buy gold bullion and have the
Perth Mint store it for you, as your very own gold. They will charge
you a fee of course, for keeping your gold safe, but that is
fair enough. They will buy some or all of it from you and the
daily price, should you need to access banknotes to pay your bills.

The very reason that we went to the system that we have today, is
because it was realised how limiting credit limits economic opportunity.
Think of all those plumbers, electricians etc, who
borrowed a few $ to set up their own businesses. Even micro credit
in the third world, changes peoples lives for the better.

We don't need more machines to make more products, what we need is
more innovation. Think of the venture capital that was thrown around
for the internet and everything from Google to Amazon to be created.
All positive for humanity in terms of information transfer and communication.

The only way you will land up with more innovation, is to have
more innovators, with more available capital, competing in the
market place.

Your idea of limited captial, due to limited gold, would stifle
the economy, stifle innovation, would limit little people with
bright ideas, from dreaming their dreams.

All because you have this fixed idea that banknotes should be a
store of value, rather then just a medium of exchange. Its not
as if you don't have other options, as I have pointed out.

So your theories are flawed Peter, I am sorry to say.

We have to devise a system of stopping our Govts and the Global Reserve Banks of European origin creating money at will.With just a small inflation rate of 3.5% our currencies depreciate by 41% every 10yrs.The reason for this is that inflation is compounding like interest.Unless you own an asset inflation destroys your earning capacity.

Notice that Kevin had to borrow OS from China to pay for stimulus packages.Get this.We borrowed to inflate our economy for no good purpose.We borrowed for china and bought batts from China that were of an inferior quality.We are paying interest on what could have been generated here.Our own RBA could have created this money and kept inflation under control via interest rates.It is the international agreements with the IMF that prevent sovereign Govts creating their own money to equal their own productivity.This is why the poor countries cannot escape the debt spiral.

In the USA Ron Paul has a great idea of getting Congress to issue a new currency in competition with with the Feds $ which is on the verge of collapse.This currency as I've suggested could be backed by the assets of the US people.ie the govt could issue shares in the national parks,roads land ,even private property,gold ,silver etc.The new currency would then be redeemable in these shares.Since the assets are limited then the money supply cannot outstrip the growth of the economy.

There is no doubt that the present system is both extremely unfair and dysfunctional.These European banks almost got though the carbon taxes for their world Govt.It was there in black and white in the Copenhagen agreement.They want another derivative called carbon credits to make even more money and CO2 will not be reduced one iota.

David feel not affronted by Pericles he is the master of obsfucation.

A house paid for in paper, well money 30 years ago would have cost nothing ore than$40.000 in my village.
Today nothing less than$165.000.
Cash hidden in the ground back then would still be worth $40.000.
John dg do you not understand those who work spend about the same percentages of income as you do?
Your bitterness at your position in life has nothing to do with the threads subject.
Arjay, please bloke,read the links given to you.

Peter Hume, you managed two entire posts without noting my sidebar on the gold issue. I'd appreciate your views, particularly since you went right ahead and continued to talk about "paper notes backed 100% by gold".

You stated that:

>>gold would be as much more stable than fiat money, as the value of gold has been stable compared to the value of fiat money<<

I pointed out that:

"When the US came off the gold standard in August 1971, the price was $35 an ounce. Today it is $1,120. That is a 9.3% per annum inflation rate."

"Fiat money" inflation has been around one third of that level.

So before you say any more about "gold-backed currency", I - and possibly others - would be interested in your defence of gold as a "stable" store of value.

Incidentally, I find your concept of multi-level private currency providers genuinely fascinating. It sounds, on the surface, to be a dream come true for fraudsters and scam artists, but I assume there is some level of oversight and governance, somewhere in the system.

Can you provide any references to where the concept has been explored in depth?

Yabby and Pericles
Unless someone can first show that increasing the money supply creates net real wealth, not just taking the property of A and giving it to B, then any discussion of the relative demerits of the use of sound money is premature.

But you haven’t shown that.

The stock of physical capital is not increased by increasing the supply of money or money substitutes. Are we agreed on that? Yes/no?

And therefore increasing the supply of money or money substitutes cannot stand for an increase in physical capital. Agreed?

Therefore prima facie, without something more, the idea that increasing the supply of money, brings forth extra productivity or other economic benefits is groundless.

To say that increasing the supply of money or money substitutes, by itself, brings forth “innovation”, is therefore groundless, since the innovation does not thereby have the use of physical capital that would otherwise be unavailable. Innovation without access to capital is as available under any regime, as under an inflationary regime. “If wishes were horses, beggars would ride.”

Underlying the inflationist argument is the mere assumption that, in inflation, we have discovered a way to suspend the physical and economic laws of nature in our favour, a magic pudding. We need no longer be bothered by the scarcity of capital: the printing press creates real wealth. It is nothing but a modern-day creation myth. I don’t know how to disabuse you of what is quite plainly a fallacy, other than to point it out to you, or challenge you to provide reason.

It is no advance on the original problem to merely keep repeating the same assumption, which is what Yabby has done.

So guys: on your mettle: how does printing more money or money substitutes create net real wealth?

Pericles, you need to compare the change of value of gold in real terms, not paper terms, versus that of fiat money in real terms. The buying power of fiat money has gone way down; gold has kept or increased its buying power. Do you want the buying power of *your* money to go up or down? Which do you trust more: gold, or politicians promises?

However the problem with fiat currency is not stability per se. I said that to show only that the claims of central banks to stabilise the value of the currency are false. The problem with fiat currency is that it’s highly economically and socially destructive and unethical.

As to your defence of tax as voluntary, don’t make me laugh. I suppose if a man threatens to stab a woman unless she agrees to have sex, so she agrees, then that's her “consent”?

Fiat money and fractional reserve banking are both against the common law of fraud, because they contain exactly the moral, or rather immoral ingredients of obtaining financial advantages by deception. What makes them not fraud under statute, is that the fraudsters and scam artists have control of making statues! Surprise surprise, they declare their own crimes to be illegal; and that is the only point of distinction from other fraud.

And then you have the gall say that a monetary system in which fraud would be illegal, would be “ a dream come true for fraudsters and scam artists?” What do you think the Federal Reserve is? The GFC? The bailouts? The stimulus packages? The IMF? The World Bank?

'they declare their own crimes to be illegal; '

(legal I meant)

Let's run through that again, shall we Peter Hume.

>>Pericles, you need to compare the change of value of gold in real terms, not paper terms, versus that of fiat money in real terms.<<

So, it's 1971, and I pay my admin assistant $7 an hour. (Actually, back then I probably would have called her my secretary, but we'll let that one through to the 'keeper, eh?) In fact, I give her an ounce of gold ($35) for every five hours she works, a total of 8oz a week.

If I gave her the same wage today, in your "stable" gold currency, I'd need to find 416oz a year, which is, I suggest, something of a stretch.

(Incidentally, the "Fiat" value of that gold is, according to today's paper, would give her an annual salary of $512,096)

But even at today's prices, let's take a large business, and see what the effect might be.

Telstra would need around 3.5m ounces of gold to pay their people each year. Conveniently, that's almost exactly 100 metric tonnes.

Which is around half of Australia's total annual output.

Just for Telstra.

>>gold has kept or increased its buying power.<<

True, but not in the way you imagine, since you make the same mistake, and compare it to a "fiat" currency in order to calculate its "buying power".

Let's think this one through.

Starting today, I issue gold-backed notes. At, say, $40 a gram.

My total possible "store of wealth" as you call it, would be ($40m x 220) $8.8bn a year, if I cornered the entire Australian gold production.

Question 1. What would the remaining 99% of the economy use for money? (Go on, check my figures: We are presently running a GDP of $1.02 trillion)

Question 2. If I need 100% of Australia's gold production to support 1% of the economy, would demand for gold increase or decrease?

That should do for a while, I think.

If possible could you respond with real examples? Theories only take us so far.

Pericles,you refuse to acknowlege that the present Keynesian system is stuffed since it has put the cart before the horse.The monetary system has excelled over real productivity.Who are the richest institutions on the planet and produce nothing? Our global reserve banks since they create inflationary money diluting the wealth generated by the real economy.When banks or Govts create inflation by the the production of excess money,it takes wealth from the rest of society by devaluing their currency.It is not theirs to devalue.This wealth belongs to the people who created it,not Govt,Wall St or the big banks.

This dysfunctional system actually destroys real wealth as we are witnessing now.The real wealth is in the skills,intelligence and aspirations of the general populace,not the avarice and lust for power exhibited by these present wreckers.

Pericles,the offer is still current of $20,000.00 if you can disprove the physics and maths of WTC 7 and the towers of 911 presented by http://www.aetruth.org/ I'm sure John and Richard Gage will offer you even more easy money if you have the courage of your convictions.

Pericles:
You, not I, have continued to reckon the value of gold *by way of* fiat money prices, which invalidates that line of reasoning.

And that evasion is your idea of answering the question: "how does printing more money or money substitutes create net real wealth?", is it? Why don't you just admit that you can't answer it?

Since you obviously have no idea what an intellectually honest conversation would look like, it would look like this:
Pericles: "By gum you're right Peter Hume. Good point. Now that I come to think of it, I can't see how we could create net real wealth just by printing paper. Since the proposition plainly violates the known laws of physics, and since I have, on being repeatedly asked, been completely unable to show any reason to think we can do it, I must concede that point, and with it, I concede the general issue. The claims of the inflationists, to create prosperity by credit expansion, cannot withstand critical scrutiny, and are false. To avoid any appearance of evasion, I hereby renounce my former ill-thought-out belief that we can make net real wealth by printing paper, declare that I was barking up the wrong tree, and humbly apologise for having troubled your patience in raising me from my former rude state of ignorance and superstitious state-worship. Thank you, thank you, thank you. Amen."

The answers to your further questions must however await your erudition from the ignorance of your current clueless bumbling. All the examples in the world won't help you understand, while ever your apparatus of understanding is home-spun non-theory made up of garbled fragmented incoherent Keynesianism, and you demonstrably and shamelessly:
a) confuse paper with real wealth
b) confuse money with money substitutes
c) confuse production with consumption
d) confuse taxation with money supply and
e) confuse consent with coercion.

I know that *you* think your latest queries are clever and incisive, but in fact they just show that you don't understand what you're talking about, and are being hammered into the ground like a tent-peg.

*The claims of the inflationists, to create prosperity by credit expansion, cannot withstand critical scrutiny, and are false.*

Not so Peter. Credit greases the wheels of commerce. With less
credit, you have less economic activity, less innovtion and
less wealth creation.

Lets just go right back to the basics of the third world on this,
for you to understand it. To the world of microcredit, where banks
do the lending, banks specialised in the field.

The African woman borrows a couple of hundred $ to buy a sewing
machine. She can create clothing etc, with her new business.
Or the poor farmer who can now buy fertiliser, to grow a crop,
which he could not have grown without it. Or it would have yielded
a quarter of his crop with fertiliser. Or he buys a rotary hoe
to till his fields, enabling him to grow far more food them
ever before. All wealth creation, by the simple ability to
borrow.

You're back on the "insults as argument" track again, Peter Hume.

It really isn't a good look, you know.

>>...evasion is your idea of answering the question... you obviously have no idea what an intellectually honest conversation would look like... the ignorance of your current clueless bumbling... your apparatus of understanding is home-spun non-theory made up of garbled fragmented incoherent Keynesianism... you don't understand what you're talking about, and are being hammered into the ground like a tent-peg.<<

Now that you have got that out of your system, how about actually addressing a few of the points, instead of pretending they don't exist.

Eh?

How would our Australian economy operate, on a gold standard?

Really. Not in theory, or in a perfect world. But practically.

It is permissible to explain that gold is only one possible standard. But if you do so, you should also explain how your substitute would operate. In real life.

You suggest that I "confuse money with money substitutes".

In what way? You are suggesting that "fiat currencies" are somehow undesirable, yet you have not proposed any workable alternative. What conclusions are we supposed to draw from that?

You suggest that I "confuse production with consumption".

Ok, let's hear an explanation from you, that separates the "production" of gold clearly from the "consumption" of gold, in your non-fiat-currency world.

But let's get back to your trump card. That famous "non-question"...

"how does printing more money or money substitutes create net real wealth?"

The answer is that "on it's own, it does nothing"

In the same way that if a country printed a trillion dollars of "new money", and hid it in the cellar under Parliament House, it would have absolutely no impact on the economy whatsoever.

Money - of any kind - only has value when it moves.

It is the IMF and the World Bank Yabby who keep third world countries in debt.They loan to corrupt Govts and get their resources and labor for a song.These countries cannot get out of the debt spiral.

These countries must also be allowed to generate a % of their own credit.The loans should be targeted at community projects rather then corrupt Govts.

Yabby and Pericles
Well if what you are both saying is true,then why not just keep printing fiat money, or lowering interest rates, until everyone in the world is independently wealthy and no-one has to engage in productive activity any more? We could then access capital without cost. You are admitting to your irrationality, there's nothing more to be said, and you are dismissed.

Pericles, data do not interpret themselves. There's no point discussing "examples" or how things work in practice if you do not know or care about the requirements of basic logic or of intellectual honesty. You can indulge your own invincible ignorance; it's far too tedious for me. If you honestly want to understand the topic, a readable introduction is "What Has Government Done to Our Money" by Murray Rothbard, but don't bore me with your dishonesty and ignorance unless and until you've read and understood it.

Arjay
Back to my original point, about the politicians don't understand it. Yabby's and Pericles' primitive superstitious worship of Kevin Rudd's arsehole, just says it all. According to their theory, there is a problem of natural scarcity of capital which affects human economic activity. But we can remove this scarcity without work or savings. All we have to do is ask the chief executive of a legal monopoly of coercion to wave his hand, and the scarcity magically disappears. When challenged to show reason for this belief, they evade, and shift, and pretend they didn’t see the illogic and untruth of their assertion, and glose, and divert, and side-track. So it’s hard to know whether you are dealing with invincible ignorance or deliberate dishonesty. But when it finally comes down to it they just assert as an article of faith "Yes, we can create real wealth by printing paper." Life is a cornucopia of limitless wealth just waiting to be opened by the magic sesame of government.

They remind me of the tribal Aborigines who believed that by rubbing a shell they could make it rain, or like the little child who asks why his mother doesn't just get all the money he wants "from the bank" by filling out a withdrawal form. They are reduced to arguing that economic life could not take place without government monopolising the money supply. Yet no-one will ever show *reason* for this belief except endless repetition of an open-ended double standard. They are intellectually literally at the level of unweaned infants squalling for the teat. And many politicians, like Barack Obama or Kevin Rudd, have perhaps not even thought about it as much as Yabby or Pericles, and openly make decisions by relying on advice from government-funded Keynesian economists, with bankers, one of the prime class of fraudsters and charlatans benefitting from the scam.

You really are scraping the barrel, Peter Hume.

>>You can indulge your own invincible ignorance; it's far too tedious for me... don't bore me with your dishonesty and ignorance unless and until you've read and understood it<<

Insult is a very poor substitute for discussion.

But it doesn't let you off the hook.

>>why not just keep printing fiat money, or lowering interest rates, until everyone in the world is independently wealthy and no-one has to engage in productive activity any more?<<

That, from someone who has just called me ignorant and dishonest, is a classic.

Because that simply isn't how it works.

Just because the support of a currency isn't immediately obvious (i.e. you can't turn all of it into gold bars overnight), that doesn't imply that it has zero value. Its value is determined by the market in much the same way as tangible commodities, namely supply and demand.

Obviously, if you circulate too much of the stuff, it will lose value. But there is a balance that exists between the various factors - trade, interest rates, economic growth, that sort of thing - that provides the "marker" for people to ascribe a specific value to it, on a specific day.

I know it is complicated. But simplicity - as in your "gold is a stable currency" fallacy - is no substitute for reality.

You do yourself no favours, either, by inventing other people's views.

>>they [Yabby and Pericles] just assert as an article of faith "Yes, we can create real wealth by printing paper."<<

You know perfectly well that neither of us has said any such thing. It can only illustrate the emptiness of your own argument, when you stoop to such tactics.

>>They are reduced to arguing that economic life could not take place without government monopolising the money supply<<

Nobody argues any such thing. It just happens to be a reasonable contemporary structure, that works.

Try writing something without the string of invective, Peter Hume. We know where your economic preference sits. Try defending it with reason, instead of polemic.

Peter,

You lost it on points – regardless of some of the good ones you landed.

I was enjoying, no – I was learning. Alas, you nailed it with:

<< You are admitting to your irrationality, there's nothing more to be said, and you are dismissed. >>

<< There's no point discussing ... if you do not know or care about the requirements of basic logic or of intellectual honesty ... you can indulge your own invincible ignorance ... >>

<< Yabby's and Pericles' primitive superstitious worship of Kevin Rudd's arsehole, just says it all. >>

<< They are intellectually literally at the level of unweaned infants squalling for the teat. >>

_______

Arjay, you lost it way back, the WTC stuff just blew my mind away. I was hoping you would acknowledge some of the good points landed by Pericles or Yabby, you didn't - it was your thread after all. What it boiled down to was your own personal slant on things, without conceding anything of substance.

If you were involved in my area of expertise (science) you wouldn't last 5 mins.

But, thanks anyway – it was/is an interesting topic.
_______

To the antagonists (Pericles and Yabby) - thank you too. We may not agree on everything, but on this I found your arguments more persuasive.

qanda,how can you judge that,which by your own admission don't have a handle on? 911 bet, qanda was from another spat that Pericles and I had recently.He backed out on that one too.

Peter I'm in total agreement.The banking cartels have taken the whole system hostage.The GFC has just begun and they think that doing more of the same will alleviate the problem.This emphasis on a monetarist system distorts and destroys economies.

Yabby and Pericles will never admit that it is seriously flawed.I've been there before with both of them.When yabby feels that he is out of his depth he calls to his mate Pericles for help.

On this I think we may agree: by repeating things that got us into trouble in the 1st place is just plain silly.

It probably has something to do with a fundamental flaw in capitalism. It would require a paradigm shift to overcome and given human nature, it ain't goin to happen.

Peter, repeating your own straw man arguments over and over again,
is not going to win you any arguments, I am afraid.

http://en.wikipedia.org/wiki/Straw_man

Qanda, the problem is not capitalism, but human nature itself.

We seem to have a financial crisis, every 20 years or so. Then
along comes a generation of new kids, it seems they need pain to
learn the realities of life.

It seems that people need to learn the same things, over and over
again. Australia was lucky in a way. The HIH debacle was a great
lesson for us, so Costello clamped down on financial regulation
and installed some tough regulators, which kept the industry on
its toes.

Not so in America, where George and Dick did not believe in regulators,
so they became toothless tigers. Many FBI staff who
previously had policed corporate fraud, were given new tasks of
hunting for bin Laden and co. Even when it was pointed out to the
SEC, that Maddock was a fraud, 5 times in fact, they still took
no action.

Ultimately Americans can only blame themselves, for voting for
such dummies not once, but twice. But human nature being what it
is, people will ignore all that, rationalise it all away and
find somebody else to blame, rather then themselves.

In Greece they are doing the same right now. The Greek Govt cooked
the books for years. But now its not their fault, but those
seemingly evil speculators! Ha

Qanda
Wouldn’t it be great if it was just a matter of opinion whether we could make something out of nothing.? Unfortunately it’s not.

At least Yabby is openly embracing a fallacy. Thus he shows that he genuinely can’t understand the economics of banking, and is honestly participating in the debate. He thinks banking is that people write mysterious squiggles on paper, and then issues forth “money”, and this is the source of all wealth. That’s as far as his understanding penetrates.

Then you explain it to him, and he *still* doesn’t understand it.

Pericles is in an even worse intellectual position. He deliberately evades embracing a fallacy on which his argument must necessarily depend. For if he answers the question he is evading, either he admits that we can’t make something out of nothing and therefore that the inflationists’ claims are false; or affirms that we can’t make something out of nothing and therefore the inflationists’ claims are irrational.

Either way he gets blown out of the water, but that’s not because it’s a “trick question”; it’s because the question correctly pins the point at which his argument is false, and the reason he isn’t answering it, is because he knows it will prove so.

What an intellectually honest person does in this circumstance is admit that he’s wrong and re-think his views. Does Pericles do that? No.

Does he communicate that he’s not going to answer it, and give reasons why? No.

The difference between his not answering my questions, and my not answering his, is this. My question goes to the issue on which the entire discussion turns. For if inflating the currency does not confer a net benefit, then a) inflation as a policy is not justified, contrary to Pericles claim, and b) any considerations against the gold standard are irrelevant, and therefore so are Pericles questions.

So what we are witnessing from Pericles is both invincible ignorance *and* deliberate dishonesty.

If you are persuaded by that, I think you have credited him more for bad faith, than you have debited me for bad temper.

Peter, you continue with your straw man tactics, so I will make it
even simpler for you to understand.

Pericles is quite correct in his understang, your question is the
problem.

So my question is this: If I give you a shovel, will that mean
that holes will be dug? Clearly that depends on how and if you
intend to use it. Owning a shovel, does not create holes in your
garden, using it does.

Its the same with credit. Printing banknotes does not create
wealth. Providing credit, which can be used to increase economic
activity, certainly can be used to create wealth, which would not
exist without it.

So to keep it simple for you, unless you use your shovel to dig holes,
it won't do it for you. Is that simple enough now?

Sorry that should be:
"...or affirms that we *can* make something out of nothing and therefore the inflationists’ claims are irrational."

Thanks for the measured observations qanda.

>>repeating things that got us into trouble in the 1st place is just plain silly. It probably has something to do with a fundamental flaw in capitalism. It would require a paradigm shift to overcome and given human nature, it ain't goin to happen<<

A paradigm shift would be a neat way out, of course. But you're right, it won't happen.

Fortunately, the systems that we have, flawed and creaking though they may be, have the capacity to evolve.

The key variable that searchers for the Platonic ideal in finance keep missing, is the massive complexity of the interlocking global finance world.

But because of that interlock, it has self-adjusting mechanisms all over the place.

So for example, while China holds massive amounts of $US debt, they are hardly likely to encourage or precipitate a significant devaluation of the dollar. Especially as it would also mean that their exports would start to be priced out of their overseas markets.

That doesn't mean that over time, the exchange rate will not tip in the direction of China. It will. Nor does it mean that China will not gradually sell down the portion of their debt denominated in $US. It will.

But changing the system itself?

A pipedream, only.

As for you, Peter Hume, it is quite clear that you have totally disengaged from any attempts to support your position. You remind me of the guy I meet this morning, pushing an empty shopping trolley through the CBD, swearing at passers-by.

Noisy, but unintelligible.

Someone should take you aside and explain, that you don't win an argument just by claiming that you're clever, and other people are not. You actually have to step up to the plate, and justify your position.

Saying "but you're too stupid to understand" isn't a particularly convincing position, I'm afraid.

I notice you've gone dead quiet on gold.

Was it something I said?

Unless you can show how stamping paper creates real wealth, then you *are* too stupid to understand, and there's no point my wasting time explaining anything more. But no doubt some more of your favourite dishonest evasions and circular arguments will satisfy you.

*Unless you can show how stamping paper creates real wealth, then you *are* too stupid to understand,*

Peter, its no different to you being able to understand that owning
a shovel will not make holes magically appear, you need to use it
to dig them. Clearly that is way beyond you, but I can't really
go any simpler then that, sorry.

Yabby

In other words, if you print money or money substitutes, but leave it in the cupboard, it won't be used to create wealth, and therefore won't create wealth. But if you use it to provide credit, then it can be used to create wealth, (if the enterprise succeeds). Yes? That's what you're saying?

So I understand what you're saying. But you don't understand what I'm saying.

The 'credit' is a credit *to* something. It's only useful because it gives a claim to that something - namely capital; otherwise it may as well be left in the cupboard.

If the stock of physical capital is 100 units, and the stock of money is 100 units, and you increase the stock of money to 110 units, that increases the ability to provide 'credit'. You have multiplied possible claims to the same underlying piece of capital. But you have not increased the underlying stock of physical capital.

When everyone is happy and busy on activities financed by the extra credit, this causes an artificial boom, which gives the appearance that everyone is better off. But *because* the underlying stock of capital is not increased, eventually the competing claims to the same physical capital, in effect, fall due simultaneously and something's gotta give - the bust. The total effect of the whole cycle, boom *and* bust, is not to increase net real wealth, but a big net real loss from destroying capital on a massive scale by diverting it from productive lines into lines that must eventually fail. It makes society as a whole poorer, not richer; and that's only looking at the end result in terms of physical productivity, to say nothing of the exploitation and injustice involved in the process.

So why do they do it? They do it because *some* people - the banksters and speculators and government, and of course economists to sprinkle holy water on it - benefit at the expense of everyone else.

The scam is simplicity itself - wealth transfer by diluting the currency - but you try getting people to understand it.

Yabby,"Owning a shovel does not make holes magically appear,you need to use it."

A shovel Yabby is a practical tool that can do work.You are equating money which has no intrinsic value,with things of real potential.Money is the medium of exchange.

The Wall St prostitutes have turned money into a commodity to be perverted into derivatives. ie expection of greed based upon more greed without effort.Where is the productivity? Aye, tis it not in China? We grew a bubble,while China grew the reality.

What ever the reason we come to OLO clearly observing human nature is one result.
The claims of Peter Hume and arjay are extraordinary.
But of all their conspiracy theory's the most out there thoughts can be seen most recently in Peter Hume but often in arjay, the insults to those who disagree.
The very idea that the world has got in wrong , and those of us who disagree, and only they know the truth.
Peter your insults are noted but you do nothing for your case by using them.

Ok, it's obviously the bee in your bonnet, and needs discussing, so let's discuss it, Peter Hume.

>>Unless you can show how stamping paper creates real wealth, then you *are* too stupid to understand, and there's no point my wasting time explaining anything more.<<

Let us first agree that the act of creating money does not in itself create wealth.

Can we agree on that? I thought so.

Let us also agree that if you create too much money, the entire system will collapse.

Ok so far? Good.

Let us also agree that money, of any kind, has no actual value until it is being used ("in circulation").

It may have a perceived value - and this applies to gold, printed paper-money or glass beads - but its real value as a medium of exchange cannot be accurately determined until it is offered in that role.

If there is anything that you disagree with so far, Peter Hume, perhaps you will let me know.

Then we will be able to get on to the more complicated part.

Ah Peter, perhaps people don't understand it, because your theory
is flawed.

What you are implying that by creating a credit squeeze, we would
be better off in permanent recession, which is hardly the case.

The thing is, as credit grows, so do assets. People build houses,
they create businesses, which have a value. Farmers produce more
crops, which are an asset. Crops that would not be grown without
credit.

Before credit came along, assets were mainly in the hands of the
very rich who inherited them. Somebody needs to own those houses
in which every day people live. It might as well be everyday
people, who live in them. All thanks to our banking system.

There is still that strange silence around the function of gold as a "stable currency", Peter Hume.

To recap:

PH: "people would almost certainly choose gold and silver for their special qualities as money"

Pericles: "Would not the underlying "store of value" fluctuate in the same manner as currency?"

PH: "What makes gold valuable as a medium of exchange is precisely the fact that people in general, and governments in particular, can’t just produce it by fiat"

Pericles: "But they can dig it out of the ground."

PH: "yes, the supply of gold as money would affect the price. However gold would be as much more stable than fiat money, as the value of gold has been stable compared to the value of fiat money"

Pericles: "When the US came off the gold standard in August 1971, the price was $35 an ounce. Today it is $1,120... I - and possibly others - would be interested in your defence of gold as a "stable" store of value."

PH: "Unless someone can first show that increasing the money supply creates net real wealth, not just taking the property of A and giving it to B, then any discussion of the relative demerits of the use of sound money is premature."

Pericles: "Telstra would need around 3.5m ounces of gold to pay their people each year... Which is around half of Australia's total annual output... If I need 100% of Australia's gold production to support 1% of the economy, would demand for gold increase or decrease?"

PH: "if inflating the currency does not confer a net benefit, then a) inflation as a policy is not justified, contrary to Pericles claim, and b) any considerations against the gold standard are irrelevant, and therefore so are Pericles questions."

Your insistence on irrelevancy aside for a moment, Peter Hume, could you explain again how the gold standard - or any mineral standard for that matter - would work.

Not for me, of course, I am far too stupid to understand it.

But for the clever people here.

Yabby,"As credit grows,so do assets." This is a mind boggling,stupendous oxymorn.As I've said in the past Yabby,giving oxygen to morons.

You like the present fools of this Keynesian system believe that the creation of money equates with productivity and wealth.Nothing could be further form the truth.They tried this at the beginning of the Great Depression and prolonged the agony for a decade which led to WW2.We did not really come out of recession until 1960.So we were in the wilderness for some 35 yrs because fools think like you and Pericles of easy money via the share market improves productivity.

When the production of money over rides real productivity,then the real wealth ie the skills,creativity and aspirations of your population is destroyed.

Both Yabby and Pericles believe in a monetarist system of screwing the masses to benefit a few elites.This system actually destorys real productivity, since the masses lose incentive to excel beyond their mediocrity.The masses actually have a lot more potential than Pericles, Yabby or the olicgarchs give them credit for.This is why the US is in the throngs of decay like ancient Rome.

Our banking system creates nothing of tangible worth,yet controls our Govts by virtue of the fractional reserve system (legalised counterfeiting)which actually dimishes human aspiration via debt slavery.The real wealth is in human aspiration and inventiveness,not in the creation of monopoly money for an elite few.

*since the masses lose incentive to excel beyond their mediocrity.*

So in other words Arjay, you'd prefer to keep them poor, slim and
mean, so that they work much harder. How kind of you :)

But this is where you really screw up Arjay:

*A shovel Yabby is a practical tool that can do work.You are equating money which has no intrinsic value,with things of real potential.Money is the medium of exchange.*

Exactly Arjay, money is a medium of exchange. So if somebody can
borrow the money to exchange for a shovel, they can go ahead and
dig those holes. Try doing it with your fingers, its not so easy.

Yabby;Why do we need to borrow from a cartel of international banks to buy a shovel we can produce ourselves? I think you are digging a deeper hole for yourself and this failed monetary system.

You and Pericles have the facilitator of transactions as being all supreme.It is people who create wealth,and not fiat depravity.

Arjay, it is not a question wether we can produce something. It is a
question wether we can produce it cost effetively. Next you will
be telling me that you want high tariffs back. The net result of
that would be a massive drop in the standard of living for most
Australians, particularly the poor.

Yes we could take the easy option and print more money. The effect
of that would be a devalution of our currency, its rather pointless.

Australians have the choice to save more, to reduce our current
acount deficit. As the tax system encourages people not to save,
they don't. Duh.

Now back to credit and buying shovels. There is a well known
Peruvian economist, whose name escapes me, who showed quite
clearly why many in the third world are poor. Most simply don't
have written title to their land. As they don't, they can't
borrow against it and so can't purchase the machinery, fertiliser
and seed to farm it productively. So they stay poor and hungry.

So what now happens in places like Ethiopia? The poor miss out
once again, as the Govt leases out large chunks of Ethiopia to
other Govts, to invest in farming that land to grow food, for
their own countries of course. The poor stay poor.

All very sad really

Yabby

In other words, if you print money or money substitutes, but leave it in the cupboard, it won't be used to create wealth, and therefore won't create wealth. But if you use it to provide credit, then it can be used to create wealth, (if the enterprise succeeds). Yes? That's what you're saying?

So I understand what you're saying. But you don't understand what I'm saying.

The 'credit' is a credit *to* something. It's only useful because it gives a claim to that something - namely capital; otherwise it may as well be left in the cupboard.

If the stock of physical capital is 100 units, and the stock of money is 100 units, and you increase the stock of money to 110 units, that increases the ability to provide 'credit'. You have multiplied possible claims to the same underlying piece of capital. But you have not increased the underlying stock of physical capital.

When everyone is happy and busy on activities financed by the extra credit, this causes an artificial boom, which gives the appearance that everyone is better off. But *because* the underlying stock of capital is not increased, eventually the competing claims to the same physical capital, in effect, fall due simultaneously and something's gotta give - the bust. The total effect of the whole cycle, boom *and* bust, is not to increase net real wealth, but a big net real loss from destroying capital on a massive scale by diverting it from productive lines into lines that must eventually fail. It makes society as a whole poorer, not richer; and that's only looking at the end result in terms of physical productivity, to say nothing of the exploitation and injustice involved in the process.

So why do they do it? They do it because *some* people - the banksters and speculators and government, and of course economists to sprinkle holy water on it - benefit at the expense of everyone else.

The scam is simplicity itself - wealth transfer by diluting the currency - but you try getting people to understand it.

What more can we say Peter Hume.We can lead fools to the fountain of knowledge but we cannot make them drink or think.

Luckily they have their palcebos called derivatives,hedge funds, credit default swaps with the aid of bankster counterfeiters to expand the bubble.

Lol Arjay, we know all about your so called "fountain of knowledge".

Its either "the CIA did it" or its "Ron Paul said it" Oops I nearly
forgot the other source, "I saw it on Utube" :)

I have to admit, I do find Arjay and his consipiracy theories
about the world, highly amusing. The good thing is that we can
actually read your posts. With UOG it was mostly gobbldygook,
so hardly worth trying to decipher.

Arjay, at least you provide light comedy relief on OLO!

Yabby,You and Pericles love calling me a conspiracy nutter.Well John my engineer friend has just agreed to take on all comers.The bet is to disprove the salient scientific facts on http://ae911truth.org/

I'm offering $20,000 even bet and John (an aeronautical engineer) is offering $100,000 even bet.We will take offers to match your budget.

If and when you lose,the deal is that you pay the monies to ae911truth.There will no personal gain for us.

So put up or shut up Pericles and Yabby.Now is the time to prove your bravado.

For large bets we will agree upon a betting agency of mutual agreement.The forum will be decided by professionals in physics/maths of your choosing and ours.NIST, the US agency National Institute for Standards and Technology will gladly assist in providing expertise.

Pericles always disappears when it really gets hot.What say you Yabby? Have you the courage of your convictions

Deary me Arjay, you are not the smartest little pea in that pod,
you really arn't.

Pericles and I don't have to prove anything. For it is you making
these hugely outrageous claims, it is you who cannot provide credible
evidence, so that people believe you. The onus is in fact on you,
not us.

Now if somehow you did have credible evidence, it would be the story
of the century and the press would be knocking down your door to
give you money and publish it. They paid Lara Pringle 200k$ just
to tell her story about the boyfriend, how much do you think that
story would be worth?

The USA has hundreds of thousands of engineers who vote democrat.
A great deal of them would give their back teeth to get rid of
the republicans forever, which such a story would do. But they
don't believe you, they think you are nuts.

When Nixon was kicked out over Watergate, they provided credible
evidence. When Bill was caught with Monika, she had that dress with
the stains, to prove her blow job story. The press paid millions.

You have nothing that anyone believes and are considered a nutcase,
along with your friends.

Convince those American engineers, who have far more information then
Pericles or I have and who would love for your story to be true,
that you are not a nutcase and the world is your oyster.

You will be so rich, you will never have to worry about inflation
again :)

Your last post here arjay is the only evidence I need to confirm a long term view.
At the start I did not see much in your posts but increasingly you have become what you your self described you as ,your words not mine a nutter.
I wounder truly, why we answer you in these fly paper threads.
In doing so we however give you a forum to spread such junk.
But we also give a place for the much more realistic views of two in particular to be heard.
Time passes arjay, live more of your life

Arjay, way to go off topic mate - why would you do that?

You (even Peter Hume) may think that you're leading us to the fountain of knowledge, many don't. Bye.

Oh common Yabby and Belly,start with the evidence of freefall of WTC 7. Would you like some help?

The Ex-PM of Malaysia Mahathir Mohomad, Yukihisa Fujita an important member of the Japanese ruling Democratic Party, Armadinajad of Iran are all calling for a new investigation into 911.Millions of people around the planet know,yet the West gets the mushroom treatment from a pathetic media.

ae911 truth has doubled it's professional membership in the last 12 mnths.There are now over 1100 Architects and engineers with almost 8000 other supporters.

It is like finding out that your father is a paedophile and is still abusing your sister.What do you do Yabby and Belly,close your eyes and hope it will all go away,or face the truth ?

I know it is off-topic, qanda, but this is Arjay's thread.

>>I'm offering $20,000 even bet and John (an aeronautical engineer) is offering $100,000 even bet.<<

I've said this before, Arjay, but I'll say it again.

Publish your offers in a public forum - a newspaper, Today Tonight, whatever you choose - along with the terms that will decide the "winner".

Until then, your mumblings are meaningless.

But honestly, I think Yabby's proposal would be far more lucrative for you. Just call Max Markson or Harry M Miller - you'll be a very rich celebrity.

If you could only get past "I know I'm a conspiracy-nut, but..." part.

>>If and when you lose,the deal is that you pay the monies to ae911truth<<

And if and when you lose, all winnings go to a charity that I - or any of the thousands of people who will take your bet - will nominate.

You do intend this to be open to anyone, don't you? Just be aware that it could get very expensive.

But you're so confident that you are right, you welcome all comers, right?

Incidentally (back on topic) I think I have spotted the reason you believe you are also so, so right, Peter Hume.

>>If the stock of physical capital is 100 units, and the stock of money is 100 units, and you increase the stock of money to 110 units, that increases the ability to provide 'credit'. You have multiplied possible claims to the same underlying piece of capital. But you have not increased the underlying stock of physical capital.<<

This might be absolutely true in your fantasy world of mineral-based currency. But in the real world, new investment can, demonstrably, yield new value.

It's your insistence on "physical capital" that gives it away. In our world, we use money, which works differently.

All the clever people on this thread are still waiting for your explanation of how a gold standard could possibly function, by the way.

Not me, of course. I'm far too stupid to understand it anyway.

Wow Arjay, 8000 supporters hey! Let me see, the US has a population
of 300 million, that is less then one in 30'000 that you have
convinced. Now in our town, of the 2000 people who live there,
at least 20 or 1% believe wierd stuff. You arn't really doing
that well Arjay.

I did in fact have a look at Building 7 and discussed it on OLO.
What you had is a building of dodgy architecture, built on top
of a power station, with far more floors added then it was ever
designed for. Then they knocked out a big section of the middle
of the building, to suit one of the tenants. But the real problem
was that when fire broke out, the fire extinguishers failed.
The side of the building eventually developed a bulge and finally the
whole lot came crashing down.

All that information, just from Wikipedia.

Arjay, the democratic party is stacked with lawyers. They know what
is credible evidence, what stands up in court and what is bulldust.
They would love some credible evidence. Now even a bimbo like Monika
could produce a blue dress. You guys nothing. No whistle blowers,
nobody claiming the millions available for evidence that stacks up,
nothing.

Arjay, produce credible evidence like Monika did, you will roll
in the millions.

Arjay your jump to another subject mid thread must have a reason.
Was it getting hard to support your other claims?
We often change the subject if we think we are not winning another it looks that way to me.
So 8.000 support you.
In America people in that number believe very strange things so it is no surprise is it.
Live more of your life mate , you can hop on another conspiracy train any day of the week.

Yabby and Belly,ae911truth has been only going for 2yrs.It took 6yrs for a sham report to be put out by NIST.Most architects and engineers do not want to compromise their careers or put themselves at risk.The science and maths is there and is irrefutable.Just place your bets.

PS.When you stop calling me a conspiracy nutter,then I will not divert from the central theme of the topic.Ad hominen brings on it's own depravity.

Ok, I'll bite.

>>When you stop calling me a conspiracy nutter,then I will not divert from the central theme of the topic<<

What term would you prefer?

And just in case you hadn't noticed, the ball is entirely in your court.

>>The science and maths is there and is irrefutable.Just place your bets.<<

All you have to do is...

"Publish your offers in a public forum - a newspaper, Today Tonight, whatever you choose - along with the terms that will decide the "winner"."

Please don't be concerned about taking advantage of our generous natures, Arjay. I would imagine there will be many thousands willing to contribute to your cause, so long as you provide a reasonably level playing field.

Can you do that?

Thought not.

Arjay I bet, I Gamble, study the odds look at the horse trainer jockey, form track conditions.
I think it is a fools game, I can never see inside the mind of that jockey, trainer, horse or the others in the race.
But having looked at the form I must warn you, you can not win, you are placing your bet on the ambulance that follows the race, it is duty bound to be last home, and will be.
And last you views, very much minority ones are not of this planet,way out there untrue unsustainable.
In the strangest way you help keep the real conspiracy's hidden.