Thanks Trefoil and Ron for the reply- Ron, the lowinf/hi inf distribution of wealth is clearly over my head. LOL. Could you explain a little the mechanism for this? Is it a different scenario for short term consumer credit vs a long term home loan where the borrower would get the benefit of repaying the loan with devalued money ( I assume you agree with trefoil's "yep")? And what would be the effect of a person that got a low interest loan the last several years, and what would happen if inflation does indeed rise? Would this be the best possible scenario for a borrower, or would it be bad? Thx in advance...
People keeping hard currencies in private reserves has nothing to do with the monetary system. It's a completely independent variable. His premise that money is debt (to me) means that the money in circulation currently isn't backed by gold, like some think it is, but backed by a giant web of debt, essentially. That doesn't go against his premise. What do you think me means when he uses the term "money"? The video covers the different types of money and the different monetary systems. A large part of the first half was dedicated to these topics. Actually, a dollar bill is a promisary note saying that the government will pay you a dollar when you ask for it. In fact, on a dollar bill it says "this note is legal tender for all debts, public and private". What is a dollar bill worth? One "unit" of debt. The premise that "money is debt" isn't a strawman argument, and it isn't wrong. But it IS funny that it's supposed to be a revelation or something. I mean, what do people really think money is? TNG
Hey boss- I would think that money isn't backed by debt, but rather by a giant web of assets - homes (from home loans), cars (from car loans), and business assets (from business loans), etc... Am I off base here?
Why do you think money should be backed by gold? More importantly, why do you think a financial system where money is backed by gold is a better one? That kind of system can be manipulated by either cornering the gold market or increasing its supply and can be driven to hyper-inflation or depression. He must explain what he means when he uses the term "money". Apparently, what he means is not the prevailing concept in the western monetary system. Do you think someone will ever ask you to return back any money you have in your wallet? That would be the case if the strawman argument that "money is debt" was valid. The creator of the video is another conspiracy theorist like those who believe in the moon hoax. These people take advantage of the fact that some subjects are fairly complicated and beyond the grasp of the average Joe. Their aim is to attack the system because their are either failures themselves or they have a political agenda. As I said, conclusions from strawman arguments are refuted by a simple counter-example. I gave two such examples but you rejected them. I am sorry then, I can only have a conversation with rational people. If you believe the money in your pocket is debt why do you think whoever issued that debt does not claim it from you but lets you spend it instead? Also, why do you think you are not required to pay interest for the money in your pocket, something that would apply if it was debt but instead you can earn interest by depositing it in a bank? Oh, I know, you will come back and say that these points are irrelevant to the argument that "money is debt", something that is clear to you and obvious, blah, blah, blah... But the obvious is that it isn't. Of course there is still a flat earth society active. They argue using the same old arguments that sent Galileo to the court. Yet, their argument is easily refuted by going around the world... Money is a standard of deferred payment, the only accepted way to settle a debt. Only a fool will argue that the standard of deferred payment is debt. I mean it, only a fool... Ron
His argument is not a strawman argument, you are using that term incorrectly. He's putting forth a contention, a hypothesis or a theory. It's what every Phd ever written did, so by your logic, every Phd is a strawman argument. Incidently, what you wrote above is a perfect example of a strawman argument. I never said, or even hinted that I thought money should be backed by gold or that a currency backed by gold was a better system. Yet you refute that contetion (which I never made), which is what a strawman argument really is. He does, that's at least half the video. Have you watched it? What's your concept of the western monetary system? He contends it's a fiat system. No, I think you've misunderstood his position. Again, have you actually watched the video? He never once says that currency holders are in debt. What he's saying, is that the ISSUER is in debt, which was not the case with prior monetary systems. With commodity currencies, there was no debt, which fractional reserve banking there is a regulated amount of debt, and with fiat money there is only debt. I didn't "reject" them, I explained to you why they were incorrect. How is that irrational? Calling me a fool doesn't strengthen your argument, it weakens it. Why are you mentioning consipiracy theories, the moon and people who think the world is flat? What does that have to do with anything? TNG
Yes. Money is backed by nothing but government debt. Call the mint someday and say you want to redeem a dollar. See what they say. Years ago, you could, because it was a receipt. Now it's not. Money is not backed by anything, but because it's fiat we have to use it as a system for exchanging value. I'm not saying it's right or wrong or better or worse, but it is what it is. TNG
In a sense you've just created and burned your very own strawman. The amount of money out there is vastly greater than the supply of hard currency. Most Americans see very little of any of their money in green or coin. On payday, they either get a check or (more common) get a direct deposit. They write checks to pay their bills or pay online, since the vast majority of their regular major bills are not paid in person. They buy Maker's Mark with a credit card, and pay that bill online. Traders have accounts that were not funded in cash, and a few manage to take withdrawals as money transfers or checks - but not dollar bills. Your friends are poorly served by stashing cash. If their fear is some sort of banking problem, they'd be better served by stashing gold or some other precious commodity. Better still, a collection of precious commodities. If they do not fear a banking or currency problem, they'd be better off in some form of investment. If they are US Senators, tell them to not store it in the freezer. But that's irrelevent to the discussion at hand. I do accept that there are people who hoard currency. I'm pretty sure I have 40 or 60 bucks plus in my money clip, plus a jar of coins, plus my wife has plenty, plus some coins in my coat. But all the cash I have is practically nothing compared to all the money I have. I propose that all the hoarded currency and all the floating currency is tiny in comparision to all the money that is out there. In other words, the amount of currency is too small in comparision to all the money to make a difference. EDIT: BTW, this is nothing more than it is. Meaning, I'm not saying I agree with the video. The only point I'm making is that saying people have hard coin so therefore the . . .uhm. . . author's (for lack of a better word) argument is false is incorrect. I'm still trying to decide if his stateful argument applies to a stateless world. He explains it all as if everything happens one step at a time - first we are at state a then step into state b never to return to a, but in the real world there's every step being taken at all times.
Ok, I understand your point about money being fiat, and I agree with that. I also agree that it's not better or worse,as long as the currency being used, be it fiat paper or feathers like the video gave, works. I think we also agree, that in essence, the banking system and the 'creation' of money is nothing but a pyramid scheme. But I guess where we would disagree is that the electronic "money" that the bank creates is created out of thin air, because I see that the'money' that the bank has created hasn't been created out of thin air, but represents the asset that the bank now controls - namely 'your' house, etc - which isn't really your house, it's the banks'. And I see no difference what asset backs that 'money', as long as it is backed by something.
I think what the autor is sayins is a twist of what you are saying. Money isn't really being backed by assets, it just so happens that some of that money is used to buy assets. The total monetary supply is still far greater than the value of all assets it's used to buy, expecially when you consider massive corporate loans used for business development, and the uber massive loans given out to third world countries for infrastructure development which will never be repaid. I would say that if the loan money was being used to buy assets, it would be backed by assets. However, I believe the vast majority doesn't buy assets. Also, there's the case of the asset dissappearing. What if your house burns down and you have no insurance. You still owe the money, but the asset is gone. TNG
Rather the money is backed by the confidence we have in it to buy future assets. The same could be said about gold, gold is a store of value because others perceive it as so. Gold in itself is not that useful. When money is backed by gold it says that each bill can be converted into a marketable asset and so it creates confidence in the system. What I'm wondering is why you say that the total money supply is greater than the value of all the assets. Money can be reused multiple times, the velocity of money, and thus you don't need as much money as there are assets, even taking into account money that could be lost due to bad investments. Here's an example: you have 2 people, one person has oranges he gets in the first half of the year and the second person has apples he gets in the second half of the year. During the season the supply is unlimited but the fruits can't be stored for later use. That means in the second half of the year, the orange grower needs apples or else he starves to death, and vive versa. With 1 dollar only introduced in the economy, the orange grower can sell a half year's supply worth of oranges to the apple grower. In the second half of the year, the orange grower uses his one dollar to buy a full supply of apples, and this goes on forever. In this case the supply of money is not bigger than the value of assets, there's 1 dollar in the economy at all times but assets worth 1 dollar(all the oranges or apples that can be sold) or the assets are worth 2 dollars(enough apples or oranges to feed 2 people) I just read a good book about financial history in the US and inflation. His arguments really help understand the cycles. Hell the book is written in 1972 and he predicts a terrible decade of inflation and stagnation. I feel that it's imperative that we understand how today's financial system works and I think the system we have today is more complicated.