Money as Debt

Discussion in 'Economics' started by WallstYouth, Apr 27, 2007.

  1. gnome

    gnome

    Estimates of world monetary growth are running 12-18% per year. Many are expecting world money supply to increase 50-100% over the next 5 years.

    If world GDP is around 4% per year, the "excess money creation" leads to (1) inflation, and (2) money-pump rise in equity markets.
     
    #11     Apr 27, 2007
  2. The World GDP is grossly underestimated for various political and practical reasons. China's GDP persists at around 8% despite efforts to curb growth.

    One indication of the possibility of a grossly underestimated world GDP is the current level of dry bulk shipping freight rates being close to an all time high despite the huge increase in vessel supply

    http://quote.bloomberg.com/apps/quote?ticker=bdiy&exch=IND&x=15&y=11

    Nevertheless, this has little relation to the false claim that money represents debt.

    John
     
    #12     Apr 27, 2007
  3. Or if the currency is easily divisible, there would not even need to be an increase in the money supply.

    You do not have to agree 100% with the video but to ignore everything he says is simply accepting being hoodwinked.

    It's just simple math.
     
    #13     Apr 27, 2007
  4. Oh common! Are u kidding?? How is it possible to separate wealth creation from wealth transfer?

    If I can fix cars and fix cars for money do I create wealth? No, its only wealth transfer, the money comes from someones elses pocket.. LOL

    If u make money in the stock market u are contributing to the wealth creating process.

    Do u think it’s possible to replace the traders and investors that makes money with monkeys and still get the same real GDP growth?
     
    #14     Apr 27, 2007
  5. the gold part of the video was OK....

    and fractional gold reserves by the Central Bankers was recently revisited by Greenspan himself...........

    Greenspan waved off the necessity for the CFTC to regulate gold derivatives, telling Congress to fear not, that the “central banks stand ready to lease gold in increasing quantities should the price rise.”

    he didn't say the banks had good delivery bars to lease.....he said they can lease whatever they want to lease.....

    go ask the Central Bankers for an audit of their "in the vault" bars and matching serial numbers that haven't been leased or leased multiple times

    lotsa luck..............
     
    #15     Apr 27, 2007
  6. http://en.wikipedia.org/wiki/Money_multiplier

    this sums up the basic idea. with a reserve ratio of 10:1, banks pocket the difference between lending rates and deposit rates on 10 times the amount of the original deposit (while diluting all savings and spending power at the same time)

    seems like a wealth transfer mechanism inherent in the way our money is created. it's true that consumers dont HAVE to borrow money, but the reality is that they are at an increasing clip and the govt/corps have no prerogative to stop this cash cow. we're trapped in this self destructive cycle where more and more leverage is required to maintain the status quo - so reducing debt isn't really an option for the govt or most households

    if banks can continually lend all the money that they're paid back on a growing debt, at interest - doesn't this result in perpetual growth of their share of the money supply? what happens at the point that consumers can't run fast enough to finance and fall off the treadmill, do the banks foreclose on all collateral..

    even if you choose not to participate in borrowing to finance your lifestyle, you still essentially pay a financing charge on your savings as inflation. and we're not talking 3% like the fed wants to pretend. food, energy, shelter ... healthcare
     
    #16     Apr 27, 2007
  7. Maybe status quo is the best solution. I agree, it seems like the money creating process is a wealth transfer mechanism. Wealth is transferred to the government and the holders of bank stocks. But what would be the alternative?

    If money supply growth didn’t erode the value of money, it would be possible to get a share of the growing economy even without taking market risk since the amount of goods in the economy would grow when the economy was growing. More goods chasing the same amount of money, natural deflation. Money would buy more and more.

    Imagine that u inherited a lot of money, u would not even need to learn how to invest to be able to get a good real return on ur money. With status quo at least the rich have to do some kind of work or take market risk to keep and accumulate more money. I’m not in favor of wealth transfer in general, but this seems like the fairest way to do it. Inflation is a tax on savings.
     
    #17     Apr 28, 2007