It’s obviously no mystery that the only reason the U.S. Dollar, and most of the world’s currencies, have any value is because the central banks and governments say it does. After we left the gold standard, there was no commodity to back the money or regulate the money supply.
Now, it was no mistake that we left the gold standard. As our economy would continue to grow and grow, the money supply would not grow to accommodate. Larger amounts of transactions would be done with the same money supply. This leads to deflation and deflation, obviously, ruins an economy.
Sidenote: Deflation is NOT deleveraging. Those are two different things entirely. Deleveraging is the common viewpoint of deflation: when prices of goods fall. Deflation is entirely different.
The Federal Reserve created the fiat money system. This monetary system is tied to no commodity and provides floating exchange rates. While floating exchange rates is a plus for foreign trade, it is only a plus when the Federal Reserve (or any central bank) is responsible. When the Fed prints money like crazy, the value of our currency will decrease. It’s like any good: when supply increases, value is lost.
The bond bubble is fueled by this.
Now let me explain. The Fed created the fiat money system so the public sector could keep the market regulated as it saw fit; it tried to do what was in the well-being of the people. The middle-class of America was created by the ability to finance purchases with loans, mortgages, etc. Interest rates to the debtors was what mattered. The only reason the middle-class was able to be built the way it was was due to low interest rates. These same low interest rates were artificially created by the government.
Foreign countries would buy our bonds (IOUs of sorts) and wait for us to repay. Well, the way we would repay was through the private sector. The money given to us by others, like China, buying our debt went to keeping all interest rates low so people could finance and save. The microeconomy would adapt and spend more on foreign goods. These foreign goods would create huge revenue for the countries buying our debt. So with the money cycling back to them, they re-buy debt.
Bonds, the debt certificates, have maturities so that huge amounts of interest do not accumulate. Mostly they have long-term maturities, but a lot of the times they have only 5 year maturities. The maturities are the set dates of when we must pay the debt back by.
Well as investing in our currency increased, we could keep fueling the debt-fueled economies. But to make payments, the Fed realized they could print their way out. They eventually had to with the short-term maturities. This was horrible for the economy. Since leaving the gold-standard, the dollar has lost near 95% of its purchasing power. $25,000 in 1929 would be over $300,000 today. We ruined the dollar.
But here is where this system falls further: other countries are decreasing investment in our currency in increasing in others (such as the Rupee). On top of the decrease in investment, structural deficits sky-rocketed. So as our dollar loses value from printing and our debt increases, our need to sell off bonds increases. But less are being bought. Can you guess what this means?
A huge increase in interest rates and every other good. Floating exchange rates, because of irresponsibility, made our dollar fall entirely. The bond bubble is bursting. And the only way we fueled this failure was fiat money.
Fiat money and the government doing what it saw to be in the best interests of the people led to this, and we’re going to have to help ourselves when the huge inflation comes. The fiat system in America needs to end; we again need commodity back currency. And it needs to be a commodity that can expand with the economy.
A better possible solution? Competing Currencies.
bravisimo! I implore y’all to read this, it’s very well written and spot on. In particular I like how the distinction is made between deflation and deleveraging. Deflation = decrease in the monetary supply, of which falling prices are a symptom.
Deleveraging = a reduction in the supply of available credit
Knowing that, it’s clear to see that what we’re experiencing isn’t deflation, but rather inflation brought about by the Fed’s attempt to fight deleveraging. And it makes sense that in the housing market, which underwent the most deleveraging, that we see those prices in free-fall. But as an unintended consequence of the Fed to pump liquidity into credit markets, the costs of tangible commodities not purchased with credit are increasing rapidly
That’s right. And to add a quick little note: deflation is very similar to credit contractions. Which is what we saw with the Great Depression. Cripples personal financing and the middle-class. Credit contractions hurt interest rates and are caused by regulation in the free-markets. A free-market will adjust, but if the Fed doesn’t act as it should, which it didn’t, you get the two results. And the Fed never really makes the right decision.
Seriously Larry Summers? Don’t you know that Bastiat refuted this shit before Keynes was even born? Probably not I’d guess.
The Austrian School will never be popular with politicians because they can’t use it to their advantage. See Public Choice Theory.
How did Bastiat refute this theory? It seems common sense to me. Take the Great Depression for example, Keynesian theory dictated that large public works and infrastructure programs be constructed to ramp up productivity and lets face it, given the severity of the crisis it worked well. Employment shot up from its lowest point of around 23,000,000 people to pre-crash levels of 31,000,000 a couple years after FDR took office. Mind you those numbers did not include temp jobs with Works Progress Administration
I actually do expect to see a boost to Japans economy on paper at least but really it’s just them getting back what they used to have. Perhaps the sudden strength in the construction sector there could bring some added confidence to the Nikkiei and reverse their economies continued contraction
The seen in this situation is the earthquake boosting production just as public works and infrastructure projects did under FDR. What remains unseen is what could have been done with the time, labor, and materials had they not been diverted for rebuilding and infrastructure projects.
Bastiat says in this essay, “Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.” This is unacceptable to the politician.
Politicians and the schools of economics that serve them, like Keynesianism, have little use for the unseen because they don’t get elected in the long term; they are judged for their actions in the short term.
The biggest distinction to make in regards to productivity is whether it is productivity for the sake of productivity or productivity to serve some demand i.e. useful productivity. Digging ditches is productive and having another person fill them in is even more productive (and creates two jobs!), but does that productivity serve any purpose to anyone? What else could be done with these persons’ time and labor?
Of course Megan comes along and puts it much more eloquently than I.
Regardless, what she said! ^^^
What else could be done with these persons’ time and labor?
That is precisely the question: if an unemployed person is not working, they are not producing anything of value, and therefore not generating wealth. if the government employs them, there is no “crowding out” effect, because they were not expending time and labor in the private sector to begin with.
The counter-argument to this is that the taxes necessary to employ that person also come out of the private sector, and therefore, even though you’re not crowding out time and labor, you’re still crowding out wealth, because those taxes would’ve been spent elsewhere. But that’s precisely the point: it wasn’t necessarily being spent elsewhere. Money produces wealth when it is exchanged for labor (i.e. goods and services). Economic downturns are generally defined by a lack of consumer and investor confidence. If entrepreneurs aren’t willing to take risks, then their money just sits and does nothing. It doesn’t generate wealth because it’s not being exchanged for labor, and thereby creates no useful good or service…thereby creating no wealth. This is one of the reasons (among others) that Andrew Carnegie supported the Estate Tax: because the over-accumulation of wealth leads to economic stagnation, which the government can alleviate by confiscating it through taxation and redistributing it to people who are more likely to use it in exchange for a good or service, than to simply have it sit in a bank and collect interest.
Yet another counter-argument to this will be that money sitting in banks doesn’t do “nothing.” It collects interest, which increases holdings and makes businesses more likely to take risks over time. But this interest is also coming out of the pockets of banks, who in turn will have less capital to loan out, and therefore increases the risk of lending to a bank’s bottom line. When money sits in one place, all it does is trade risk between the Principal holder and the bank. There is no new wealth being created because nobody is getting paid to create any goods or services in this transaction. And the relationship between large-scale investors and the banks which hold their money doesn’t contain any mechanism by which this risk is alleviated or broken. Labor is removed from the equation here, it is precisely labor which makes money valuable in the first place.
At the risk of making this post excessively long, I’d like to link to a piece of the discussion I had yesterday with Hipsterlibertarian regarding the Broken Window Fallacy. At the risk of leaving out a substantial portion of my argument, I’ll quote the most relevant language:
one of the benefits of the Tsunami reconstruction could be the opportunity to update and build a more efficient transportation infrastructure, or construct homes which don’t draw as much power from energy grid. Even if you take into account the static loss of wealth from the Tsunami destruction, re-designing and updating inftrastructure and technology could eliminate pre-existing inefficiencies and, over time (admittedly a very long time) lead to a net-gain transfer in wealth, as people are able to travel faster, and their homes use less natural resources, thus saving both time and energy moving forward.
I’m not saying this *will* happen. I’m obviously assuming a great deal. But Bastiat’s theory is absolute: it claims that the net-gain in wealth described above is impossible. Clearly it’s not impossible to have a one-time wealth-negative disaster event that creates an opportunity to eliminate inefficiencies from a previous system that were, due to human factors, not possible to eliminate in the absence of that event. Eliminated inefficiencies create real gains in wealth by saving people time and energy; gains which will be real and accumulate over time until they eventually exceed the one-time expenditure involved in the original disaster event.
Well a cause for stagflation/economic downturn is taxes. You’re taking wealth from a) industry that could otherwise be used to expand itself and b) citizens that would spend it elsewhere because of the fact that they have more wealth. When the government regulates industry, investor confidence falls, and when investor confidence falls and businesses waver, consumer confidence falls. Ontop of that, wealth is being lost. You’re talking about furthering the idea of taxes when it’s part of the main problem already.
As for the banking argument, fractional-reserve banking shows that to be false. The bank only deals out interest upon withdrawal from deposits. Banks are required to have certain amounts of reserves to avoid bank runs and meet the demands of withdrawals. Otherwise, the FDIC steps in. Though, banks should know to do that and keep some reserves as securities and cushions. As more wealth goes into the banks by deposits, the more the banks can loan; this is because the total amount of wealth in the bank has increased. Loans are paid back with interest. Risk is being traded between the principal holder and the bank, yes, but it then goes to businesses and is cycled back through. More than risk is being given. Investors also allow banks to expand and gain assets, allowing them, in turn, to loan out more. Labor does create wealth and value to money. But this wealth creates labor. It’s a cycle. Taxes damage it rather than help.
Repeatedly we hear, in various iterations, that the reason for all of the invasions in Iraq, Afghanistan, Egypt, Tunisia, Libya, etc. is to either secure oil supply or transportation routes, etc. But it isn’t the necessity of oil in today’s economy that makes it worth battling for. No. It is the control and maintenance over the pricing mechanism of oil, which is essential to funding and ongoing advance towards global governance.
Here’s what you won’t hear discussed on CNN or FOX or in the pages of the NY Times, etc.:
The US dollar, priced in oil, became necessary for ALL nations to maintain as a reserve currency. That is if they wanted to buy any oil – as dollars were what the Saudis and the rest of the OPEC members would accept. This created the effect of an ever-growing demand for dollars. And like any Ponzi scheme, you need an ever-expanding base of demand, or else it crumbles, which they all eventually do.
So, under the guise of spreading their new religion, democracy, Western elites have brought various developing countries under the control of non-elected world government agencies. If it were just about the oil supply, why wouldn’t the US open up their vast oil resources in the mid-west? The answer is because it isn’t really about oil at all. It is about maintaining the global oil trade in the fraudulent US dollar so that the 20th century game of wealth redistribution and mind manipulation can continue. After all, it was working so well, wasn’t it?
More and more are waking up to the realities of what exactly the dollar is and how it has been used to suck the lifeblood from Western citizens and destroy any hopes of progress for developing nations too. And so it is that today we have another major societal shift unfolding before our eyes. The elite are spinning out of control. Their global agenda is easily visible, their dominant social themes are easily dissectible, and their financing mechanism equally simplistic and understandable – as corrupt as it is.
Is it a coincidence that the nations states that are targeted for immediate democratic revolution are those primarily rich in oil? No. Those states, rich in oil, are the very threat to the global agenda of the Western elites, not because they will restrict shipment of oil, but because they are likely waking up to the fact that the US dollar is finished. The game is up so to speak. The ‘Net is where the real revolution is happening and it is one driven by a desire to know the truth about societal manipulation and control.
Do Western powers really want to invade Iran because of their nuclear ambitions (anti-democratic right?) or to secure its vast oil resources? Or is it because Iran’s leaders have also determined that if China, for example, wishes to buy its oil why should they trade it in US dollars? Especially when it is on its last legs and on the verge of a complete collapse? Do Western powers really care about the people of Venezuela and the need to instill “democracy” in that country or to secure its vast oil reserves? Or are they focused instead on making sure that Chavez trades his oil in dollars as well?
The same goes for Libya, Tunisia and the rest of the oil-producing world. Oil is the one commodity that all countries need and it is imperative for the elite focused on the greater agenda of implementing one-world government that the fiat-money financing tool be utilized in international trade. The Ponzi scheme requires it. Without the ability to continually create endless amounts on money-out-of-nothing, which central banks do, there would be no ability to fund the globe spanning US industrial complex that enables the Anglosphere elite to utilize the US as its bad-boy enforcer.
Once the Iraqs, Irans and Venezuelans of the world start to back away from the dollar reserve they are attacked as being anti-democratic and a litany of supporting evidence is trotted out of the elite’s meme factories, UN, CFR, Trilateral commission, etc. And like a precision Swiss watch, the mainstream Western media and bought-and-paid-for government officials trumpet their coordinated propaganda right on cue.
The Mid-East today is being force fed democracy. It is a failed religion, one that promises endless social benefits that require a fiat money, central bank controlled, IMF governed, fractional reserve (fraudulent) monetary system in order to fuel the enslaving dream while artificial wealth is illusorily created – albeit temporarily. As I stated in a recent interview with Russia Today on the West’s intruding and hidden hand in fostering these color revolutions with an eye toward installing “democracy.” But Western regulatory democracy is a morally corrupt and socially enslaving philosophy. Why would the people in the Mid-East want to embrace it?
1. You can’t be a national socialist without being an international socialist.
2. You can’t believe that taking 1% of someone’s wealth is okay without believing that taking 100% is okay too.
Why does one necessarily mean the other? I’m not disputing the ideal of free-markets and no taxation, etc. But I’m wondering, why can there be no gray area?
1. Saying that Americans deserve to have a fair share in the ‘national resources’ as opposed to sharing them with Canadians and Mexicans is hypocritical. It’s saying that people in Maine should be entitled to oil drilled in Alaska but people in Mexico City shouldn’t be entitled to it because of an imaginary line.
2. If you say there’s a “gray area” in terms of theft, it turns an objective criminal act into a subjective one based solely on the opinions of politicians for whom many of the victims didn’t even vote in the first place.
So you’re talking about your view of the immorality on taxes in the first place. Gotcha, I thought you were coming from the point of saying taxes or a moral matter to help others, etc. So I was confused by the whole 1% to 100% idea because a liberal wouldn’t agree with that. And then I realized you were ‘libertarians” posting that and we don’t like taxes. Derp.
The couple is in the UK, not America. They do not have the same freedom of speech laws as us. Also, freedom of speech does not necessarily extend to hate speech.
Okay, I didn’t know it was in the UK. You’re corrected, they’re limited. But wasn’t it about the opinion of the ruling? I just think a universal right is freedom of speech as well as a life-style. Isn’t saying freedom of speech doesn’t count for hate speech like saying “you can practice all religions except for this one”? Or saying “have any ice cream you want except for these”?
Now I agree in principle, the morals they stand for are hatred and are full of ignorance. But its not my job to police them and their lives. Besides, it’s beneficial for both sides to not restrict the others in a morality battle. Because moralities are all opinionated, and when you fight one you’re giving more room for people to affectively fight yours.
I didn't say there were no ads that are negative toward men. I said that people keep asking me "What if the ad said Dad instead of Mom," and I called it theoretical because there is no ad that says that. The ad specifies Mom.
This is a discussion about an ad that is offensive to women. Not every conversation has to come back to, "But what about MEN?" Seriously, I didn't see your first response, and it was really assholeish to say, "No viable argument against it, hmmm?" Not really sure how you thought that was going to start a constructive discussion.
You’re right. To be fair, the added “hmmm?” makes me sound more condescending than I wanted and did come off. It was a bad way to start off a constructive conversation and I’d be willing to tell every one of your followers I was wrong in responding like that.
I just feel like the ad was meant to represent the age difference and showing that there will be a need for the applicant to use both sides of the brain efficiently. I’d like to hear why you believe that that view of the ad is wrong. Legitimately; not to be condescending. I’m curious of that point of view of the ad.
This ad? Is sexist. I don’t care if your mom can’t turn the computer on. It is offensive to women to say, “Haha, get it? A mom could never understand a computer issue! If you can explain computer stuff to your mom, you can explain it to anyone!”
It’s not a clever ad. Just because you don’t…
The ad is not sexist; the sooner you see that the better. One: even if it were making fun of women, how many ads are there making fun of men? Countless. I’ve seen them and many others have seen them. Men don’t go up in arms about them. But all of that is beside the point. It’s not targeting women. Let me quote someone who asked you a question in the form of a comment on your page. “That ad bugs me. My mom isn’t as good with computers as I am, but that has nothing to do with her being a woman and a lot more to do with being from her generation (she didn’t see a computer until 1997) and not having to do a lot of computer stuff for her job (she’s a children’s librarian). “
Generation. If you consider the ad to be so black and white, which you do, then this rationale is a lot more… well… rational. Try explaining something technology relate to a technology-impaired person. That would be as if I went to my father and tried explaining how computers did some really complicated function. He won’t understand it for obvious reasons.
But it’s not even that black and white; I agree with a previous poster saying the point is for the person applying for the position to demonstrate that they have both sides of the brain highly functioning. Which the ad definitely depicts in the drawing. You can’t take the joke, which albeit could have been done better and with more taste, as simply sexist. I, the other day, saw a blogger relate her incident bumping into a woman at a grocery store and how she merely said “sorry” to how there is a huge patriarchal status quo. And how women only apologize because the men want them to. The woman did so out of common courtesy, not because she was, and I quote “inferior in worth”. Taking things to that extreme leads to a blurred and distorted mentality. The woman who apologized out of common courtesy didn’t have to go home and scream out her window “I will live the life I want and not apologize for my existence!” as the blogger suggested.
It’s not sexist. It’s a bad joke not aimed at women that they didn’t deliver well.
1) Tax breaks only add to deficits if you don’t slash spending equal to or greater than the lost revenues, and if taxes are high enough, the Laffer Curve shows us that it can, actually, increase revenues. I can’t speak for the spineless self-proclaimed “fiscal conservative” GOP memebers who only really like to show their fiscal conservatism when it involves slashing only that entitlement spending they’re ethically oppposed to, but at least speaking for myself, I certainly dont’ support tax cuts without an appropriate decrease in spending.
2) You mean to tell me that in this inflationay environment, the poor and working-class families, more than anyone else, would not benefit from a decrease in something like a state sales tax? You can perhaps make the case an income tax break is not wise at this time, but certainly cutting something like petrol taxes or sales taxes, which are inherently regressive forms of taxation, would do a lot to help the poor and working class.