Money as debt

[NoStateofMind]

Google Video: Money as Debt . Explains in laymen terms what corporate banks came from and how they control everything. Its only 47 minutes and well worth the watch.

there are 4 questions it asks and I would like to hear some responses.

1.) Why do governments choose to borrow money from private banks at interest when government could create all the interest free money it needs, itself? (This is a good question in my mind)

2.) Why create money as debt? Why not create money that circulates permanently?

3.) How can a money system dependent on perpetually accelerating growth be used to build a sustainable economy?

4.) What specifically needs to be changed about our current system?


I would like to hear answers from people who support our current methodology. Any input from others is also welcomed.

 

[charrison]

1. Governments dont borrow from banks, they issue government bonds.

2. Too much money in the economy causes inflation.

3. Why is growth bad? And why do you think our current money system is tied to growth.

4. Until a better system comes along, I dont see much need for change.

 

[XZeroII]

Originally posted by: charrison
1. Governments dont borrow from banks, they issue government bonds.

2. Too much money in the economy causes inflation.

3. Why is growth bad? And why do you think our current money system is tied to growth.

4. Until a better system comes along, I dont see much need for change.

Someone didn't watch the video...



To the OP:
You're going to be the center of a major flame fest for this. Just about everyone here is a PhD in whatever it is they want to be that day and this is a topic that everyone knows everything about. Don't expect anything resembling a civilized debate about this.

 

[IronWing]

In answer to 1)

A government could simply print up all the money it needs. Not only would it have no need to borrow money, it would also have no need to tax. The problem is that the money would not be linked in any way to productivity and would be worthless. No one would accept such money for payment, knowing that the government could simply print more, devaluing the money.

In reply to 3)

Capitalism is based on a perpetual growth model. As the saying goes - all roads lead to inflation. A savvy government in a capitalist system will try to keep the rate of inflation low but simply can't prevent it without sinking the system.

 

[manowar821]

Originally posted by: ironwing
In answer to 1)

A government could simply print up all the money it needs. Not only would it have no need to borrow money, it would also have no need to tax. The problem is that the money would not be linked in any way to productivity and would be worthless. No one would accept such money for payment, knowing that the government could simply print more, devaluing the money.

In reply to 3)

Capitalism is based on a perpetual growth model. As the saying goes - all roads lead to inflation. A savvy government in a capitalist system will try to keep the rate of inflation low but simply can't prevent it without sinking the system.

So capitalism is a flawed system?

 

[IronWing]

Originally posted by: manowar821
So capitalism is a flawed system?

Yes, absolutely. However, it is a very good system for growing economies.

 

[blackangst1]

Originally posted by: ironwing

Originally posted by: manowar821
So capitalism is a flawed system?

Yes, absolutely. However, it is a very good system for growing economies.

wow. I guess economists are wrong then. Youre way off base.

 

[IronWing]

Originally posted by: blackangst1

Originally posted by: ironwing

Originally posted by: manowar821
So capitalism is a flawed system?

Yes, absolutely. However, it is a very good system for growing economies.

wow. I guess economists are wrong then. Youre way off base.

You don't think capitalism is flawed? Go to the grocery store. Look across the street. Another grocery store. Over production. Capitalism overproduces. Overproduction is necessary to competition which is necessary to establishing correct pricing/production. In other words, capitalism requires too many parties making too much stuff in order to find out what the correct amount of stuff to make is. Inefficient. Flawed.

Communism is more deeply flawed in this respect in that there is no mechanism to determine prices so too much/little/wrong stuff is produced.

 

[blackangst1]

Originally posted by: ironwing

Originally posted by: blackangst1

Originally posted by: ironwing

Originally posted by: manowar821
So capitalism is a flawed system?

Yes, absolutely. However, it is a very good system for growing economies.

wow. I guess economists are wrong then. Youre way off base.

You don't think capitalism is flawed? Go to the grocery store. Look across the street. Another grocery store. Over production. Capitalism overproduces. Overproduction is necessary to competition which is necessary to establishing correct pricing/production. In other words, capitalism requires too many parties making too much stuff in order to find out what the correct amount of stuff to make is. Inefficient. Flawed.

Communism is more deeply flawed in this respect in that there is no mechanism to determine prices so too much/little/wrong stuff is produced.

Quit putting words in my mouth. I never even HINTED that capatalism isnt flawed. NEVER.

Secondly, youre wrong when you say "Communism...no mechanism to determine prices so too much/little/wrong stuff is produced". I think what you mean is by the free market, which we know doesnt exist. the government DOES determine needs and prices. But you hopefully know that.

My original comment meant, and I'll put it into other words, capitalism is about creating and expanding a free market based on consumerism, and creating wealth for individuals and companies. NOT about growing economies. Although, again, maybe thats what you meant. "growing economies" is kinda vague.

 

[ProfJohn]

Yet another Ron Paul spam thread?

Are you getting paid to start all these posts?

 

[her209]

Originally posted by: ProfJohn
Yet another Ron Paul spam thread?

Are you getting paid to start all these posts?

:laugh: Are you?

 

[CycloWizard]

Originally posted by: ironwing
You don't think capitalism is flawed? Go to the grocery store. Look across the street. Another grocery store. Over production. Capitalism overproduces. Overproduction is necessary to competition which is necessary to establishing correct pricing/production. In other words, capitalism requires too many parties making too much stuff in order to find out what the correct amount of stuff to make is. Inefficient. Flawed.

Communism is more deeply flawed in this respect in that there is no mechanism to determine prices so too much/little/wrong stuff is produced.

I think this is an interesting point. As someone who has never actively studied economics, the way I see it (which is probably way off ) is that the supply-demand "equilibrium" would only be achieved at steady state. However, I don't think that the economy is ever really at steady state because there are always various external stimuli acting on it, forcing it away from this equilibrium and even changing the location of equilibrium. I see capitalism as the quickest path towards that equilibrium when a disturbance acts on the system. I wouldn't consider this "feedback" system necessarily flawed, but an ideal system that could anticipate the disturbances and take preemptive actions to correct supply and demand would lead to less waste. I think.

 

[sandorski]

Originally posted by: blackangst1

Originally posted by: ironwing

Originally posted by: blackangst1

Originally posted by: ironwing

Originally posted by: manowar821
So capitalism is a flawed system?

Yes, absolutely. However, it is a very good system for growing economies.

wow. I guess economists are wrong then. Youre way off base.

You don't think capitalism is flawed? Go to the grocery store. Look across the street. Another grocery store. Over production. Capitalism overproduces. Overproduction is necessary to competition which is necessary to establishing correct pricing/production. In other words, capitalism requires too many parties making too much stuff in order to find out what the correct amount of stuff to make is. Inefficient. Flawed.

Communism is more deeply flawed in this respect in that there is no mechanism to determine prices so too much/little/wrong stuff is produced.

Quit putting words in my mouth. I never even HINTED that capatalism isnt flawed. NEVER.

Secondly, youre wrong when you say "Communism...no mechanism to determine prices so too much/little/wrong stuff is produced". I think what you mean is by the free market, which we know doesnt exist. the government DOES determine needs and prices. But you hopefully know that.

My original comment meant, and I'll put it into other words, capitalism is about creating and expanding a free market based on consumerism, and creating wealth for individuals and companies. NOT about growing economies. Although, again, maybe thats what you meant. "growing economies" is kinda vague.

Whoah Dude. You may not have meant to imply that, but that's the first impression your previous post made.

 

[IronWing]

Originally posted by: blackangst1

Quit putting words in my mouth. I never even HINTED that capatalism isnt flawed. NEVER.

Secondly, youre wrong when you say "Communism...no mechanism to determine prices so too much/little/wrong stuff is produced". I think what you mean is by the free market, which we know doesnt exist. the government DOES determine needs and prices. But you hopefully know that.

My original comment meant, and I'll put it into other words, capitalism is about creating and expanding a free market based on consumerism, and creating wealth for individuals and companies. NOT about growing economies. Although, again, maybe thats what you meant. "growing economies" is kinda vague.

Okay, I'll rephrase my statement about communism to say that there is a system to set prices/production levels but it isn't a very good system. When governments set prices they often don't reflect demand pressures so too much/little/wrong stuff gets produced.

Buy growing economies I meant making economies larger => increasing economic activity. In my example of grocery stores, things can work out for both stores, even though the system is wasteful, as long as the market for goods keeps increasing. In a stagnant economy or contracting economy either/both stores are likely to get hurt faster than they would without the overproduction.

 

[blackangst1]

iron: got it :thumbsup: which is why I said think I know what you meant

 

[NoStateofMind]

Originally posted by: ProfJohn
Yet another Ron Paul spam thread?

Proof? Ron Paul was never mentioned by me in this thread, only by YOU. You are doing what you are complaining about. Ironic isn't it. :laugh:

Are you getting paid to start all these posts?

What? Want a tin foil hat to go with that whine? Another conspiracy theorist?:laugh:

 

[NoStateofMind]

Originally posted by: XZeroII

Originally posted by: charrison
1. Governments dont borrow from banks, they issue government bonds.

2. Too much money in the economy causes inflation.

3. Why is growth bad? And why do you think our current money system is tied to growth.

4. Until a better system comes along, I dont see much need for change.

Someone didn't watch the video...



To the OP:
You're going to be the center of a major flame fest for this. Just about everyone here is a PhD in whatever it is they want to be that day and this is a topic that everyone knows everything about. Don't expect anything resembling a civilized debate about this.

Yes I know the flame fest will be a BBQ at my house but so be it. Let's get it out and in the open, whether you know very little (like me) about the economy, or you know more than most, it will help everyone to have a better understanding of whats going on.

 

[XZeroII]

Originally posted by: ironwing
In answer to 1)

A government could simply print up all the money it needs. Not only would it have no need to borrow money, it would also have no need to tax. The problem is that the money would not be linked in any way to productivity and would be worthless. No one would accept such money for payment, knowing that the government could simply print more, devaluing the money.

In reply to 3)

Capitalism is based on a perpetual growth model. As the saying goes - all roads lead to inflation. A savvy government in a capitalist system will try to keep the rate of inflation low but simply can't prevent it without sinking the system.

Reply to 1)
You assume that the gov't would not be responsible when it comes to printing money. Let's assume for the moment that they would do the same job that the fed does, equally well. Is there still any problem with the gov't printing it's own money?

 

[Vic]

Originally posted by: ironwing
In reply to 3)

Capitalism is based on a perpetual growth model. As the saying goes - all roads lead to inflation. A savvy government in a capitalist system will try to keep the rate of inflation low but simply can't prevent it without sinking the system.

This is inaccurate. Capitalism does not require inflation. In fact, uncontrolled, capitalism frequently results in deflation. In fact, the economy of the US from the end of the Civil War to the creation of the Federal Reserve was plagued by deflation.

Originally posted by: ironwing
You don't think capitalism is flawed? Go to the grocery store. Look across the street. Another grocery store. Over production. Capitalism overproduces. Overproduction is necessary to competition which is necessary to establishing correct pricing/production. In other words, capitalism requires too many parties making too much stuff in order to find out what the correct amount of stuff to make is. Inefficient. Flawed.

Communism is more deeply flawed in this respect in that there is no mechanism to determine prices so too much/little/wrong stuff is produced.

And right here you just contradicted yourself. And it only took you 21 minutes to do it.
Overproduction of goods leads to deflation. Too many goods + plus too much competition = lower prices.
However, the system is self-correcting, like all natural systems are (because EVERYTHING is flawed FYI). Lower prices spur less investment, which reduces production and competition, which increases prices, which drives investments, which increases production and competition, and so forth and so on in endless cycles.

You are entirely however correct that communism is much more deeply flawed because it lacks any type of accurate/non-arbitrary economic calculation model. So... winter is coming. Which economic system would you prefer to live under... the one that might make too many shoes in too many styles and sizes? Or the one that will for certainty produce too few/or all of the same size/etc.?

 

[Vic]

Originally posted by: ProfJohn
Yet another Ron Paul spam thread?

Are you getting paid to start all these posts?

Dave? Is that you?

 

[jman19]

Originally posted by: Vic

Originally posted by: ProfJohn
Yet another Ron Paul spam thread?

Are you getting paid to start all these posts?

Dave? Is that you?

He's the Republican Dave - less sensational, but just as stupid.

 

[Engineer]

Originally posted by: Vic

Originally posted by: ProfJohn
Yet another Ron Paul spam thread?

Are you getting paid to start all these posts?

Dave? Is that you?

Goddamnit, I just spit all over my keyboard...you bastard Vic!!! :laugh::laugh::laugh:

LOL...

 

[StageLeft]

In other words, capitalism requires too many parties making too much stuff in order to find out what the correct amount of stuff to make is. Inefficient. Flawed.

Actually, this is not a flaw; it uses uninhibited, legitimate forces to determine the optimal amount of production based on the demand.

Although competition itself is a wasteful thing--think about Intel and AMD, for instance, both developing similar technologies but both doing it themselve hiding from the other--there is no effective system now that can allow or encourage monopolies to avoid such replication without more significant drawbacks. Communism may try it but lacks the appropriate models to do it properly. On some theoretical level I think it could give better productivity than capitalism, but so far it sucks.

 

[ericlp]

Well, back on topic if you ever watched the video that was done superbly well and just like sex ed where we *SHOULD* teach all kids how and why to use a condom we should also show them this video (but I think it's against the law) or something like that...

Anyway, the reason we haven't changed or gotten away from a world (central) banking system? Well, the banks or the people in charge have paid tons of money to lobby to get OUR government to pass corrupt decisions... IE banks are VERY powerful, they control most of the money and have huge amounts of land tied to debt (IOU'S). They keep changing the laws... pretty soon banks won't be required to have any actual cash or gold of their own to write loans it's already at a 1:10 ratio and soon it will probably be a 1:20-30 ratio in the near future.

Perpetual debt is a bad idea and the only way your gonna change it is have a revolution and that's not gonna happen any time soon. Changing the money system is like asking them to change the corrupted two party system. Too much money, too much power and your not gonna change it.

The way I see it, we fought to get away from a centralized system until Roosevelt (according to the video) was probably paid a pretty good sum of money to get this country back into it again.

 

[NoStateofMind]

Originally posted by: ericlp
Well, back on topic if you ever watched the video that was done superbly well and just like sex ed where we *SHOULD* teach all kids how and why to use a condom we should also show them this video (but I think it's against the law) or something like that...

Anyway, the reason we haven't changed or gotten away from a world (central) banking system? Well, the banks or the people in charge have paid tons of money to lobby to get OUR government to pass corrupt decisions... IE banks are VERY powerful, they control most of the money and have huge amounts of land tied to debt (IOU'S). They keep changing the laws... pretty soon banks won't be required to have any actual cash or gold of their own to write loans it's already at a 1:10 ratio and soon it will probably be a 1:20-30 ratio in the near future.

Perpetual debt is a bad idea and the only way your gonna change it is have a revolution and that's not gonna happen any time soon. Changing the money system is like asking them to change the corrupted two party system. Too much money, too much power and your not gonna change it.

The way I see it, we fought to get away from a centralized system until Roosevelt (according to the video) was probably paid a pretty good sum of money to get this country back into it again.

You sure it wasn't Woodrow Wilson? Maybe I'm mistaken <shrug>


But I do agree economics should be taught from grade 9-12. This video would be a good introduction for 9th graders.