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  1. #11
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Magic Poriferan View Post
    I confess that I really have no understanding of this debate. What is the relevant difference between using fiat money and commodity money? Is there any difference between these monetary systems other than mere reification?

    The video there tried to explain something about fiat money. It did not, however, specifically explain anything about a possible alternative.
    The alternative to fiat money, which is commodity linked if I'm not wrong, is gold standards.

    It means that money being linked to gold reserves there is less of it to circulate, therefore in theory it will result in the balanced or at least restricted budgets of neo-liberal lore and small government, ie nothing to bankroll military-keynesianism or a welfare state with.

    Who benefits immediately from such a change? Well right away anyone who has bought up gold and has an interest in the ramping of the price of gold relative to other commodities like oil, then all the uber rich who dont like paying taxes, small government means they dont need to pay taxes, a lot of them are effectively on a complete dodge already but it'll be easier.

    Who loses? Well, despite denying it, a lot of middle and small businesses would lose immediately, they might survive for a bit on savings from taxes but eventually without customers you go bust, then some of the larger stores and chains will experience a drop off in revenue, perhaps then the banks and financial sector, speculation will remain, perhaps even a lot of the trickery which constitutes profits without any tangible produce, such as short selling or trading and messing about with interest rates but it will experience a contraction too because neither business nor individual savers will have as much cash around.

    Ultimately its hard to see how the hell it will all stack up without a massive reduction in the population, something malthusian, and that's why, despite the history of failures fiat currencies remain in use because its necessary, bitches, and discussing their abandonment because of internal contradictions is a little like commies talking about the higher phase of communism when money is obsolete and gift relationships reign because capitalism has disappeared like the dinos because of the internal contradictions of class war.

  2. #12
    Doesn't Read Your Posts Haight's Avatar
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    Thank you.
    "The only time I'm wrong is when I'm questioning myself."
    Haight

  3. #13
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    This is crude(and funny), but it might help
    http://www.youtube.com/watch?v=tGk5ioEXlIM

  4. #14
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    Quote Originally Posted by Haight View Post
    Thank you.
    I added the bitches part for you Haight.

    Now go, buy Gold, fast.

  5. #15
    FRACTALICIOUS phobik's Avatar
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    Quote Originally Posted by Magic Poriferan View Post
    The video there tried to explain something about fiat money. It did not, however, specifically explain anything about a possible alternative.
    I think the purpose of the video, as mine, by starting this thread, was primarily an attempt at raising awareness.

    Quote Originally Posted by Lark View Post
    The alternative to fiat money, which is commodity linked if I'm not wrong, is gold standards.

    It means that money being linked to gold reserves there is less of it to circulate, therefore in theory it will result in the balanced or at least restricted budgets of neo-liberal lore and small government, ie nothing to bankroll military-keynesianism or a welfare state with.

    Who benefits immediately from such a change? Well right away anyone who has bought up gold and has an interest in the ramping of the price of gold relative to other commodities like oil, then all the uber rich who dont like paying taxes, small government means they dont need to pay taxes, a lot of them are effectively on a complete dodge already but it'll be easier.

    Who loses? Well, despite denying it, a lot of middle and small businesses would lose immediately, they might survive for a bit on savings from taxes but eventually without customers you go bust, then some of the larger stores and chains will experience a drop off in revenue, perhaps then the banks and financial sector, speculation will remain, perhaps even a lot of the trickery which constitutes profits without any tangible produce, such as short selling or trading and messing about with interest rates but it will experience a contraction too because neither business nor individual savers will have as much cash around.

    Ultimately its hard to see how the hell it will all stack up without a massive reduction in the population, something malthusian, and that's why, despite the history of failures fiat currencies remain in use because its necessary, bitches, and discussing their abandonment because of internal contradictions is a little like commies talking about the higher phase of communism when money is obsolete and gift relationships reign because capitalism has disappeared like the dinos because of the internal contradictions of class war.
    I can see the logic behind some of the points you address, although, it is your alternative, to the fiat money, which hadn't been brought about, yet. Earlier, when I asked about alternatives, I was mostly referring to the apparently less-than-trivial part of informing about the system mechanics.

    As described in this article, the way past and current economy functions, or better, does not, is imo, a consequence of mankind's greed and the never ending thirst for power. Were one to attempt equality, the next "smarter/more advanced" person/culture will seek to exploit what is seen as naivety.

    Myself, I am not sure the change to a gold standard on itself would suffice, perhaps due to the ripple effects that would stem from points you raise, or other more complex ones, relating to the already established power imbalance.

    I'm led to conclude the reason why the gold standard was abandoned in the first place, cited as an inconvenience, was already, and simply, for accommodation of the instilled abusive mindset that ruled back in the day. If that is not changed, history can but continue repeating itself, with all the suffering that entails.
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  6. #16
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    Quote Originally Posted by Lark View Post
    The alternative to fiat money, which is commodity linked if I'm not wrong, is gold standards.
    The reason why the gold standard was abandoned is because unless the supply/demand forces in the gold market are highly elastic/responsive to changes in the economy in general, then you will inevitably get monetary supply problems. The economic problems we see in Europe right now are due to a lack of tight correlation in the economies of the countries that dominate the monetary policy (France and Germany) and the smaller countries that do not (eg Greece, Ireland etc).

    Linking the monetary supply to cost of living was meant to be an equivalent measure. It is not a good idea to directly link it to perishable goods, but rather the prices of things people need to live. The problem is that the CPI no longer attempts to measure the cost of living for a median individual. In the 90s, economists in many western countries decided that the monetary supply was too tight and that things like land prices and petroleum prices should not be included or should have greatly reduced weight. What was the result? Large inflation in land prices and the price of oil. Along with an associated increase in debt.

  7. #17
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    Quote Originally Posted by Tantive View Post
    This is crude(and funny), but it might help
    http://www.youtube.com/watch?v=tGk5ioEXlIM
    So if you can't increase taxes, cut spending or inflate your way out, there is only one solution: work harder and consume less. The inherent assumption of the system is that it factors in a large productivity increase in the future to pay for the debts of the present. We have seen similar large productivity increases in the last 50 years, but how long can it continue at this rate?

  8. #18
    Senior Member reason's Avatar
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    The original video about fiat money is confused. For example, the printing of bills does not actually increase the money supply. When national mints print new bills, they either retire old bills or credit bank reserve balances for the same amount: the net change in the money supply is zero. In fact, holding the supply of base money constant, switching reserve balances for bills actually tends to reduce the money supply, because those bills eventually leave the banking system (in a way that reserve balances cannot) and reduce the money multiplier.

    More importantly, the video focuses too much on changes in the money supply and not enough on changes in the supply and demand for money. An increasing money supply is rather innocuous so long as it does not create a surplus of money at the prevailing level of prices, i.e. a disequilibrium between supply and demand. Holding the supply and composition of base money constant (i.e. reserve balances at the central bank + currency), the creation of money by banks is not inflationary and does not benefit in any nefarious way those who receive the money first. In a well-functioning system, the creation of money by banks only occurs when there is a shortage of money, i.e. monetary disequilibrium.
    A criticism that can be brought against everything ought not to be brought against anything.

  9. #19
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Catbert View Post
    The reason why the gold standard was abandoned is because unless the supply/demand forces in the gold market are highly elastic/responsive to changes in the economy in general, then you will inevitably get monetary supply problems. The economic problems we see in Europe right now are due to a lack of tight correlation in the economies of the countries that dominate the monetary policy (France and Germany) and the smaller countries that do not (eg Greece, Ireland etc).

    Linking the monetary supply to cost of living was meant to be an equivalent measure. It is not a good idea to directly link it to perishable goods, but rather the prices of things people need to live. The problem is that the CPI no longer attempts to measure the cost of living for a median individual. In the 90s, economists in many western countries decided that the monetary supply was too tight and that things like land prices and petroleum prices should not be included or should have greatly reduced weight. What was the result? Large inflation in land prices and the price of oil. Along with an associated increase in debt.
    Exactly what I suspect is the true aim of anyone who would like to see this situation arise, its monetarism as more than the philosophy or policy of a single administration.

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