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It's impossible for the US to default

By AnsuGisalas ·
Tags: Off Topic
http://www.forbes.com/sites/johntharvey/2012/09/10/impossible-to-default/

Now, tell me again, why would anyone lend money to someone who can just print more of it? Trust that they wont? China must know what they're doing, right? Right?

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RE:- .Money serves as a unit of account, a medium of exchange, and a store

by HAL 9000 Moderator In reply to Destroy the fiction of mo ...

Yep I know that but I asked about Wealth not money.

I know many people think that they are interchangeable but in reality they are different concepts. Wealth is as far as I understand supposed to be a amount of Money you are worth maybe.

You can have money without being Wealthy but as far as I can perceive to be Wealthy you must have above a certain value of Money or assets that others want to buy.

For instance you could own a 300 acre farm that may make you wealthy or depending on where it is it may very well be a Millstone around your neck that eats money and has no value or at the very least less value that what you are left owing on it or what it costs you to run a month.

For instance there is a massive Cotton Farm here called Cubbie Station which is supposed to be the biggest Cotton Farm in the Southern Hemisphere. When it was originally built I thought of it as a Disaster waiting to happen and I didn't think it was worth what it cost to build let alone run. Since that time it has gone broke and been in Receivership for 3 years and just recently sold with debts of 300 Million supposedly though I very much doubt that the creditors got anything like that amount when they sold it and with the reported conditions that have been placed on it I think that the present owners will be getting a lot less when they dispose of the % that they have agreed to in the next 3 years.

The fact that no one in the past 3 years has thought of it as Valuable is why it has sat on the Banks Books with them running it mostly at a break even point if they have been extremely lucky though the last 2 seasons should have resulted in some sort of profit though maybe not as big a profit as it should have.

It's just that I can not see how it's Wealth Creation investing in Companies who spend more than they earn and just how Money/Assets is any sort of reasonable measure of Wealth.

For instance I could have invested a Million $ in Facebook a few months ago and my Wealth now would be considerably less if I still held the shares and most likely completely gone if I had of sold them. Yep I know that the Stock Market is Legalized Gambling mostly with Funny Money by the Big Institutions but I still fail to see how it generates any Wealth with these Public Companies being subject the Whims of the Market.

What is considered as a Blue Chip Company today can very easily be worthless tomorrow even with Good Management, those who's management is anything but Stellar can become worthless very quickly so I consider any Stock held in Publicly Listed Companies worthless and Wealth Stealing.

I still completely fail to comprehend what Wealth Creation actually is as while it seems to depend on how much of a Countries Currency you are supposed to have the reality is that very few people could actually ever get their hands on the Physical Money if they ever required it. Banks lend $10.00 for every $1.00 that gets deposited and they are expected to be able to cover any Rushes on them by their reserves but the reality is that there isn't any Institution in the world except maybe a Government who can print what they need who can actually lay their hands on the Money that they are supposed to Own.

Col

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Re: Hal - Old wealth vs new wealth

by DelbertPGH In reply to Destroy the fiction of mo ...

All wealth, wealth independent of money, is the stuff and services that are produced right now or are available for use because they were saved (like a barrel full of apples from last autumn.) In societies where money did not play a big part, the wealthy man was the one whose social position allowed him to own a share of what his inferiors produced. There was a manor, there was the man who owned the manor, and there were other men who owed their work and their produce to the manor.

Enter money. Money can be saved, and used in the future as a claim on produce and services. Money allows the concept of capital, investment in plant and process that consumes money at the outset but returns money later. The capitalist gets to enjoy all the wonderful perishable items that made the manorial lord's life sweet, the apples and the wine and the clothes and the servants, but without a constraining, feudalistic social relationship. At least, that's the new style of wealth. Some of the capitalists I see seem to hanker for the entitlements of the old style. We'll probably see that come back somewhere in the long, long future.

Anyway, once you have money, you have more ways to experience wealth, and with money, everybody can work in more specialized and capital-intensive ways, producing more than they could have in the days of the kingdom of Ur. Wealth is in part just money, but is also the ability to own an asset and have access to a market where it can be sold (for money.) Property rights are a different set of concepts today than they were at the time of the French Revolution, and the flexibility of the concept of property is just as essential to wealth as the power of money.

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So those 1 Million Bank Notes that i carry with me

by HAL 9000 Moderator In reply to Destroy the fiction of mo ...

Represent what exactly?

After all they must have once upon a time been proof of wealth but now you are lucky if you can buy a loaf of bread with them in their country of origin.

Much more importantly why would any country need a Bank Note of that Value?

I get with Galloping Inflation Propriety is worth something provided it's salable but way too often it is no longer salable when things go to **** in a hand basket so how does the Land Holder represent Wealth.

Then the Business People who have Monetary Wealth but little in the way of assets surely their Billions in their Countries Currency is worth very little when things go like they currently are in Zimbabwe.

What I do not understand is how a person like lets say Bill Gates who has a "Concept" of wealth is actually wealthy. If the US with it's massive Government Debt which has been building for the past few decades was to go like Zimbabwe is now what would wealth mean to anyone? Those earning a wage would get rapid pay increases so that they could just come close to surviving but those with no income except Interest and companies who do not become very salable because they produce nothing that feeds people rapidly see their wealth disappear.

After all what's the point of having 300 Billion in the banks when a loaf of bread starts costing several Million? Their wealth is rapidly devalued where as those unskilled workers have more money but even less wealth.

Col

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Col, if they get you a laugh...

by AnsuGisalas In reply to Destroy the fiction of mo ...

then they're probably part of your social capital (or your use of them is).
Pierre Bourdieu did some work with that concept: basically specific types of things about a person can be exchanged by that person to achieve other things.
Like: Physical capital; owning an earth mover: It can be used for money (monetary capital), or for helping out friends (increasing one's social capital).
Being the heir to the throne of France is "symbolic capital", it can be traded in (through deigning to associate with boors who care about that kind of crap) for all sorts of other capital (symbolic is the least straight-forward kind).

Throwing a birthday party is an exchange of monetary and social capital, while throwing a dinner party is an accepted way to buy social capital with monetary capital... and if you introduce people to each other, you're spending your social capital in a specific way - probably getting some kind of symbolic capital (being a useful man to know) ... sometimes returns aren't very straightforward in these things.

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A million ain't nothin'

by DelbertPGH In reply to Destroy the fiction of mo ...

I have 20 billion mark German postage stamps from the days of the Weimar Republic, before the old marks were exchanged for new at the rate of a trillion to one in 1923. However, even that's not so special.

The Hungarian pengo in 1946 was exchanged for the new forint at the rate of 400,000,000,000,000,000,000,000,000,000 (400 nonillion) to one. That may be exceeded by the Zimbabwean dollar series: the first dollar was convertible to USD at a 1:1 rate in 1980, but began hyperinflating in the 21st century; in August 2006, it was exchanged for the second Zimbabwean dollar at the rate 1000:1; the second was exchanged for the third Zimbabwean dollar in August 2008 at the rate 10,000,000,000:1; the third for the fourth in February 2009 at the rate 1,000,000,000,000:1; the fourth was discontinued in August 2009 after inflation peaked at 87 septillion percent per <i>month</i>. (Annual inflation rates were well into the google range.) It's impossible to say how little the currency was worth at the end, since even the government abandoned its use and did not announce a remonitization rate, or even a new currency. Zimbabwe has used other nations' currencies to settle internal bills since then.

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Where Else Could China Invest?

by TheChas In reply to It's impossible for the U ...

Where else can China invest such large amounts of money and get such immediate return?

No, not in getting their money paid back, but in almost immediate new spending.

One of China's worst fears would be for the US to have a drop in consumer spending. Walk through almost any store and look at how many items were made in China. China has to keep the US consumer spending money to keep it's own economy moving and growing.

Another benefit that China gets is that as the US government borrows more money from China it is harder for the US government to make any diplomatic or monetary moves against China.

I fully expect at some point that China will demand that the US severe all military and diplomatic ties with Taiwan. If not demand that the US actively assist China in taking control of Taiwan.

But, those are just my thoughts on the situation.

Chas

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Apparently, China can also invest (heavily) in their military...

by AnsuGisalas In reply to Where Else Could China In ...

But don't worry, Romney has clearly stated that Russia is the greatest military threat to the USA.
And since Russia is not much of a military threat at all, that *must* mean China's army of 3 million is comprised entirely out of boy scouts with blunted sporks.
And that their kung fu really blows.

Good to know the Mitt has spoken...

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