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It’s impossible for the US to default

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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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This is a perfect example of why I do not understand what

In reply to It’s impossible for the US to default

[b]Wealth Building is.[/b]

I no longer understand the concept of Wealth or what it is supposed to be. Once upon a time all money was tied to the Gold Standard where it was in theory redeemable for the metal that it represented. Now with no Gold Standard unpinning the different Countries Money System the very concept of Wealth means nothing at all, [i]well to me at least.[/i]

The entire idea now seems pointless with nothing that has any meaning. Why you would try to achieve more by collecting your countries Money when it can simply have more printed and have no meaning at all confuses me no end. I still tell people I carry several Million around with me at all times and it’s true I have a couple of 1 Million Lire Notes as well as various other countries Bank Notes all with a Face Value of a Million.

They of course mean nothing and are next to no value.

Col

When I was a boy, gold was $35 per ounce.

In reply to This is a perfect example of why I do not understand what

I suppose that, in inflation-adjusted terms, that’s worth about $280 today. It’s close to what the price was ten years ago. The current price, $1780, is more than six times that. In 1980 the inflation-adjusted price was above $2100 (in today’s dollars.) Gold is a bad thing to pin a currency to; the price shoots up and down like crazy. It’s a commodity whose value is determined by speculators. A country needs to be able to increase the amount of money in circulation, or decrease it, to support an economy and control inflation.

No money, not even gold, has any value, unless people agree to value it. And, happily, they do. Money makes big economies possible, but it’s all a confidence game, and governments have to sustain that confidence.

What’s so special about gold?

In reply to This is a perfect example of why I do not understand what

I never understood why gold was used as a standard. Why tie economic values to something that has no intrinsic value of its own? You can’t eat or drink it, and can easily live without it. The amount of it isn’t fixed; more of it is dug up every day, and there are other metals that are scarcer. It has too many practical uses in electronics to sit idle in a vault. Sure, it’s pretty, but so are any number of other things.

I do agree with you regarding the liberal generation of currency, both physical and otherwise.

I didn’t say I disagree

In reply to What’s so special about gold?

Money originally was supposed to represent something and was redemable for that item, if everything went to Hell in a Handbasket. It could have been baised on anything really but now it’s baised on [b]Nothing at All.[/b]

Just I don’t understand what Wealth Creation is. Or for that matter what the term Wealth means.

It’s supposed to be good but it’s measure is something that has no real value as said above

[i]You can’t eat or drink it, and can easily live without it.[/i]

So what exactly is Wealth?

Also why was Quantitative Easing when practiced by Japan so bad but is perfectly acceptable when done by the US?

From my very limited understanding QE it is the first step in debunking the Value of Money and those who worship it. Have a big enough incident that adversely affects the Wealth or Money, like the US Defaulting on it’s obligations and the Donald Trumps of this world have lots of paper and no real wealth. Even then they don’t even have all of the Paper as it’s not really possible to actually get, they are just told that a Organization will hold that much for them, however if it was ever demanded it would prove impossible to provide, if enough Owners wanted their Money at the same time.

After all they can not eat it or drink it and it’s perfectly possible to live without it though I’ll admit that [b]Living Without[/b] it will be radically different to life as we now know it currently.

I had a similar conversation recently with someone who thought I was taking the P!$$ when I said I had more Shells than they did, and they where unable to comprehend that any society could have their currency based on something as silly as Shells.

Apparently having a institution print paper and call it money is OK but basing your currency on anything else is not acceptable.

By the same token I understand why the various Governments get really [b]Narky[/b] when their citizens print their own money as it adversely impacts on that countries ability to pay for things but I then find it difficult to comprehend why the same Government who stops their citizens from printing their script is quite happy to do it themselves. Of course they use a Fancy Name for it and would never consider it Counterfeiting. 😉

Col

wealth: idea of

In reply to I didn’t say I disagree

You might try reading Ruskin: Munera Pulveris. This book of very elementary economics was originally published in installments in a magazine, but the liberals (in the proper, historical sense of that much -abused word) disliked it so much that the serialization (and the book) was never completed. Nevertheless, Ruskin did manage to get out his definition of wealth and a description which is still valuable of the nature of money.

Wealth consists of things that have value?

In reply to wealth: idea of

I never would have known. And value to whom? The holder?

As I read this, wealth is relative: if you think you are wealthy, you are wealthy. I have things that are invaluable to me, yet valueless to others. Does that make me wealthy in your eyes? (Not that it matters to me…)

[i]If all the money in the world, notes and gold, were destroyed in an instant, it would leave the world neither richer nor poorer than it was. But it would leave the individual inhabitants of it in different relations.[/i]

This could be a fun experiment. Destroy all the money in the world. I wonder how much of the world’s population determines its self-worth by the number of dollars, pounds, yuan, rubles, pobble beads, or ningis in its possession. It’s probably a majority; for the financial industry, I suspect the percentage approaches 100.

Interestingly, Ruskin’s definition of money appears to exclude linking it to an outside standard, so I guess the gold standard is out completely.

Used to be tied to the value of work…

In reply to Wealth consists of things that have value?

but since the rising prosperity stopped being passed on to wage-earner salaries, (70s?) the value of money became fundamentally disconnected.

There are some work-exchange programs here in the states

In reply to Used to be tied to the value of work…

Part of the underground economy, aided by the Internet. You join an online collective, post what you can do and what you need others to do. A committee assigns point values to various tasks.

I’ve heard about those.

In reply to Used to be tied to the value of work…

Crypto-tribes, for example.

Destroy the fiction of money, and you destroy much of society.

In reply to Wealth consists of things that have value?

Money serves as a unit of account, a medium of exchange, and a store of value. That’s textbook.

Money enables us to set a price on things, and to reduce the friction involved in buying and selling them. You want to sell your barley to buy my coal? You sell your barley for money, give me money for coal, and we’re both happy. Without money, you’d have to barter, and if I don’t want your barley, you’d have to figure out what I do want, find somebody who has that and is willing to swap for barley, and then bring that to me and complete the exchange. Without money, buying and selling is a big pain. People would make fewer things and less of them, because they’d be hard to sell, and they’d sell within their own village, except for a few wandering trading speculators. It’s the kind of economy you get in a serf society.

I think there’s a fourth fundamental purpose to money, which is: money liberates peoples’ ability to specialize and create objects and services of value. Human beings simply can’t, or won’t, create wealth without an effortless means of transacting exchange. Humans are different creatures because of money; they are more human than they would be without it.

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

In reply to Destroy the fiction of money, and you destroy much of society.

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 [b]Funny Money[/b] 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

Re: Hal – Old wealth vs new wealth

In reply to Destroy the fiction of money, and you destroy much of society.

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.

So those 1 Million Bank Notes that i carry with me

In reply to Destroy the fiction of money, and you destroy much of society.

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 hell 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 [b]”Concept”[/b] 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 😉

Col, if they get you a laugh…

In reply to Destroy the fiction of money, and you destroy much of society.

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.

A million ain’t nothin’

In reply to Destroy the fiction of money, and you destroy much of society.

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 month. (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.

Where Else Could China Invest?

In reply to It’s impossible for the US to default

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

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

In reply to Where Else Could China Invest?

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 [b]army of 3 million[/b] 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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