An exceptional video.
http://vimeo.com/2351801?pg=embed&sec=2351801"%20target="_blank
http://vimeo.com/2351801?pg=embed&sec=2351801"%20target="_blank
How money are created from debt.
- Thread starter yannis
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Need a better link, I get
"This content is not authorized for viewing."
"This content is not authorized for viewing."
Well, I am sitting in a coffee shop closing cases. But unless it's offensive, I've not seen stuff blocked.
This appears to be a response from the web-server, not from any "nanny" software running here.
This appears to be a response from the web-server, not from any "nanny" software running here.
I learned more about fractional reserve banking in that video then I ever did from college economics!
unless interest rates go negative
And now it's your duty to devise a better system.
Originally Posted By: Shannow
Yeah, that is a very interesting concept isn't it ?
"I'll pay you to hold my money"
Short term U.S. treasuries did go negative. But the rate of deflation is even greater, which is why Bernanke has been doing this:
http://research.stlouisfed.org/fred2/series/BOGUMBNS?cid=124
Yeah, that is a very interesting concept isn't it ?
"I'll pay you to hold my money"
Short term U.S. treasuries did go negative. But the rate of deflation is even greater, which is why Bernanke has been doing this:
http://research.stlouisfed.org/fred2/series/BOGUMBNS?cid=124
That's how it is for gold, silver, etc. You pay a storage fee. The Central bank should never be charging interest, because of the impossibility of paying off the debt under that condition. Private banks, however, invest the money in order to try and make a profit, so they are justified in charging interest. It is not the proper business of the central bank or government to make a profit.
Deflation is needed now, to make up for all the pumping up of the nmoney supply over the past decade.
Deflation is needed now, to make up for all the pumping up of the nmoney supply over the past decade.
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This is why we HAVE to send our develop others into consumers. More people at the bottom of the ever expanding pyramid.
I found the reference to the "game of musical chairs" validating....
I found the reference to the "game of musical chairs" validating....
Originally Posted By: oilyriser
Deflation is needed now, to make up for all the pumping up of the nmoney supply over the past decade.
In a perfect theoretical world maybe. In reality, when deflation strikes, the financial system collapses, the economy collapses and society falls apart. No thanks. I'll take inflation any day over 40% unemployment even if I get charged an inflation tax.
Deflation is needed now, to make up for all the pumping up of the nmoney supply over the past decade.
In a perfect theoretical world maybe. In reality, when deflation strikes, the financial system collapses, the economy collapses and society falls apart. No thanks. I'll take inflation any day over 40% unemployment even if I get charged an inflation tax.
The computer industry has faced deflation ever since it's beginning, and it's not on the brink of collapse.
I don't think early industries count as prices go down when more folks adopt a technology and more suppliers enter.
However, let's see what happens if Moore's Law no longer applies and the technology isn't increasing at those rates any further.
At some point, we'll get feature sizes so small that the assumptions made about electron flow will no longer apply as the feature size approaches the size of the electron itself. Then, things will not work as they do today.
Could be good. It could be a wall for the semiconductor industry.
However, let's see what happens if Moore's Law no longer applies and the technology isn't increasing at those rates any further.
At some point, we'll get feature sizes so small that the assumptions made about electron flow will no longer apply as the feature size approaches the size of the electron itself. Then, things will not work as they do today.
Could be good. It could be a wall for the semiconductor industry.
Originally Posted By: oilyriser
The computer industry has faced deflation ever since it's beginning, and it's not on the brink of collapse.
Deflation does not directly cause specific industries to collapse. You need two ingredients:
1. Debtor nation
2. Deflation across many goods and products.
I think its safe to say, we satisfy both (1) and (2) given recent CPI numbers. And I don't think I need to comment on the debt part.
The reason why deflation hammers a debtor nation is beause the real value of debts increase. It is analogous to jacking up the interest rate by the rate of deflation. That means people's debt burdens increase in real terms. This will cause a lot of people to default on debts. Then you have massive bank failures and financial system collapse. In America in 2008, we already have a financial sector on the brink of collapse. Add deflation and it could be mayhem. Bank runs, bank holidays, companies go under because they can't get operating credit. Massive layoffs and unemployment.
But I agree, if we were a saver nation, deflation in select industries would not be bad. But right now, we are not in that fairy tale land.
The computer industry has faced deflation ever since it's beginning, and it's not on the brink of collapse.
Deflation does not directly cause specific industries to collapse. You need two ingredients:
1. Debtor nation
2. Deflation across many goods and products.
I think its safe to say, we satisfy both (1) and (2) given recent CPI numbers. And I don't think I need to comment on the debt part.
The reason why deflation hammers a debtor nation is beause the real value of debts increase. It is analogous to jacking up the interest rate by the rate of deflation. That means people's debt burdens increase in real terms. This will cause a lot of people to default on debts. Then you have massive bank failures and financial system collapse. In America in 2008, we already have a financial sector on the brink of collapse. Add deflation and it could be mayhem. Bank runs, bank holidays, companies go under because they can't get operating credit. Massive layoffs and unemployment.
But I agree, if we were a saver nation, deflation in select industries would not be bad. But right now, we are not in that fairy tale land.
What's going on in the computer industry isn't deflation.
Falling prices due to increased productivity and amortized development costs while maintaining or increasing revenues is not deflation. It's closer to cost advantages derived through economies of scale.
Now, if all economies of scale are optimized and falling prices with falling revenues in a system where economics have been "optimized", then we have something closer to deflation (even within an industry).
Falling prices due to increased productivity and amortized development costs while maintaining or increasing revenues is not deflation. It's closer to cost advantages derived through economies of scale.
Now, if all economies of scale are optimized and falling prices with falling revenues in a system where economics have been "optimized", then we have something closer to deflation (even within an industry).
The way to live through a general deflation is to do just the opposite as during inflation. As people lose their jobs, the price of labour goes down. As fewer people are able to buy stuff, you reduce the price of goods to attract more buyers.
The argument that deflation will trigger a complete shutdown of the economy is just as invalid as the argument that inflation will explode into hyperinflation as people start to dump currency and hoard goods.
When there's a shortage of energy or commodities, you *need* to slow down or shrink the economy because there's not enough stuff to go around. Once the energy and commodity supplies get back in balance with demand, growth can resume. If you can't afford the payments on your McMansion, double up with another family who's in the same boat, and mothball the extra house.
The argument that deflation will trigger a complete shutdown of the economy is just as invalid as the argument that inflation will explode into hyperinflation as people start to dump currency and hoard goods.
When there's a shortage of energy or commodities, you *need* to slow down or shrink the economy because there's not enough stuff to go around. Once the energy and commodity supplies get back in balance with demand, growth can resume. If you can't afford the payments on your McMansion, double up with another family who's in the same boat, and mothball the extra house.
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