Bitcoin Forum

Hi everyone.

I see the spreading of a lot of misinformation in the thread referenced above and in these forums - info that is either based on incorrect premises or a misunderstanding about how the financial system works in the United States.  I work in the financial investment industry and want to clear things up so that people do not scare you into buying into their own agenda.  So what I want to do is debunk some of these misconceptions with facts, not opinions or theories, about how our financial system works in the United States.

So please, ask me anything or tell me why you think the US is "going bankrupt" or the Federal Reserve "prints money" or fiat is dead or petrodollar or the implosion of the dollar, and I will respond.  To start things out I can start by saying that the United States is not bankrupt or anything close to it.  A nation which can print its own currency, tax output and has no foreign-denominated debt can never go bankrupt.  The national debt will never be paid down nor does it need to be and this is not a problem.  The government could issue only very short government debt and essentially controls the interest it pays on its own debt, if it were to ever become a problem.

Anyhow, let's hear your doomsday scenarios!

For sure, USA will never go bankrupt because its debt is denominated in USD and they can issue that currency in unlimited amounts.

The rest of the world goes bankrupt instead :)

Translation: "I see the spreading of information against the banking oligarchy, and I came here to dispel of these facts so that we can continue to enslave humanity.  Don't listen to these bitcoin/liberty mumo-jumbos.  Give us your money and your freedom."

You realize they're all teenagers or twenty somethings in here don't you?  Smarmy arrogant kids.  I used to have your attitude trying to help folks get better understanding of economics and markets.  But now I just entertain myself watching them suffer

So? We've got people here who believe in perpetual motion machines; that the world is being controlled by Jews, lizards, and/or Jewish lizards; that aliens walk among us; that humans can survive without food; and IPU knows what other nonsense. The Speculation forum in particular attracts many people who don't understand how financials markets work or even basic economics for that matter. These people are immune to basic logic, and I doubt you'll be able to convince them of anything, though you're of course welcome to try.

I didn't even bother reading the thread you're referring to, as the whole premise is ridiculous on its face and really not worth responding to at all.

If you think that'll help.

I can't speak for the rest of the forum, but I don't think any of those things, except perhaps for the implosion of the dollar. Though I don't think it's going to happen anytime soon, of course, or that it'll be so sudden that nothing can be done about it when it happens.

This is Economics 101. Tell us something we don't already know.

LOL. Best thread ever!

The problem with the Dollar - is trust. And this is why OP is apperaing here. Bitcoin is all about trust. The economy is just another playground, which will (always) build around trust. Like it did with the Dollar for the last 100 years.

Edit: I might add, that it's also about the trust in a political system that has seen its best days. When have you see the U.S. standing up for humanity and civic liberty the last time?

Surprisingly logical replies so far (except for the person claiming something insane about me silencing people).


Curious to hear why you think that is?  The truth is that a local currency is almost always dependent on inflation to keep its value - that is why people would not accept UST at a low rate, they will want higher rates to justify the higher inflation - and the US does NOT have an inflation problem, nor does most of the developed world.  In fact, it is quite the opposite.  This is probably the most important issue here that people are saying will happen - a hyper-inflationary spiral which kills the USD.  I think we should talk more about this because it is pretty important!

As long as the rest of the world believes that our government can tax citizens and pay interest on its debt, the international community will have a demand for dollars.  Demand for dollars is not only buying and selling of goods - most of the time it is transfer of US Treasurys, which act as cash equivalents.  So if people think they will get paid back on their UST, they will have no problem dealing with the US and holding our debt.  And this payments, we agree, will always be made.

In the past countries "blow up their FX" because their economy relies too much on one product - like oil and Russia or agriculture and Argentina in the mid 1900s or Venezuela today - or rely too much on foreign capital flows to operate - like many countries during the Asian Currency Crisis of 1997/1998.  The US does not have this problem.  If you think the USD will collapse, I assume you think that many many other countries will have gone down first, since the USD is the most stable, liquid and widely accepted form of payment in the world (again payments are usually in UST, not dollars for candy bars, on aggregate).

Judging by your name I assume you fall into the "inflation is just around the corner and hyper-inflation is just around that corner so USD is worth nothing" crowd.  Amirite?

Alright, why does any country that attempts to sell oil for anything but USD get bombed back into the stone age?

I'm not familiar with any countries that this happened to? Countries are free to transact in any fx they like. They choose the USD because of reasons posted in my previous post. Mainly, it's stable and widely accepted.

Try buying foreign products with pieces of toiletpaper.....

My assumption....

Because oil is the only backing for the USD.
If people buy oil in any other currency the USA gets screwed over since there is no more demand in USD.
Having control over the oil supply effectively gives control over every country requiring it.

Power == Money == Power

Not really. The USD demand has little to do with oil and more to do with products we export and buy. If you sell oil in usd, the person you bought it from sells usd and you buy usd, so the net is zero demand for usd. The country USA doesn't control oil supply except for oil we make in USA but even that is controlled by thousands of individual firms. So it doesn't help usd demand and is not controlled by the US. If anything marginal supply is controlled by opec, which the US is not a part of.

Well, yes, the US does have an inflation problem, but that's not the main problem or even a particularly important one in the grand scheme of things. In particular, I don't believe the US dollar is going to go the way of the Zimbabwe dollar, like some people here think. Inflation alone is almost certainly not going to be what kills the US dollar.

And here is the problem. There are growing indications that the rest of the world does not think that, and other powerful countires (notably China) are trying to move away from the US dollar as a reserve currency. This is not unexpected - no currency has remained a reserve currency for much more than a century - and it's certainly not going to come without warning, but it's definitely going undermine the value of the US dollar and radically impact the US economy. Will there be a recession? Very probably. Will the US recover? Again, probably. Will there be an apocolypse? Highly doubtful.

Certainly, many other countries will undergo economic collapse before the US. This appears to be already happening.

The idea of the USD petrodollar was conjured up after WWII and implemented in the late 60s and early 70s during Nixon's presidency as mostly a quest for power; the US could offload some of its inflation and simultaneously increase demand for the US dollar. The US is the largest oil producer in the world, the oil agreement gave them (Saudi Arabia) military protection and arms in exchange for denomination of oil sales in USD. The point of the agreement was to offload some of the US economic inflation as those dollars never entered into the US economy, but most importantly to gain economic power over the one resource that rules them all.

Most countries continue to buy oil in USD because of the protection (well used too in a way) it affords against larger non-allied countries, pirates and other rogue states. Civilization and the military need oil; most importantly, the military. As long as oil is priced in USD, the US government can continuing printing dollars to pay for it and to maintain reserve currency status. If the oil agreement folds, the US can continue printing money, but the economy will suffer. This is one of the ways the US became so big so quickly.

The US looks like its suffering from Dutch Disease with its export being currency and not natural resources. Once the currency well dries up, banks will lose some power and the US will begin a multi-decade race to once again ramp up manufacturing (Made in America TM) to try to mitigate the loss. Problem with this will be that because of the eventual USD decoupling, it will be a race to the bottom.

This is where I believe Bitcoin comes in. SDRs under the guidance of the IMF are nothing new; essentially, a world currency basket to hedge currency volatility. Dump all your country's debt into an SDR and well, you know the rest.

It's actually not a problem at all.  Those countries have their own agendas and reasons for doing deals which are political in nature.  China and Russia doing deals on the side means nothing when the rest of the world is not following suit.  If you want to see if people believe in the ability of the US to tax, look at the USD at ten year highs, look at US Treasury yields approaching multi-decade lows.. your assertion that people are losing faith is based on no facts, you are ignoring all the evidence to the contrary.  Let's just say you are right and the US loses it's status.. who is it going to go to?  China with their fabricated economy that no one has faith in?  Or Europe which is teetering on collapse?  There is no one else.  Full stop.  Period.  Besides even if it does happen, that is not a kiss of death.  Great Britain was just fine after they lost reserve status, their economy did not collapse and the world kept spinning.  I'll tell you one thing, it sure as heck won't be Russia or Brazil or China accepting BTC for their goods and services.

Let's step back and ignore what the market is telling you and also put aside our theories for a second and think:  why on Earth would the US all of a sudden not be able to tax its citizens and pay interest on its debt?  That is the fundamental question.  We have a powerful military to protect us, we have one of the best economies in the world and we have the best legal system in the world.  There are no rational or logical reasons to think that the US is on the decline or the dollar is doomed or anything close to that.  And looking at interest rates and FX strength you can see the world does agree with that statement.

I think this is were it becomes interesting.

The US does not need oil to be priced in USD to "print money".  This is a fundamental misunderstanding of the way our monetary system works.  It is not something that can be argued because it is a fact like 1+1=2.  The Federal Reserve can create reserves out of thin air.  This is what people call "printing money".  But it is not actually money printed into our economy as you say.  The banks have to lend in order for new money to be created outside of the federal reserve system.  Banks only lend if qualified borrowers want to borrow.  This is why we have not had inflation despite the Fed "printing" trillions of dollars over the last few years.  The reserve simply sit on the banks balance sheets, there is no mechanism to turn them into cash besides market forces like demand.

Why would the US not be trying to ramp up manufacturing now, and instead waiting for some event?  They are manufacturing more today.  Every individual company tries to maximize profits, there is not one God of USA that says hey, we should all do manufacturing real good now.  It's thousands of companies that work independently in the economy to make a buck.

I'm afraid I do not know the rest.  What I do know is that you are talking about getting rid of volatility with BTC which is down 70% in a year.  That makes no sense.  Look at a chart of the USD over the last ten years and compare it to BTC - which would you rather hold your $ in if you are looking for stability and not wild speculation?  You have ideas about FX and the USD but they are not based on facts and are non sequitur.

Do you see Keynes as a God or just below the level of deity status?

Agree that it becomes interesting.  But not in the way that most people think it does.  So, let's hear it let's hear the scenario that is based on facts today that would lead to one of those things falling apart.  And then try to tell yourself that you are doing anything but trying to wildly predict the future in opposition of hundreds of years of precedence, the rule of law and the will of 300 million + people.  We're not soothsayers or wizards who can make predictions about the future.  Sure, anything can happen tomorrow.  A comet could be discovered that is going to hit us.  But consider this - in that case we are all screwed no matter what - this is for all doomsday scenarios.  If you are trying to predict something less severe just realize that you are really reaching.  Being protected from negative risks is one thing, but selling your home to bet that the world is ending or whatever is something else altogether.


I don't know what you are talking about.  Please address one of the points I made directly so that I can reply instead of posting vague, too-cool-to-elaborate-comments.

That was in response to this:


Do you know the concept of bubbles?

Like this one:

https://i.imgur.com/hKrWuKu.png

Sure I do.  I know that tulips were a bubble, along with many other things.  I also know that for a bubble to exist market prices have to reach a level where they cannot deliver the expected results.  If you are saying that US debt is in a bubble, I would point you to my other posts and suggest that you have not read them.  It is not a bubble as long as they can pay the interest expense on their debt ie deliver the PROMISED payments.  The US can never not pay on its debt obligations.  Period.  The rest of the WORLD disagrees with you that is why UST rates are at multi-decade lows.  If you understand that the US Treasury can CONTROL the interest rate they pay on debt by issuing only 1 year UST or that the FED can target 1% as the 30yr UST rate then you see that paying interest on debt can never sink a country that can issue its own currency and has no foreign-denominated debt.  It is not something that you can argue it is a fact about how our financial system works.

I'm not going to get bogged down by the misleading chart you posted for 2 reasons.  1)  you are ignoring output and the value of assets that the country has.  Having a lot of debt does not matter if you are using that debt to produce more, which the US has been.  There are also hidden assets like oil, gold, etc that don't show up there.  It is extremely misleading and offensive to people reading this to post a chart of debt increasing because 1)  it ignores that the US economy is much better off than it was 40 years ago and 2) you are assuming this false notion that debt somehow has to get paid down one day.  It does NOT.  If you paid down all the USTs in the world, think about how much savings people would lose!  Everyone who holds UST today collects interest from that debt - it is an ASSET for people.  No way no how will it ever disappear from the planet nor does it have to!  We pay our obligations, issue debt to produce more and life goes on because we can TAX that new output which was created by the debt.

Lastly, your chart has an entire gray area which is not based on fact, it is just scribbles saying that somehow, something happens that makes it all go bad.  There are no facts there there is nothing but a guess.  I'm just going to ignore the fact that the implications of your chart and notes would be that debt gets somehow paid down and that is a good thing or a "crash"... the notes you have apply to business and product cycles, not government debt.

I can post a chart of the SP500 that goes straight up at a 45 degree angle like your chart - is that a bad thing too?  The chart is meaningless, please don't insult the intelligence of the people on these boards and try to scare them with something that misleading.

Poor logic buddy.  Debt isn't an asset.  Or perhaps you are claiming that we're close to the point where that debt will start deflating rapidly  ;D

You assume that the taxpayer can pay the interest on the debt every year. But the interest on the debt has risen to one of the top 6 budget expenses and as it rises we will reach the point where there are not enough taxes to cover the interest plus any sort of other expenses. Debt cannot continue to climb with no detrimental results.

And when the Fed needs to print money to buy US treasury bonds to keep down that interest rate and allow the US to continue to be solvent, they are shifting the burden by devaluing the dollar.

In short burts they can bounce back. Over the long term it leads to inflation.

Sure we have the military which is one of the top 3 budget items, and they can attack countries like Iraq who started talking about going off of the dollar for oil sales. But that just adds to the spending and adds to the problem. And higher taxes do not necessarily result in higher income as people work to shelter their money from those taxes, just look at the failure of the 75% tax in France.

Depending on violence and force to prop up your economy is not the best way forward even if in the short term it seems like it is working. That system always requires more force and more violence before it comes to an end.

An unfortunate time to point fingers at US economy (DOW-UP, USD-UP).   Bitcoin economy continues to tank amidst unchecked theft & fraud :-\

Look up sectoral balances to understand relationship between public vs private deficits and surpluses

I agree, the US doesn't need oil to be priced in USD to print money. I never said that. What I was alluding to was because oil happens to be dominated in USD, the US (aka the Fed-a private entity) can print money that is never disseminated into the economy (i.e. lended to banks as you've said above). What this allows the US to do is simultaneously buy oil with money that is non-inflationary on the US economy, purchase a commodity and sell it back to its economy at deflationary prices for a profit. Essentially, on the books it looks like the US economy is booming with all the capital coming in (cheap gas prices mean more spending, traveling; generally linked to improved economic conditions), but in reality, the money never existed and is being injected into the economy from an outside way to mitigate economic inflation on the home front due to the printing of USD. The commodity oil is like fake money. It is a vehicle to control economic factors based upon what the commodity is denominated in primarily (currently USD). The US is the best house on a bad block right now.

Secondly, printing of money alone does not cause inflation (again I did not say this). When the real value of the economic output is mismatched with the amount of dollars circulating, this is how printing excess money (QE) becomes a problem. Without having the output to back up the QE, the US experiences inflation. If the US doesn't have the goods to support the high exchange value of the USD in the world economy, you get inflation. The only reason we have QE in the first place is because an economy that wants to grow fast and beyond its means (the US since forever) has to do it somehow

Step 1: you tell everyone your country has a ton of money by printing it
Step 2: Get them to buy your stuff/invest in you with 'real money'
Step 3: Economic boom town - profit
Step 4: Continue the process until every one is entirely dependent on your country for its economic value based on their currency that they won't let you fail
 
The US isn't ramping up manufacturing in response to some event. What I was talking about was bringing our manufacturing back to US soil and beginning to increase our world stake in the export market. Right now, all we export is dollars. You will see a return to American made products and a reinvestment in corporations housed in the the US. What this will do it allow us to export more products, decrease our reliance on QE and strengthen our hold on the world market. If we let go of being the reserve currency (we will eventually), we have to be a frontrunner in something otherwise the US stands to lose a hold on the world.

The debt in the US doesn't matter, it never has. In the 40s/early 50s, we actually volunteered as a country more or less to be the world reserve post WWII (see Bretton Woods Conference) since we had lots of economic resources and much power.

The volatility of Bitcoin right now is purely because of lack of no clear authoritative governance (as posters below say: a military). Eventually, if Bitcoin becomes a real thing, governments with lots of power and money and military will assume their slot in this, set up shop and push their economies in new ways using this technology.

Whoever stole Bitstamp's coins are UP in bitcoins.

Theft tends to yield good revenue. This is what the US economy relies on. The better their military at keeping those taxpayers in line, the better the economy.

The unfortunate thing is Bitcoin has no military (or any enforcement mechanisms) to deal with theft.  As always, Bitcoin parasites run to the nanny state to deal with teh bad hax0rs.
Regardless, thieves profiting != good for economy, that's bitcointalk logic.

Oh boy. Where do I start!?

1. Depends which side you are on.
2. What is "global deleveraging (http://en.wikipedia.org/wiki/Deleveraging)" if not the rapid deflation of debt.

Specifically: (http://en.wikipedia.org/wiki/Debt_deflation#Fisher.27s_formulation)

Fisher's formulation
In Fisher's formulation of debt deflation, when the debt bubble bursts the following sequence of events occurs:

Assuming, accordingly, that, at some point in time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both. Then we may deduce the following chain of consequences in nine links:

Debt liquidation leads to distress selling and to
Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes
A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be
A still greater fall in the net worths of business, precipitating bankruptcies and
A like fall in profits, which in a "capitalistic," that is, a private-profit society, leads the concerns which are running at a loss to make
A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to
pessimism and loss of confidence, which in turn lead to
Hoarding and slowing down still more the velocity of circulation.
The above eight changes cause
Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.
—(Fisher 1933)

Ah, man you couldn't have said it better. Increased taxation can only cover indebtedness so long. If you poke the bear (the public) too much, they are going to get angry. Debt is a great asset for the financial industry in generating massive profits on the backs of "investers". Debt is awful for the public at large. The Fed can churn out as much cash as it desires, but ultimately the people have to pay for it. I just recently read that GB is finally paying off its WWI debt... my ass, they are just refinancing it.  Your point exactly sir. Kudos.

It is not me who believes that theft is the best way toward a good economy.

Taxation is no more theft than Bitcoin is child pornography :)
Your friends, the other paranoid lunatics libers claiming that it is doesn't make it so.

Closing your eyes and covering your ears saying that the forced taking of money is not theft all you want. Because it is an ancient tradition, society allows it without thought. Like they did with slavery and war.

Where did they said that? Is there a thread. I thought about it one day and found some articles.
edit: sorry the off-topic

When your landlord expects you to pay rent, do you call that theft?  If you don't want to pay taxes, GTFO & go and live under the sea or on the Moon.  Stop trying to freeload.

Well technically tax isn't theft, but extortion.

My landlord does not rob me and then grant me the privilege of living in my apartment.

As for me, I did GTFO.

No matter how you cut it, whatever goodies the government gives away, how much they spend on protection, free TVs, free health care...whatever, they take my money without my permission.

You can't talk about what the government provides until you address the part where they steal from people.

Theft is theft is theft, it doesn't change because of what happens afterwards.

The country where you live--it does not belong to you any more than your landlord's house does.  To live there, you play by the rules & pay taxes, or GTFO.
Calling taxes theft simply labels you as yet another batshit crazy--don't do it if you expect to be taken seriously.

A government does not create land any more than you get your rights from a government. The government controls that land solely because they have the power to do so, and they get that power by stealing it from anyone they can take from and get away with it.

I do not live in the US or use government services but I am still required to pay medicare, social security and all income over $100k. There are several countries that run just fine without taxes but most people have been brainwashed to believe that is the only way a government can get its revenue. Just like many people likely believed that the only way cotton fields could be picked was through slavery. I am sure the slave masters made similar excuses about the land the slave lived on and the food they ate.

True Colors...

If you give up US citizenship, you do not need to pay medicare or pay taxes.
You should feel free to move to one of the countries that "run just fine without taxes," no one's holding you back :)

@Wekkel:  You bet.  Tired of listening to grown adults acting like sullen, entitled teenage girls.  Man up and stop whining FFS.

One could also think further outside the box. A lot of people here try to do just that.

One can do many things, but people here aren't thinking outside the box, just in a different box.
The box you do your thinking in loves slinging cliche shit like "think outside the box."

Yes, my plans are my plans. The slave was free to run to the north if they could as well. Doesn't make theft any less theft and slavery any less slavery.

If that route is not open for you, wouldn't it be better to stick to posting nice pictures (much to my entertainment)?

You don't need to run, no one is holding you back.  You don't even need an exit visa.  I come from a place where one did.  My father was jailed for trying to leave.

@Wekkel:  Nothing would be easier for me than joining the chorus of entitled whiners on this forum.  Other than common sense, sanity, and self-respect.

Except he posted a chart of PUBLIC debt.  Deleveraging happens on the PRIVATE side!

deleveraging doesn't pick sides. debt can be deleveraged, public or private. isn't that the point - that the deleveraging of public debt by governments has pretty serious ramifications?

from the deleveraging link above...

LOL. Childish nonsense. Look at the countries that the United States has wrecked in the immediate past (Iraq, Libya), and is currently rattling its sword against in one form or another (Iran, Syria, Russia, China, Venezuela). All have either attempted to start their own oil bourses, or have threatened to begin transacting for oil in other currencies. The only exception to this rule in recent history is Afghanistan, which is not a major oil consumer/producer, and was invaded for other geopolitical/strategic/economic reasons.

Military might and nuclear arsenal aside, the petrodollar is the engine of America's global economic domination. It essentially creates an endless loop of demand for U.S. dollars and U.S. debt, which allows the United States to print money endlessly, export its inflation abroad, and smash foreign economies on a whim by tinkering with oil prices, interest rates, and the overall U.S. money supply. Foreign countries, with no other choice but to obtain U.S. dollars in order to purchase the world's most precious commodity (oil), are forced to play this hopelessly rigged game.

Umm.  Your linked article says "simultaneous".  The chart he posted shows inflating debt.

Anyways, what is your point? You want the gov't to pay down debt or not?

His point was trying to compare debt bubble to asset bubble.  Not the same at all

I don't care what they do :) just pointing out that one way or another the piper gets paid!

 Man oh man. You need to get your arguments squared away and correct guy.

1. China's economy is not fabricated. It is quite the opposite; it is predicted to become the largest economy in the world in the coming years. This is mirrored by India's sentiment on China's Silk Road Initiatives of 2014. India is worried because China has an increasingly large slice of the Indo-Pacific corridor. Couple this with DPRK ties, the Russian-China oil pipeline proposals and major infrastructure ties with large African nation governments and you will quickly see China is not some joke.

2. Europe isn't teetering on collapse. The European Union Commissions latest report out in autumn of last year indicated all EU countries were set for growth through fiscal years 2015-16. Historic government deficients are being refinanced and paid due to strengthened economic activity.

3. Great Britain was NOT fine after losing reserve status with the Sterling. Since the early 1900s, the Pound has been decreasing. Since the 1950s after the end of WWII, the pound has been devalued by HALF in comparison to the USD.

4. China will happily take BTC or a regulated, world approved digital currency for their goods and services. What they want to make sure of is that Chinese money is primarily spent in the Chinese economy and that when it comes to foreign affairs, they get their fair shake with the debt they are holding on behalf of others.

5. The US won't be able to tax its citizens the amount necessary to make the debt interest payments one day in the future. We can only tax so many unborn future citizens (this is a disgusting concept that is mostly true). The government cannot infinitely raise tax burdens on the public without them getting angry. See any history textbook for prime examples. It's a fine line to walk.

6. Having the best legal system has nothing to do with America being in the shitter. Having the best military has nothing to do with it either, but I'll let you rationally decide which one gets the money and which doesn't. Military spending/strength has always been an economic indicator.

7. Stop thinking so small and US-centric. Interest rates and currency strength are proxies for everything else.

For a guy that claims to be in the financial industry, reading your posts makes me think you're a teller who has sat in on a few loan officer meetings. I don't want to take away from this thread, I like your ideas and for facilitating a discussion, just don't parrot things. The world is much larger than the US and on the contrary, many countries are superior to the US in many ways.

Europe isn't teetering on collapse but Euro might need to be broken up and return to national currencies

Great Britain went through ups and downs after international trade moved away from Pound Sterling as a reserve currency.  But as evidenced today UK is still powerful economy.

If your debt is denominated in your own currency,  you have no risk for default.  Not saying its good.  Just the risk for default isnt there.

1 What effect has the recent years of central bank commanded low interest rate had on the physical capital structure in the US and in the world?

2 Do you think that the current oil glut has something to do with the low interest rate?

http://cdn.meme.am/instances/500x/57822811.jpg

I mean come on. China, a fabricated economy? I'm an Australian, and I know that China is by far Australia's largest trading partner (both imports and exports). Unless Australia's economy is fabricated too, you've got some explaining to do.

Consider this:

1) someone with a gun puts that gun against your head and tells you to pay them half of your income.
2) ten strong guys put you in a cage and tell you they will let you out if you give them half of your income.
3) ten strong guys put you in a cage, and tell you they will let you out if you buy for half of your income, beany babies.
4) ten strong guys put you in a cage, and tell you they will let you out if you pay them half of your income, and then they will make sure that no other guys will put you in a cage again.
5) the gouvernment will put you in a cage unless you pay them half of your income, and in return they will make sure that nobody else will put you in a cage.  On top of that, you get a museum of modern art for it which you can then visit by paying an entrance ticket.

Where's the difference ?

Hello my born-again libertarian friend!  And what a purty hobby horse it is you're riding today, never seen one quite like it before, such original, very wow!

1-4:  The reason it doesn't happen is I live in a country where there are laws, and enough muscle to enforce those laws in a meaningful way.  Those musclebound jackbooted thugs work up a big appetite, so some of my taxes go towards buying them fresh children to eat.
Good things cost money.

5.  Yes, as far as making sure that no one else does, WWII certainly comes to mind.  Of course, a privately funded militia of sulky middle-aged libers would have done the job far better, cheaper, and in half the time  ...wait, aren't you French?  Nevermind then, disregard.  

http://www.newyorker.com/wp-content/uploads/2012/04/120430_cn-french-army-knife-interpretation_p323.jpg

For the record. 90% of french population is made of socialist jerks with exactly your arguments. Idk if he's french, but maybe you are? If not, you should ask for a Visa.

He is.  I'm not.  Been there.
Do you have a point, or just venting?

My point is that you should live in a country that incarnate your political views so you could experience how good they are, but I shouldn't bother since you're probably not sincere. Acting as a socialist jerk is perfect for trolling this board. You do what you have to do. Move along.

^
I live in US.  My family moved here from Soviet Union.  We were made to wait two and a half years for an exit visa.  My father was jailed during that time for a protest demonstration which lasted all of 30 seconds.

So yeah, I moved to a country that "incarnate [sic] my political views."  Now what the fuck have you done?

Debt is an asset to people that hold it.  If you have bonds in your 401k you are holding the debt of companies and governments but it is an asset to you.  Removing all US debt would be devastating and will not happen.

Interest expense as a % of total government outlays has actually been coming down and is currently very low!  Since interest rates are so low our interest expense is low - there is not this problem of things spiraling out of control.  Plus, like I said, the US Treasury can issue shorter maturity debt or debt with low coupons indefinitely so we can actually control the interest expense further if we wanted to - I repeat we can issue currency if we needed to pay interest and would never go bankrupt like this!  The Fed printing (creating reserves, which is not putting money into the economy directly, it nets to $0) has not devalued the USD - it is in fact in multi-year highs.  Dollar's value is based on inflation, among other things, and that is very LOW right now.  So please don't make these assumptions, just follow the facts.

The US cannot just spend those reserves on things like oil.. they literally sit on the bank's balance sheet as an accounting journal entry.  They cannot use it to buy oil or anything else.  You see, the dollars never make it to the economy UNLESS they are borrowed by people.  The only way you can say QE is inflationary is if you think banks DID NOT HAVE ENOUGH RESERVES TO LEND BEFORE and this "new" QE money allows them to lend and that causes inflation.  BUT, critically, the banks NEVER had a problem with having reserves before!  In fact, banks don't actually need reserves to lend - they lend FIRST then create the reserves as an offset on their books!  This is so important.  If you understand that you understand that QE is just an asset for asset swap which nets to 0 - swap reserves for US Treasurys - cash for cash - a checking account for a savings account!!  So many people got this wrong since 2009, please understand how important it is.

^this.

This is so wrong.  Please read all my posts here and you will see all you questions addressed.  We don't need oil to be priced in dollars for people to buy our debt.. they do that because we trade with them and they want to hold safe investments.  The US does not need permission to "print" anything, our Fed has the Congressional right to do that all their own.  We don't need permission.

1 - no professional investor or businessman trusts data that comes out of China.  They make up numbers and hide problems.  Of course they are a huge economy that will continue to grow, the issue is that people do not trust their government to put all their cash in CNY.  Their legal system is nowhere near the USA, which is why China is nowhere near ready to be reserve status.
2 - Europe - lol - dude they've been saying that every year for the last half decade!  Those are just projections!  Greece is ready to leave and the structural problems that Europe has cannot be fixed without full fiscal and monetary integration of their banking system - something the Germans are wildly opposed to.
3 - Britain's currency being devalued is good for their economy.. they can sell more of their goods.  It is only bad for people who want to take vacations, because they have to spend more.  That is anything but a collapse.
4 - Dude, China was one of the first to ban BTC transactions..
5 - You are speculating, wildly.  Interest expense is down as a % of total government outlays because rates have fallen.  And again, the way our country works we can use the Treasury and primary dealers to buy US debt - we don't need outside forces to do this.  You are saying that people will pay fewer taxes in the future - why?  The US economy collapses?  I think not.  Because interest expense will be high?  No - we can control this by issuing shorter debt maturities, and besides rates have been PLUNGING for the last 30 years, so that part of your argument is also false.
6 - Dude having best legal system is what makes people want to do business with us and supports reserve currency status, which you seem to think is so important.  That is why I mentioned it.
7 - I'm not sure what this is referencing.
And BAS please understand that when I read your comments it is very clear you do not know what you are talking about so don't tell me I am a bank teller.  If you are delusional enough to not see that what I am saying is based on FACTS and what you are saying is based on speculation, things you read online and general surfacy BS then please, move on.  Quoting things like European estimates is just obviously clear that you are naive about many topics.  Every economist every Wall Street analyst 99% of the time predicts things to get better and follow a trend.  If you look at what actually happens and how often they are right, you will see that stuff like that is not worth a lick.  We all know the world is more global than the US, I'm trying to address everything that I can and I am not implying that the world is not connected globally.

1 - it has largely benefited the world because businesses can borrow for less and money has flowed into emerging markets to move their economies forward.  Honestly, it is so difficult to say if that was because of QE or because of things that would have happened without QE anyway.  Even the Fed does not know and cannot quantify QE impact.  Could just be low inflation doing all this like causing low rates.  Overall, it is good for growth to have low rates.  Of course, there are potential issues that come up.. most notably money flows into riskier assets.  Like oil and gas drilling that only works at $100 oil.. and now we will see defaults in that space.
2 - Yes, there are many shale, deepwater and oil sands companies that were able to borrow at very low rates and that increased supply of oil, which started this decline.  By the way - low gas prices are great for consumers worldwide and this should be seen as a VICTORY for the people of the world.  Just bad for companies and certain governments.  More generally, oil prices and interest rates move in the same direction a lot of the time because if you have low inflation caused by low oil prices you get lower bond yields, because you don't need to be worried about higher prices coming up in teh future which makes the value of the interest you are receiving less lucrative.  Low inflation = low yields = low oil prices.

I meant that a lot of the data that comes out of their government is fabricated.  Of course it is a real country with real output.. just look at where all your clothes and electronics come from.  I was talking about whether or not they would be qualified to be a reserve currency, please do not take my quotes out of context.
--

PS I like talking to you guys and this has been surprisingly civil (mostly) so far.  Of course I have views that can be challenged but I am trying to keep opinion out of it and reference how things work so you can all make your own decisions.  That is why I stress the Treasury, Fed and FX concepts so much, cheers.

The point was not whether it happened or not, but rather what is the difference between 10 maffia thugs putting you in a cage unless you pay them, or 10 000 state-paid thugs doing the same (but carrying a police uniform or the robe of a judge instead of a leather jacket).

A gedanken-experiment, if you like.  What's the difference ?  Why is the former "crime" and the latter "paying taxes" ?  What's the fundamental difference as seen from the individual undergoing the action ?


No, I'm not talking about that.  I'm talking about all those goods and services OTHER than protection against violence that the state buys for you in your name with your extorted money.  Like public services of bad quality and high cost that you don't ask for, wellfare that you don't ask for, military adventures abroad that you don't ask for, and a lot of people on a state's payroll with ill-defined tasks but important salaries that you have to pay for.

Ah, then I can understand you of course.  If you come out of Hell, of course the kitchen oven seems cold to you :-) and you do not understand people complaining about the heat.

But maybe you're not aware that even the western governments (more Europe than the USA probably) are slowly evolving in the same direction as the former Soviet Union: total state control of everything.  Of course there's still more freedom in the west than under Stalin, but that's not difficult :-)  But the amount of freedom is melting like snow in Hell.

And now after gods own country saved you you've found out waisting your life spitting poison on the bitcointalk forums is your destiny.

None.  That's why I'm going to come & live at your house, and won't pay you rent.  Because there's no difference between charging rent and mafia thuggery either.
Please remodel & hire some good help before I move in--I wouldn't want to put up with substandard services.


Living in a country is a package deal.  Like renting a hotel room--you get charged for the pillow mints you didn't eat & the bed you haven't slept in.
Don't like the deal?  Go to a different hotel, or sleep in the gutter.  Give up your citizenship & GTFO like that petty criminal Ver (who is now whining that US won't give him an entry visa).

You seem too flustered to type.  Take a few breaths and cool down 'til you can form a coherent sentence :)

The confessions of Notlambchop. Made my day lol

I guess my biggest question would be, why are you on a Bitcoin forum if you have no interest in Bitcoin?

Are you trying to "save us" from ourselves?

^
Nah, just keeping you from roping in more marks.  And won't lie, the luls here are top notch.

1- Don't hand wave by saying "no professional investor." That's a cheesy line and dates your age at about 21. China doesn't want reserve status. Why would they? It would mean losing out on collection of all the debts they have from the US and other countries. If you put yourself in the shoes of Chinese economic power, think about it? The US is the example of what happens if you take on reserve status. Why the hell would they want to wreck their economy? What they would do is given a world currency, China would back it's use for foreign economic affairs provided when they exchange all their debts both held/personal would be given an exchange rate equal to the country the currency was held in.

2- Not to sound condescending, but Europe is a conglomerate of countries, not one economic house. You talk as if all Europe functions as one. Greece was bailed out not to long ago. The Germans (one of the economic powerhouse manufacturers of Europe) want Greece to remain out of austerity. The point of the Euro was to unit Europe after the war. There are too many competing currencies and countries in the area, so the idea was to unite making trade, travel and access to Europe easier for all Europeans. In a sense bolster the economy after being crushed from the war. Of course the Germans are pissed - do you realize what happen to them after the fall of the Berlin Wall? - Try supporting an entire new eastern half of your country that was decimated by the Russians with massive influx of poor eastern Germans.

3- The devaluing is not good. Everything in the world economy is tied to the reserve currency. When you are selling products from your country at a lower value, you may sell more, but you still make less on the economic scale. How do you think GB borrows their capital? and from who? Credit lines to GB come from the US (mostly). GB may have a booming economy from sale of its goods, but when it has to borrow 2:1 to finance the increased production of those goods, it's a net loss for GB.

4- China banned Bitcoins because it meant Chinese dollars were leaving the Chinese economy. China has a heavy tradition of gambling and superstition. For instance, similar to the US, Chinese elevators don't contain the number of certain floors. Certain numbers in Chinese signify death or life and people live by it. It's may sound like a farce, but it is heavily steeped into Chinese culture and business practice. Much of Chinese is rural and poor. Bitcoin was seen as a chance to make a lot of money quickly. The government locked it down because of that.

5- I never said any of this. What I said was that every year there are taxes taken from the citizens of the US. As the debt level rises, the Fed can either adjust the interest rates/the government can increase taxes or a combination of both. For the next decades to come, the US economy is shooting out of control. There are not enough US citizens to tax (at whatever future rate needed) to make the debt payments in the future. Tax rates are based on economic status which is ultimately determined by debt ratios.

6- I quote things because that is how I root my arguments. When you want to make a statement regarding something, one must references his facts. For instance:

"Every economist every Wall Street analyst 99% of the time predicts things to get better and follow a trend." - said by you


This has nothing to do with anything. 99% of all Wall Street analysts don't agree with 1% of Wall Street analysts. This is all that you are telling me. I don't want to harp on you, but in all your responses to me, you have not stated one clear fact at all nor backed up anything besides saying "I'm in finance." I don't care if you're in Sewage sales. Everyone is entitled to their opinion, but clowning around on an internet forum where many young up and comers stop to get a perspective on Bitcoin and finance get ruined by your unsubstantiated statements.

And yet there's Bitcoin :)

I agree, that's the whole point of Bitcoin. You cannot create more Bitcoin after 21 million. That's all there will ever be.

However, I'd argue Bitcoin is not money. It's a store of value that can be exchanged for currencies to buy things. This technology will one day become the placeholder many countries will exchange their own currencies to hedge economic ups and downs.

When the digital currency store of value price has a favorable exchange rate for some country's own currency, that country will exchange back to their currency it and deliver it to their economy through any number of ways to drive their economy. Conversely, if their economy is tanking, they will borrow funds at a favorable rate and hedge the loss by exchanging into the digital store of value. Once their economy flips, they make the exchange.

It's a genius idea.

Two-thirds of the value lost over the past year.  Where did it go ???


No country would ever adopt a currency it neither issues, backs, nor controls.


Read up on what fiat money is and how it works.  Above makes no sense.


Nah.  Beanie Babies' artificially limited supply was a genius idea.  Bitcoin simply borrowed it.

I don't think you are understanding this whole reserve thing.  If you are saying they don't exist, how can they buy oil with them.  The point about QE that you make, about how money isn't real and how it is buying oil I just don't understand it.  Loans are created when banks lend, that is new money.  Going out and buying oil has nothing to do with QE or reserves.. the banks, if they buy oil, could have sold their US Treasurys and bought oil with that, so the fact that QE happened has nothing to do with it.  If you read my posts which explain that QE was an asset swap of one type of money for another, there is no change that happened.  Look, if you are talking about how the USD is not going to be reserve status anymore we are missing one major step - them losing that status.  You have to convince central banks around the world to dump their dollars when the USD has been very strong and stable.  And I have argued over and over that it is stable and will likely continue to be stable.  Talking about losing status, or how inflation is coming is too far ahead.  There is no inflation right now, that is the problem.  QE did not create it.  The Fed can't create it.  So let's move past this point you are trying to make which is that somehow inflation is being created because that's not how it works.

Banks do lose money when people default on debt.. they lose all the money they gave to the person.  And banks do fail, thousands of times.  Getting things moving again with government intervention is the only way to prevent a depression.  You say that all the money created since 1776 has been debt but that is not true and I'm saying it again you are not understanding or reading what I am writing - money is only CREATED or truly put into circulation by the US TREASURY they are the only ones who can create physical money.  But that is not the only thing that money is.  Money is also money in checking accounts and savings accounts, which is created by other borrowing and lending and so on.  The important thing is that there IS a ton of money out that that is BEYOND the debt.  Household assets in the US are about $80 TRILLION with liabilities of like $12 trillion, so there is WEALTH there.  Tons of it.  Not just that came out of debt.  What I think you are getting at is that all wealth is backed by the full faith and power of the US Government, which is true - the cash and wealth is not backed by anything like gold.  But look at what happened to stock markets and economic activity after we left the gold standard - it took off like a rocket.  That system is antiquated.  And if you are saying that that guarantee is worth nothing, I think you are wrong and I have talked about the things that protect the value of the dollar ad naseum in here.

1 - Dude the US did not get it's economy wrecked by having reserve status, that is nonsense and contradicts the other comments you made about how somehow they can buy things with money that doesn't exist it is false.
2 - The Eurozone has problems that cannot be fixed unless there is a union which the Germans oppose - that is a problem.  Greece was bailed out and they like 3 times and they need to be bailed out again.  The euro was created to facilitate trade, not to unite Europe in some political way.  I don't really know what you are arguing I said that Europe has a lot of problems and they clearly do, just look at their currency strength or lack thereof.
3 - Devaluing IS good.  What does it mean when you say you sell more but you make less on an economic scale?  That is not a real thing.  I don't care about GB I'm talking about the US which does NOT borrow in other currencies, because you were saying that somehow devaluation of the dollar would be disasterous.
4 - I hear that, but again that was entirely my point and I am not sure why we are arguing.
5 - This is wrong on so many levels.  Yo usay that it is shooting out of control but corporate profits are at all time highs.  Nothing of what you said is actually happening.  Can't make debt payments - are you serious?  They ARE doing so comfortably.  If this was true our interest rates would be 50%!  They are like 3% - this is simply false and misleading at best.  Economic status has nothing to do with debt ratios.. tax rates are based on how much money you make and that has nothing to do with what you said in the rest of your paragraph.

I can't tell if you really believe that all the stuff you are saying is true or not.  But let me assume that you do believe it.  You are talking about things like economic scale which is not a thing, you are saying that somehow banks are buying oil without real money, that China would happily accept BTC but then that they don't want to take BTC because well it means $ leaving their economy, and that is just to pick on a couple points.  Most of what I have said is based on facts, and the fact that you think I have not substantiated anything with facts speaks to how unhinged from reality you are.

No disrespect but it doesn't sound like you are reading my posts or if you do read them you then just quickly move onto the next manic point you may have and ignore the facts about how banks, the economy and real world work so that you can fit everything into your picture of the world.  This is not good for you.

There's nothing wrong with creating money out of nothing, in and of itself.  I would rather a country can create money - which most in the world CAN since almost NO ONE is on the gold standard - and then backup that money by output, taxation, etc.  That is what fiat is.  Look at the last 50 years since we went off the gold standard - the world is 100x better off you cannot argue this fact.  You would rather we trade bits of gold and limit credit expansion?  Please.  Instead you have BTC which is backed by nothing, but is in a limited supply.  So what?  Who CARES that you cannot make more.  That does NOT mean that the value will be supported lol.  It just means there can't be more.

NotLambChop -

Where did the 2/3 go? -Into the pockets of worthless scoundrels who are taking speculators money. It's a damn theft market right now. You have a lot of money? -Start an exchange. Profit. Close up shop.

No country would adopt a currency it can't control? I never said they would. I am alluding to the idea of SDRs (Special Drawing Rights-Currency units). This concept already exists and is used by the US and a few other countries, but is in need of new lifeblood. This is where I believe Bitcoin's technology will take it.

BTC-

Comon? You really believe a country that can create its own money out of nothing is a good thing? Why aren't other countries doing because "in and of itself" it's good? Hell, why doesn't some small nation just get to printing? --They can't do it because everything is tied to the exchange rate of their currency to the reserve currency (the USD). We are in control of it; we set the price. This really is my only point out of all of my writings for you to see and internalize. The US is in control. That's why every thing I am saying to you sounds wildly outrageous. You are part of those in control. You are seeing it from one side and because that side is in control, you think that is reality for everyone.

The gold standard was dropped because after the war, Britain (the reserve currency at the time: the Sterling) had a massive run on the banks and they ran into a huge liquidity problem. They simply is not enough gold in the world to cover everything.

"The world is better off" as you say after dropping the gold standard was because this allowed the US most importantly to not have to keep reserves of a finite metal not because they just got rid of the stupid idea of gold. They instead used their own dollar (USD; which can be controlled and minted) as the new 'gold standard' for not only the US but the world. The US controls the "gold standard" of yesteryear today for the entire world. It's like being Midas pre-WWI. Dropping the gold standard allowed the US to boom as it could take on massive loads of debt without having to pay it back ever because they control it!

Problem:
Gold Standard = finite resource that cannot cover infinite growth

New Problem: The finite resource limits growth

Solution:
USD reserve currency standard = unlimited resource that can cover infinite growth

New Problem: Those who don't control the resource can't control their growth (anyone but the US -> dependency)

You renting my house is a mutually free agreement.  We both agree on that, or not.  I didn't say I didn't want to pay for state (or other) services.  I only want to be able to choose them.   My house is mine.  If you want to live there, and I agree that you live there, then we make a deal, and part of the deal is that you pay some rent.


The point is that "the country" is not the ownership of a state.  If it is, then I'm the state in my house and my garden, and when I'm at home, the state around me has nothing to do with me, because I'm then the owner of my house, and not the state, and my front door is a state border.  

However, I agree with you that using public services and infrastructure needs to be paid for.... on a voluntary basis !  If I want to USE a road, it is normal that I pay for it.  However, if I don't want to use a road, I don't see why I should *be obliged* to pay for it.  I might *choose* to step into a package deal that I pay for all roads, and that as such I also have the right to use them.  Whether I do or not will depend:
- on the price I'm charged (there's for instance no reason why the same service should be more expensive to me than to someone earning less than me)
- on the quality of the roads.

If I don't have this choice, then of course the state will build a lot of useless roads at too high prices for too low quality to give my tax money to their friends the road building companies held by their brother in law.  The only way to keep the ratio of quality, usefulness and efficiency in check with the spending is if there is the free choice to say no.  If not, we get exactly what is happening in almost all states: budgets running out of hand, rising taxation until the economy is strangled and a lot of spending on very low efficiency, bad quality and very costly stuff.

I know this, because I work with state money.  The more I waste, the more I spend, the better things go for me and my people.  At no point, any form of efficiency is demanded.  (on paper, yes, in reality, no).  I've had collegues who couldn't stand this going to the private sector, where they discovered all of a sudden that every Euro spent must be won too.  
Of course it is fun spending other people's money in truckloads.  But exactly because I know how it goes with tax money, I'm aware of the hypocrisy of the system and I want to keep wasting it because it is much more fun than having to earn it (and pay all those bastards like me wasting it on taxes).


The state doesn't own the country.  The state should ideally (haha) be a servant to the country.  In reality, the state is a huge parasite of the country.  The country doesn't get any better with all the wasting of tax money.  The state does.  That is, the state and his brother in law.

I think I get what you are saying here.  Sure, most of the time things are priced in USD.  Like EuroDolalr or YenDollar or whatever.  But people can just as easily talk about the EuroYen instead of the DollarYen when quoting prices.  This new country that just prints $ would see its FX decline in relation to all currencies, not just the USD.  Even BTC is quoted in dollars often but can also be quoted in EUR or whatever.  The reason that the USD is in control, as you say, is because well if I work in Indonesia or whatever and someone wants to pay me, I would much rather trust the USA than Vietnam or whatever so I would much rather you paid me in USD.  That's just because that country has good things going for it, there is nothing wrong with being preferred currency if that is the case.

I just don't agree that "we" set the price of these other things you reference.  The USD is not set by any one party.  Sure, the Fed has a lot of control over it because they control short-term interest rates, but there are so many other global factors that affect the value of the dollar that it is difficult for me to accept that our government controls it.  And even if they do - I just don't think it matters.  It only matters if you are doing business with the US, in which case other countries WANT our FX to be weaker so that they can sell us more stuff!  But in the long run it is inflation that affects the strength of a currency and this government has done a good job of keeping that in check.

Creating money out of nothing IS a good thing if that money is being used to invest in productive assets.  If a country prints its way into a fortune and has no economy, it is worthless.  But if a country prints a fortune and create unlimited, no-pollution portable power source or something crazy, that currency will be worth a lot.  It just depends.  And I think in this case the USD is doing well - they have the best tech industry, the best healthcare industry and a slew of other things going for them.  Sure, it could change tomorrow but that is speculation.  And having that argument is much different than saying the USD will be worth $0 in 100 years because it's much harder to think it through and say I think the US won't be competitive because of X or Y.  Those points can be argued but saying that it's screwed, well that's just an opinion.

When did France agree to you living there without paying taxes?  I hope you saved the contract, because France tells me she didn't.


Not sure what the law in France is, but here in US the state doesn't "end" at my doorstep.  Owning a piece of real estate in US makes it "yours" in the same sense that owning an apartment in an apartment complex makes it yours.  It grants you some rights, but far from all.

You aren't allowed to breed cattle in your "own" apartment, for instance, and you need to pay building maintenance costs.  Not optional.  

Similarly, when you buy a piece of land in US, it's only "yours" as long as you pay your taxes, follow building & zoning codes, and comply with a bevy of other shit.
Oh, and if the jackbooted thugs ever need "your" land back, they can seize it via eminent domain. (http://en.wikipedia.org/wiki/Eminent_domain)
Ownership is not quite as binary as you think it to be :)


Stop wasting your government's money, or, as a minimum, stop bragging about it.  It's unscrupulous people such as yourself who drive up the taxes.
Stop being the problem and become the solution.


You certainly don't think *you* own the country, do you?   What is it you feel that you have done that made you deserve it?

Bitcoin re-surfacing.

https://i.imgur.com/COeeUTe.png

Quouting the above, The US dollar loses its status as the reserve currency, the question is not who it goes to but what it goes to, look at what all the central banks hold as their reserve assets, the dollar and GOLD! There does not need to be one country with a reserve currency, there is already a backup in place and all the central banks of the world hold it already. Its not going to be game over for the US once it loses its reserve status, after the dust settles I expect they will bounce back as a manufacturing powerhouse and will remain a preeminant world power, it is an incredible and dynamic place.

Consider that China has been buying treasuries throughout this past decade, this is what has given support to the dollar all this time but they have now stopped and started acquiring gold. If the dots havent connected for you yet, well they bumped off Gaddafi after he threatened to sell oil for gold didnt they?

"It only matters if you are doing business with the US, in which case other countries WANT our FX to be weaker so that they can sell us more stuff!"

--Now you get it. The US is a major importer. Other countries want them to buy their stuff, but when the country that is selling to the US wants to do some growing of its own what happens? Well, their currency isn't worth shit globally even though they are selling the US massive loads of stuff. So they go to the US for a nice credit line and a favorable exchange rate only to find that the rate has teetered once again in favor of the US dollar. It is no coincidence.

"If a country prints its way into a fortune and has no economy, it is worthless."

-- I agree completely. Problem is this is essentially what is happening in the US right now because its only economy is exporting dollars. Financial transactions are the leading "product" produced. Yes, the US makes things, but not nearly on the scale it used to.

"But if a country prints a fortune and create unlimited, no-pollution portable power source or something crazy, that currency will be worth a lot."

-- This would be great, but why go through all that trouble as a country if you could command power over what currency that power source was designed and built with? Have someone else do it using your money which you control.


The US and their currency is not going anywhere. Same with other countries as well. What will change I predict is how foreign countries trade with each other. I believe in the future, all global trading will be done with a unified currency ("The World Dollar" or whatever you want to call it). Countries will exchange their respective currencies into "The World Dollar." Trades will be made using this World Dollar and upon completed transaction, those World Dollars will be immediately exchanged back into the denomination they originally were.

USD --> World Dollar  (Make trades globally)

World Dollar --> USD (Profit or Losses from global trades)

The world dollar serves as the "exchange rate" so no longer does USD/YUAN at (Example--$1.50:1 yuan) show up when the US strikes a deal with the China for instance.

Since I live on tax payer money :-)

Ok, they give me some, and take some back, but I live net, partly, on the French (and partly on British, and German, and ...) taxpayer's hard-earned money :-)

Before, I produced wealth and earned money.  But states took a big part of that away and I didn't want to be in slavery.  Now, I'm on the other side of the fence, where I produce almost nothing (of any value on the market), and live good on other people's stolen production.  I don't really think that is good, but it is better to steal, than to be stolen.  Given that in a pseudo-communist system, it is one or the other, and there is no fair earning what you produce, it is better to be on the state's theft side.  So that's what I do.

However, your point is a logical fallacy.  You compared "paying taxes" to "paying rent when you live in a house".  I pointed out to you where that comparison fails:
1) living in a house for rent is a mutual agreement, while paying taxes isn't.
2) living "on earth" (so, in a country) is not the same thing as "living in a house" because earth is not a produced good that belongs to someone, contrarily to a house.  Living on earth is a natural state of affairs, like breathing the air is.  For many reasons, the country is not owned by a bunch of people calling themselves a state, no more than the air in the forrest is my property and no more than I could ask money for somebody who is breathing.
Only the result of production can ideally be owned.  Public land is public, and not owned by anybody, including the state.
I agree with you that USING INFRASTRUCTURE is something else, and should be paid for, on a voluntary basis, in order to be allowed to use it (such as a rented house, or a road).  But that's not the same thing as "being in a country".

Of course, actual states don't apply those rules, because they are maffia thugs.  But it is not because they are maffia thugs that that is a good thing, or should be wanted for.
In the good old CCCP, many things also happened, enforced by the state, that you may not find OK.  So it is not because a state can enforce things, that things SHOULD be that way, and that you should find that logical or normal.  Your parents fled from the CCCP exactly for those reasons.  It is a bit strange that you do not understand that yourself.

But there's nothing else in a state.  It is the definition of a state.  The day that you will understand that, a lot will clear out for you.  The state is nothing else but people like me, wasting taxpayer's money.  The only reason why they do SOMETIMES something that appears useful to the public, is to keep people like you cheering for paying taxes.  But the state is nothing else but a self-propagating bunch of bastards like me, who produce essentially nothing useful, on mountains of taxpayer's money, and live well off the production of others.  I agree however, that I'm pretty rare in being open and honest about that.  Many of my fellow spenders of taxpayer's money are on top of that deluded (or pretend to be so) and have a high esteem of their wasting practices.
It is the definition of a parasite.  Sometimes, by accident, it also does something useful.

This is a strange (Keynesian) statement, isn't it ?
Investing means to give up consumption in order to use resources to make capital (that is, means of production).  Indeed, certain resources available could be used to consume, OR they could be used to make capital, but not both.  They could also be wasted of course, but what is impossible is to consume and make capital with the same resource.  If you want to "consume time" (that is, if you want to have free time), you cannot use that time simultaneously to produce labor.  If you want to consume electricity for playing a video game, you cannot use that same electricity to make a machine that will build a car for instance.  You can only use a resource once, and it can be 1) wasted, 2) consumed 3) invested (that is, turned into a capital good).

There's no way in which "printing money" can invent resources that can be turned into capital, without not having them consumed or wasted.  This is why "printing money" or any other Keynesian technique doesn't really work in the long run: because resources cannot be double-spend in consumption AND in capital.
Of course, what printing money can do, is to take away resources from some and give them to others.  Whether that transfer of resources improves the economical structure or not is an open debate.  Usually, if the one spending has no choice over on what it is spend, and if the one receiving didn't have to earn it, wasting resources is probable, so usually, taking away resources from some, to give it "for free" to others is wasteful (because you are usually more careful with resources you had to earn, than with things received "for free" and taken from others).

Ideally, the decision not to consume, but to invest, is what is called "saving" and happens ideally with a "sound money" (that is, money that doesn't inflate its basis).  Then, the balance is clear: people earning money (in return for produced value) who do not want to consume this, put the money aside as a saving, and this can be lend out to people wanting to invest.  With sound money, the amount not spend on consumption is then equal to what is available for investment, as it should be.  The interest paid on the borrowed money is then ideally equal to the value of the capital in the new production and is the incentive for the saver to save. 
All printing of money is distorting these balances.

Sorry to nitpick, but I was a bit perplexed by this. How does one have rights not granted by some ruling body? Rights are what subjects have. Freedom is what sovereigns have, in theory of course.

This is a feudal view on things.  Normally, people are not "subjects" but are in principle free.  They should be free to work together and organize them into bigger structures (like "states") if they want to, on their own free choice.  States should be subject to people, and people shouldn't be subject to states.  I know that this is not how things worked out the last 5 millennia or so, but that is exactly why states are thugs, submitting people to their will by using their violence.  As I said before, it is not because things are different than what they could be, that we should necessarily cheer for the way they are now.

Indirect democracy didn't submit states to the people, that is just a pipe dream.  It did improve a bit the situation over the established absolute monarchy, but not much.  We can only change the absolute monarchy every few years.  That did bring some softening, but didn't solve the fundamental problem you pointed out: that people are still subject to states instead of the other way around.

Your right to freedom is granted the day you are born. From there, it is all about defending that right.

Your right to free speech is not something the government gives you. You have the right to free speech simply by being alive. The government is just saying that they are being ever so courteous as to not interfere with that particular freedom.

The government takes away your freedoms and leaves you with your remaining "rights".

For most people, the truth ain't an option.


Winston Churchill

That's the problem with being a citizen--

The state (or law or government) bestows to you your rights and duties in that particular land. I agree with Elwar in theory, but wherever you end up being born, some governing body has been there long before your birth and will subject you to its desires.

As Elwar said, it's all about defending your rights. In the US this could mean protesting. In Somalia, this could mean shedding blood.

No.  France has never agreed to you your living there without paying taxes.  If you were born at my house, would you feel entitled to live at my house for the rest of your life?  Do you feel that you have a right to live in the maternity ward of the hospital where you were born for free?  How is that different from living in France without paying for it?


Then owning a piece of land is a crime against nature.  It is as repugnant as owning the air above that land.  In short, GET OFF MY LAWN, capitalist imperialist running dog pig >:(

Speaking about the US:

1) Forced taxation of its citizen is unconstitutional, i.e. in the US, it is illegal for the government to force its citizens to pay taxes just because they are in the US.

2) However, the law states that all citizens must file a tax return. It is illegal to not file a tax return, i.e. all citizens are forced to file a return.

3) In effect, failure to file is illegal (punished constitutionally) in order to in force taxation (unconstitutionally).

No.
 

Stop listening to batshit crazies from the intertubes.  Do you really think you're the first to think of "it's unconstitutional" argument, snowflake?

I wasn't arguing about whether it is a right or wrong policy or that I was the first to think of it. No special snowflake status for me. I was just conveying how laws are organized around certain issues. I did not get my statements from the intertubes, I got them from Supreme Court Case Florida v. United States regarding the ability to file income taxes as voluntary, i.e. the government doesn't have to do it on your behalf, it gives the citizen the right to do it.

Taxation is NOT voluntary in the US unless in criminal situations and other special cases. I didn't say this. I said forced taxation is unconstitutional, i.e. using force. You don't go to jail for not paying your taxes. You go to jail for failure to file your tax return, for lying on your forms, etc. This is how the government gets around using actual force. It made it voluntary to file income tax, i.e. gave the responsibility to its citizens. In effect, the government provided the rope to which its citizens voluntarily hang themselves.

The point is that if you live on taxpayer's money, you don't ACTUALLY pay taxes. Of course I do file my tax declaration, and of course I "pay taxes".  But this is just taxpayer's money that was given to me and of which I return a part.  I just got less taxpayer's money than is noted on my salary.  Nevertheless, I get NET money FROM taxpayers.  That the state gives me some more, and then I have to return a part, is not really "paying taxes".  It is receiving less tax money.

If I give you $1000,- and I ask you back $200,-, I still gave you $800,-, right ?  You can't really say that you GAVE me $200,-, right ?

However, if you earn ON YOUR OWN by producing useful stuff for others, $1000,-, and then I ask you $200,-, then you REALLY gave me $200,-.  Of your hard-earned $1000,-, I took away $200,- from you.

See the difference ?

If there are 10 times more people producing stuff on their own, then I (as the state) will get 10 times more out of you.  However, if there are 10 times more dudes like me living off the state, and they pay each of them $1000,- to get back $200,-, this will COST the state 10 times more !


That's infrastructure, right ?


Indeed, owning land is an aberration.   It is as ridiculous as owning sea.  When USING natural resources, whether it is land, or minerals or whatever, ideally, this should be lend to the highest bidder for a certain lapse of time, and the bid should be the replacement for compulsory taxation: you BORROW land from the state at the bid you are willing to offer, on terms you agreed to.  In return for that, you get protection of your right to use that land exclusively for the time agreed upon.
Land that is not borrowed, can then be used by anybody, but no enforcement of any "property" can be asked from the state.  So you can build a house there, but someone else can then decide to live there.  If you don't want that, and you want to have exclusivity to access to land, you have to bid for it, and become the highest bidder, for the period you want to have your exclusive access to that land.  During that time, you can build a house there, and ask the state to have your exclusivity of access enforced.  After the end of that period, the land becomes public again, and your house that you put on it, too.  Until you, or someone else, makes a highest bid on it again.
The state should be financed exclusively with the income from those bids.
Because natural resources belong to everybody and to nobody, and wanting their exclusivity must be paid for whatever you are willing to put on the table for it.
On the other hand, produced goods are property of individuals.

This makes that the state gets an income based upon the bids for natural resources, and no taxation is necessary.  The state has to handle its stuff with its income.

^@B.A.S: Which Florida vs United states are you talking about?  If you ever read case law, you'd know there's a shitton of them :)

How's that ?  If you file an honest tax declaration, but you don't pay, you don't go to jail ??

Not even wrong.  If you work for me, draw pay, and return all of that pay in exchange for rent on the house (that you also rent from me), can you say that you're not getting paid?
If this is difficult for you to grasp, try not paying taxes on what you earn to understand why.



It's infrastructure, the land beneath it, the services provided, whole package.  Like living in a country.


So the state owns the land?  Good.  Finally getting somewhere.
You have no right to dictate to the state what it does with its property.  Get off my lawn :)

The US government gets to determine what the laws mean because they have a lot of guns and military power.

The income tax is allowed in its current form simply for the shitty reason that it has been that way long enough so they use that excuse to make it legal.

Like if it was found out that using eminent domain to create military bases was against the 3rd Amendment, just nobody really thought about it until now, it would be de facto legal because of precedent.

There is no point in arguing with an entity with a lot more power than you that they should have less power. You will never win that argument.

Yup.  Might makes right.  Which doesn't stop keyboard revolutionaries from grumbling.

Generally, penalties/fees/interest are amassed on the amount you owe. Why would you honestly file and then refuse to pay?

The logic for criminal tax evasion and jail time has to do lying/failure to file. Tax evasion is punishable by jail time.

If you honestly file and can't pay, there are numbers of ways to go on payment plans, eventual consolidation, striking of deals if the amount is large enough, etc.

This, survival of the fittest.

The point is that if you want to pay me for something, you want some PRODUCED VALUE in return.  If I am paid by the state, I don't have to produce any value (except on paper).  In your example, there are two free decisions between you and me:
- I work for you for a pay we agreed mutually on
- I rent your house for a rent that we agreed mutually on.

We can both NOT agree with any of these deals.


Land is not infrastructure.  It is nature. The building is infrastructure.



No, you didn't understand my proposal.  The state doesn't own the land, in the sense that "ownerless land" is public land on which anybody can do anything, and there is NO right of exclusivity.  Which makes it unproper for building investments on it, as one cannot enforce exclusivity on that land, and hence on those buildings.  Un-owned land, being public, can be used by me to build a house on, but tomorrow you can come there in the house I build, and I cannot invoke any exclusivity and require the state to force anybody OFF that land or out of that house.

However, the state receives the income of the bid for the right of exclusivity during a certain lapse of time (50 years, 20 years... whatever is the bid).  In return, the state will enforce the exclusivity during that lapse of time.  In other words, the bid goes over the right to require from the state to enforce exclusivity.

This should be the sole income of the state, and with that, the state does as it pleases.

Because there is a difference between undergoing might, and cheering for it !

Because visibly, I can be (if in the US) punished if I am dishonest on the filing, but I cannot be forced to pay, according to what you say !

So, logically, according to what you say, if I file my declaration honestly, I cannot be punished for a false declaration, but if I don't pay, the state cannot put me to jail (using force to collect taxes?).

The state expects value in return for pay, that should be obvious.  If you knowingly fail to provide value, you are a crook.  Stop stealing taxpayer's money, dinofelis.


You are paying the property owner for the right to be on that land.  A right that he, in turn, has paid the state for, as you've suggested.


If the state doesn't own the land, what right does it have to "enforce exclusivity"?
Curiouser and curiouser...

I'm not cheering for it any more than I cheer gravity--it simply is :-\

Because the state's the violence monopolist (by definition).  Its business is violence.  It should remain with its business.

You ARE cheering for it.
You ARE thinking up reasons why people SHOULD pay taxes (not why they have to pay taxes, namely that otherwise they get in big big trouble).

I'm back to my initial comparison between the state requiring taxes, and maffia thugs requiring you to pay them "for protection".

You do have more "feelings of duty" for the former than the latter, don't you ?  You do not have the same attitude towards both of them, don't you ?

So you are relatively cheering for taxes.

If you really want to be nerdy about it, filing your taxes constitutes a contract to pay them.  If you are financially capable of honoring the contract, but fail to do so, jackbooted thugs will drive you around in a partyvan & put you in jail.  Gratis.

Is that not "enforcing the collection of taxes" ?

It is, but the government itself was not responsible for that force so no laws need to be on the books. That's the ticket! Shirking responsibility since 1776. This is how the US gets around a lot of shit like this: third-party van parties.

>the state's the violence monopolist (by definition).
No.  Or, rather, not by any sane definition.

>you are relatively cheering for taxes.
No.  I am pointing out that your arguments are intrinsically flawed.

It is.

http://en.wikipedia.org/wiki/Monopoly_on_violence


Not by any logic.

Lol, that's Max Weber's  definition of "Monopoly on violence."  For the definition of "state," start with disambiguation here: http://en.wikipedia.org/wiki/State
It is you who wished to grant the state such monopoly--to enforce your exclusive right to land that was neither yours nor the state's.


I'm afraid we've reached an impasse.  You continue insisting that you're a little tea pot, short and stout, even after I've pointed out you have neither a handle nor a spout :-\

Again, your logic fails on you.  Your claim was that the statement "the state is the violence monopolist" is NOT "any sane definition".

I gave you one:

Now, this is the definition of a state as the violence monopolist by Weber in 1919.  I can presume that if that definition is taken over on wiki about 100 years later, it must have some elements of sanity to it.

By which your statement that no such sane definition exists, is contradicted.  QED.

BTW, don't try to take me on logic.  I have a very high degree of Spock in me :-)

Not at all, my young friend.  Wikipedia also has a page on Flat Earth, here:  http://en.wikipedia.org/wiki/Flat_Earth .
This by no means implies that the Earth is flat, or that it is sane to continue believing that it is.
It merely means that once upon a time, there were people who thought that the Earth was flat.  And that to this day, there are batshit crazies who contend that it is.
So now you know :)

Alright.  http://www.wulf-herbert.de/ACPACS-occ-paper9.pdf

Now, try to find other university studies after 2000 which bother trying to show that the earth is not flat :-)

To go more into detail: assuming - as you try to do - that Weber's definition of the state as violence monopolist is "not a sane definition" and is äs ridiculous as flat earth theory" no university would even argue against that position, if it were so generally accepted as unsane, no ?

So the very fact that a university study tries to counter this view in 2009, means that it has at least some elements of sanity to it.  Otherwise, nobody would bother writing a paper against it in 2009, no ?  And even there, Weber's view as the STANDARD view on a state is accepted.

So again, your logic fails terribly.

No.
You tried to suggest that state=violence, by definition, by citing a wikip page on Max Weber.
I pointed out that the existence of such a page does not validate Max Weber's views any more than the Flat Earth page validates the notion that the Earth is flat.
That's all.  Simply pointing out the flaws in your thinking--not trying to prove that Flat Earth is a hotly debated topic :)

Guys.. you cannot go to jail for failure to pay taxes.. we don't have debtor's prison here like they did in Europe hundreds of years ago lol

If you don't lie, file taxes but cannot or do not pay, then you will not go to jail.  They can garnish wages and what not but you cannot go to jail.  This is a fact, not something that can be argued.

I'm going out of town for about 10 days but will checkin on thread once I get back!

Again, your logic is flawed.  

My statement was: the definition of the state is the violence monopolist.

Your statement was that such is not a sane definition of the concept of state.

I pointed you to a Wiki page indicating that that was Weber's definition since 1919.

You said that there are also Wiki pages on flat earth, so it is not because there's a wiki page that that proves its validity.  Now, that argument would hold if *the only source* of Weber's definition were a wiki page.  However, I next showed you a university study of 2009, where Weber's definition is taken as the standard view on "state" and then this was challenged in international context, where a state is not "sole source of violence".

So although you are right that JUST the existence of a wiki page on a concept doesn't prove that that concept is the actually accepted standard, it certainly doesn't prove the opposite (which is your claim: namely that that definition is INSANE by any standard).  Moreover, giving you OTHER sources (such as a university study from 2009) where the same view taken as the standard view is challenged, is rather a proof that that view is NOT generally considered insane.

So in the end, you consider it demonstrated that Weber's view is an insane because there's a wiki page on it, even if it is hotly debated in recent university papers.

Even your flawed logic of "there are examples of insane ideas that satisfy your proofs, hence the concept you are talking about must also be insane" which is by itself flawed, doesn't even hold.

Your analogy between "there's a wiki page on Weber's definition" - yes but there's also a wiki page on Flat earth, so everything with a wiki page on it is just as insane as Flat earth

doesn't even work for "there are hotly debated university papers on it recently", which is why I raised the question of where are the hotly debated papers of recent origin fighting the flat earth hypothesis.

Lol, so you think more sources & modern examples=not insane?
Here, buddy: http://en.wikipedia.org/wiki/Modern_flat_Earth_societies
Elaborately annotated :D

Batshit crazy is batshit crazy :)

You still fail in your logic.  No matter how much analogy you can find with flat earth, that is no proof that Weber's ideas are as insane as flat earth, which is YOUR statement, namely that any definition that equates the state to the violence monopolist is insane.

You have not given one single inch of a proof.

If everything with a wiki page on it, and other sources on it, is then an insane idea because flat earth also has a wiki page and other sources, then the only things that are not insane have no sources and no wiki page on them :-)

However, my question was: do you find many recent UNIVERSITY PAPERS trying to poke holes in the "flat earth theory" ?

And if you do so, does that mean that everything on which a university paper is written, is also an insane idea ?

So now I come to you, and ask you what is then YOUR definition of "state" ?  And puleeze, no wiki pages, no other sources, and no university papers, because that is also the case with flat earth :-)

Still catching my breath after reading just a portion of this debate!  Page six was delightful.  So was Friedrich Wilhelm Nietzsche right?

No.
You tried to establish that state=violence, "by definition."
You quoted Weber's page on wikip to validate them lulz.
I pointed out that the wikip page you have linked is not the definition of "state," but Max Weber's  definition of "Monopoly on violence."
I further pointed out that wikip psge does not validate, but merely delineates Max Weber's view on the subject.

I'm not trying to prove that Weber's a nut, merely that having a page on wikip doesn't preclude his being a nutter.
Why is this so difficult 4u to grasp?

I accepted that that was not a sufficient proof of MY statement, which is why I completed it with a university paper.
However, it was absolutely no indication of YOUR statement (that any such definition would be insane).

I will even add another one:
Britannica:

http://global.britannica.com/EBchecked/topic/1916738/state-monopoly-on-violence


Insane, right.

Gah!

I have given you the disambiguation link to "state," here: http://en.wikipedia.org/wiki/State
Not a single instance of the word "violence."
Here is the definition of what I think you mean when you say "state," "sovereign state," here: http://en.wikipedia.org/wiki/Sovereign_state
Again, not a single instance of the word "violence."
Those are the definitions of "state."
It is further conceivable to have a state which does not have a monopoly on violence.  Such as a sovereign state where one could protect his person and/or property by violent means.
Or where one could get bitchslapped by persons other than a member of teh ruling elite.

How is it you still claim that state "the state's the violence monopolist (by definition)"?

Read "the defining characteristic of the modern state" in Britannica ?

Yes.  Did you read that if you break into my house, I can take my gun and legally cap your ass?  Do you not consider that violence?

Further, you have once again given me a link to "monopoly on violence.  That's the definition of Monopoly On Violence, not the definition of "state" :)

Of course.  It is delegated.  Because you can do that in the USA because thet violence monopolist there allows you to do so.  If you do that in most European countries, you are facing 20 years of tjail or something.  So the end decider is the one with the biggest gun: the violence monopolist.  The state makes the rules, also those that tell who may use violence in what circumstances.

Power comes out of the barrel of a gun.  The state is the ultimate power after all.  It can take all belongings.  It can put you in a cage.  It can decide by what rules people have to live.  Modern states have mechanisms where this decision process is somewhat diffused amongstte several decision makers, which themselves have to get elective mandates and so on, and that makes that a modern state has more difficulties in applying directly, immediately and totally arbitrarily any measures according to his whims, than its absolute predecessors.  Which is a good thing.  There is some friction and some brakes put on the modern state's ways to extort and exploit its country, as compared to its absolute predecessors.  But it only goes slower and more subtler, the nature of the beast doesn't change: a wasteful elite messing around with other people's efforts and imposing their pet rules on people.


What part of "the defining characteristic" don't you understand ?

Imagine that I define a ball as the 3-dimensional object with the highest volume-to-surface ratio.
Now you can look up "ball" on wiki and not find any reference to volume or surface there, but rather something with a radius and so on.
That doesn't make my definition "insane".  It is a perfectly coherent way to define "ball" that way.  It might be an original view. 
However, if Britannica gives "violence monopoly" as the DEFINING CHARACTERISTIC of the modern state, then I would think that it is not totally insane to use that as a definition for "state" even if you find another definition on Wiki, right ?

You got that backwards.  The people granted the the state the right to use violence.  Lrn 2 history, lrn 2 civilized society, lrn 2 civilization :)


"Defining characteristic" means just that--a characteristic that defines the term.  I live in a state which does not have a monopoly on violence, allowing me to defend my person (and, in many states, property) with violence.

The people have given their states similar rights.
When you try to steal from the state, as you admitted to doing by taking the taxpayer's money and wasting it, the state defends itself by putting your ass in jail.  If, at the time the party van arrives at your door to take you to jail, you chose to use violence against the jackbooted thugs, the jackbooted thugs have been granted the right to use violence on you.  Fair's fair :)
What is it that you still don't understand?