The way to create a community is not to insult people.

Also, I dont know how you can call crackpots to the people that predicted the housing bubble, while a majority of keynesians did not see it coming, including Krugman. Krugman specifically called for the creation of the housing bubble. So if someone has to be called a crackpot here are the keynesians.

The real problem with keynesianism is that its not scientific, but that is another discussion.

If this ends up happneing Im going to blame you.

I read the whole article. It starts very good, but it ends badly. You dont need a central bank to have reversible transactions. In fact, Bitcoin has implemented a system to have reversible transactions.

The joke of the day.

http://www.economicpolicyjournal.com/2011/06/world-bank-taps-lehmans-ex-risk-officer.html

I recomend to some of the poster here to stop insulting to other members of the community.

Regarding the article is a bunch of non-sequiturs. I would appreciate if the op would bring a serious economic analisys and not the economic political propaganda.

Indeed. The people with better job position get higher wage increases every year, probably equivalent to the real rate of price inflation, while the rest get their wages actualized by the offical government price inflation rate.


I never said that they dont pay interest in the bonds that they sell to the general population. The government does not pay interest (or more accurately gets the interest payment back) from the debt monetized by the central bank.

Yes. Its very important to understand that fractional reserve with a central bank (or similar regulation) and fractional reserve without a central bank (free banking) are completely different monetary systems. People tend to talk about fractional reserve in general without taking into consideration if there is a central bank or not, and that leads to a lot fo confusion.

Shiny bitcoins!!

Life can be tought...

After reading that book, I recomend to read something from the free banking school (something from Lawrence Whilte or George Selgin, I personally prefer the style of the later), because IMHO its an advance on monetary theory from Rothard. Free banking is in my opinion the most important advance in austrian theory of the present day austrian schoolars.

Im guessing that the rest of Europe will be similar. Btw, can I buy two pairs with the offer?

How much for your internets?

Let me guess: You are french.

Yes, its the federal funds market, and its rates are heavily influenced by the central bank. Only the banks of the Federal Reserve system and certain institutions (like Freddie and Fannie) can access this market.

Right now Bernanke has the federal fund rate at almost zero (between 0 and 0.25%). You can check their daily value here: http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm Short term the central bank uses repos to correct slight deviations of this rates, but if that is not enough it has to raise the rate or do open market operations to inject more money. Right now we are in a special situation because the banks are loaded with money (check the excess reserves) and they have no need for borrowing from the federal fund market for their operations. Right now most of the action comes from the other institutions that lend the banks the money they have around without use overnight to earn some (minimal) interest. Why do the banks borrow this money? Because they can deposit it as excess reserves and earn a 0.25% that the Federal Reserve pays them. So while this situation goes on, the federal fund rate wont go over the excess reserve interest rate that the Fed is paying the banks. Note that this is a way for the Fed to give "free money" to the banks.




Different countries work in different ways, but usually the banks settle their balances once a day.


Sorry, Im not from the USA and I can not give you specifics on how exactly the banking clearing system of the USA works, but there is the wikipedia page that might help you get started: http://en.wikipedia.org/wiki/Automated_Clearing_House (according to the wikipedia is regulated, which is not a surprise at all).

Btw, there were free market clearing houses that restrained member banks from expanding the money supply. See the Suffolk bank in the USA druing the XIX century.

What about international delivery?

Can I suggest that you include information about international delivery in your offerts? It would make things easier for a lot of people.

The only way for price inflation not to happen is for Bernanke to remove the liquidity from the banks. And the Fed is signaling already QE3 (which will be different form QE1 and QE2, it will be similar to the Operation Twist from the 60's and probably wont be called QE3 but its still money printing to buy government debt). The Fed really can not remove the liquidity from the banks, the only thing it can do is to control the rate at which that liquidity enters the market. That is why I have been predicting stagflation but not hyper-inflation.

We need some channels were people dont need to get out of the Bitcoin economy. That is why I think its so important to get food business to accept bitcoins. If I earn bitcoins and can use them to buy food, there really is no need to change them back to a government currency. And as the business that accept bitcoins grow the food business can use them to buy computers, etc... Once we create some "circular flow" there will be no need to use the government currency.

The problem is that then you probably can not trade in that jurisdiction anymore. Obviously its not unheard for some people to not pay the debts. In Europe a lot of people, specially inmigrants, have fleed the country leaving the unpayed mortgage behind. But they can not expect to come bank ever. Some people might preffer to pay the debt than to go away from their home, family and friends.

Yes, I agree.


What? There was massive inflation due to the monetary expansion of the Fed to pay for IWW. Scratch that, I read the two wars and though you were talking about IWW and IIWW.

In the present moment there already is price inflation. The thing is that the credit crunch has produced a contraction of the debt producing deflationary preasures that have countered the inflationary preasures. But the credit is leveling so the deflationary preasures are fading, and the price inflation is starting to signal what is about to come. Monetary events are very slow. They can take years to develop.

Some people still trust that Bernanke will be able to remove all the liquidity from the banks "when the time comes". But I have written articles (not en english, sorry) showing how Bernanke can not remove the liquidity, just delay when it appears in the market (basically through playing with the interest it pays on excess reserves).

Funkypala, welcome again.


There are ways to enforce contracts through private institutions. First, you have ostracism. If someone violates a contract he/she will find it hard that other people trust him/her and trade with him/her. So there is an incentive to respect contracts. Second, you have the legal system, the courts. This legal system can be a government monpolly or private. It would be a long to discuss both systems, but basically the bank can use the legal system to enforce the contract.

This is a incentive to not have very extreme fractional reserve banking. And that is what happened when banking was not regulated. Because banks were afraid of bank runs they kept a higher ratio, the were more prudent. Now, with regulations, they are protected from bank runs (specially because of central banking and FDIC) so they can go as low as the regulators allow them, which for example in Europe is 2% and in the USA a bit higher. The government regulations have taken the control away from the costumers. Bernanke at some point said that he wanted to change the regulations and regulate the rate to 0%. Imagine that...